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Interesting thread.

Would allowing failing banks and businesses in Japan to go bankrupt be inflationary or deflationary?

Presumably failing businesses would mean destruction of debt, hence be deflationary.

OTOH, destruction of debt is the purpose of the K-winter so one may expect it to be over quicker if bankrupcies were allowed, instead of corporate zombies being kept on a life line.

2. It is not US government policy to prop up failing banks.
3. It is not US government policy to prop up failing businesses.

I´m not sure I share your confidence here. It seems to be US government policy to prop up asset prices, and talk down exchange rates. It´s a tiny step from here...

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