Japan Once Again Proves that Contractionary Economics is ……… Contractionary

It is no surprise that the Japanese, in their haste to go back to austerity when the first glimmers of light has driven their economy back into recession:

Japan’s economy unexpectedly fell into recession in the third quarter, a painful slump that called into question efforts by Prime Minister Shinzo Abe to pull the country out of nearly two decades of deflation.

The second consecutive quarterly decline in gross domestic product could upend Japan’s political landscape. Mr. Abe is considering dissolving Parliament and calling fresh elections, people close to him say, and Monday’s economic report is seen as critical to his decision, which is widely expected to come this week.

………

Rising sales taxes have been blamed for triggering the downturn by deterring consumer spending, and with Japan having now slipped into a technical recession, the chances that Mr. Abe will seek a new mandate from voters to alter the government’s tax program appear to have increased significantly.

The preliminary economic report, issued by the Cabinet Office, showed that gross domestic product fell at an annualized pace of 1.6 percent in the quarter through September. That added to the previous quarter’s much larger decline, which the government now puts at 7.3 percent, a slightly worse figure than in its last estimate of 7.1 percent.

………

Although the second part of the tax increase would not be carried out until October, Mr. Abe needs to decide what to do about it soon, to give Parliament time to change legislation if he opts to cancel or postpone it. If fully enacted, the plan would increase the tax on all goods and services sold in the country to 10 percent over 18 months. It now stands at 8 percent after the first increase in April.

Yeah, imposing crushing sales tax increases, taxes were taken from 5% to 8%, with an as yet not implemented increase to 10%, will discourage consumer spending, and have a deflationary effect. (See also Krugman saying, "I told you so," here and here and about a gazillion other places.)

If you are concerned about the deficit, tax financial and currency speculation,  which, in addition to reigning in destabilizing speculation, would encourage that money to go into investments in plant, equipment, training, etc.