The Fallacy of the Fallacy of Composition

But the fallacy of composition is a fallacy…at least as applied by modern economists. There comes a time when a man should sober up, even though the hangover is unpleasant. But while Japanese households were drinking strong coffee, Japan’s economists refused to allow GDP to fall; they put zombie companies on life support; and they kept the doors on the banks open. This not only prevented a new economy from arising, it cost money. As the citizens paid off debt, the government borrowed in their names. While households repaired their private balance sheets, government destroyed the balance sheet of the entire nation.

We are committing the same blunders as Japan and can expect the same consequences says Bill Bonner.