The Japanese economy stagnated since 1990:

when real Gross Domestic Product (GDP) grew at an average of just 1.2%.

Since 1995, growth was extremely slow averaging less than 0.7% on year-to-year basis." ("Banking Crisis... "5) During the last quarter of 2003, however, the GDP increased 7% (Annexure 2), the most since 1990, demonstrating growth rate of 2.7%, for the entire year. Some economists argued, however, this 2003 growth did not reflect a complete economic recovery but signifies a short-term phenomenon, not a long-term reality.

Nakamae contends that the BOJ's reaction to the Japanese weakening economy only weakened the economy further and that doing nothing would have been better than the steps Japan took and further argues that.".. central banks react to economic bubbles by creating further bubbles....

Amid the economic and political fallout that descends when a bubble bursts,... In an effort to boost demand and thereby reduce the fallout...
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