This is a bit lengthy, but informative read.
http://www.japanfocus.org/-R_Taggart-Murphy/3265

Here are a few excerpts;

...
To be sure, doves on the “left” will predictably advocate accommodative monetary policies while hawks on the “right” will go on favoring tightening. Now and again crackpots will appear arguing for the abolition of central banking and a return to the gold standard. Or perhaps for cutting taxes while ignoring spending. Sometimes their recommendations will even be adopted for a spell until the whole economic edifice begins to quake and terrified politicians quickly retreat into orthodoxy. But no one really believes any more that the continuation of the system we live in is anything other than inevitable....


Brenner identifies the first experiment in “stock market Keynesianism” as Japan's bubble economy of the 1980s. “In 1985-6...a fast rising yen had put a sudden end to Japan's manufacturing-centered, export-led expansion of the previous half decade, was placing harsh downward pressure on prices and profits, and was driving the economy into recession. To counter the incipient cyclical downturn, the Bank of Japan radically reduced interest rates, and saw to it that banks and brokerages channeled the resulting flood of easy credit to stock and land markets. The historic run-ups of equity and land prices that ensued during the second half of the decade provided the increase in paper wealth that was required to enable both corporations and households to step up their borrowing, raise investment and consumption, and keep the economy expanding.” My only quibble here is with Brenner's identification of the Bank of Japan (“BOJ”) as the prime mover – the BOJ was more of an agent of the Ministry of Finance (“MOF”) in its attempts to compensate for the sudden surge in the yen's value after the Plaza Accord of 1985 – the historic agreement among the world's leading economic powers of the time to suppress the exchange value of the dollar, particularly against the yen. But Brenner has the essence of what happened in Japan in the mid 1980s right, and he goes on to argue that the Japanese experience formed a model that would be consciously emulated. “(US Federal Reserve Chairman Alan) Greenspan followed the Japanese example...

A further parallel that Brenner may have overlooked between the Japan of the late 1980s and the US in the early 2000s lies in the deliberate manipulation of land prices. ...

These two countries – and the smaller economies of East and Southeast Asia that followed in their wake ¬– could not, however, escape the consequences of their systematic creation of overcapacity and the resultant decline in manufacturing profitability. To save the global system on which they themselves had come to depend, they were forced to turn around and provide the waves of credit that permitted the financial lynchpin of the global capitalist system – the United States ¬– to continue to act as the world's primary engine of demand.

As Brenner notes in discussing how the explosion in deficits by the George W. Bush administration was financed, “... Japanese economic authorities saved the day by unleashing an unprecedented wave of purchases of dollar-denominated assets. Between the start of 2003 and the first quarter of 2004 ... Japan's monetary authorities created 35 trillion yen, equivalent to roughly one percent of world GDP, and used it to buy approximately $320 billion of US government bonds and (the debt of government-sponsored institutions such as Freddie Mac), enough to cover 77 per cent of the US budget deficit during fiscal year 2004. Nor were the Japanese alone. Above all China, but also Korea, Taiwan, and other East Asian governments taken together increased their dollar reserves by $465 billion and $507 billion....

Meanwhile, in the United States, it is now obvious that the stimulus package enacted by the Obama administration was too small to do anything more than prevent the onset of a full-scale depression. The failure to enact a more robust package can be attributed partly to the seeming ease with which the White House allows itself to be intimidated by the Republican rabble in Congress. But it also seems rooted in fear that the Treasury may be approaching the limit to the amount of U.S. government debt it can cram down the throats of the bond markets. Wall Street is back blowing bubbles, but this time they are not translating into any wider upsurge in consumer purchasing power. Unemployment remains stuck at politically dangerous double digit levels, mortgage defaults are still frighteningly high, while lending to businesses – as opposed to the financing of these new bubbles – continues to stagnate. Brenner described the situation at the end of 2008: “with nothing to induce expenditures by either businesses or households, the economy was experiencing a self-reinforcing downward spiral in which falling consumer demand made for declining profits, which brought about cutbacks in both investment and employment, which reduced aggregate demand, and had entered into free fall.” The fall may have slowed since then, but there has been no real revival of the broader economy....

Hung maintains that China's leadership understands this, but they are trapped by the power of the newly arisen coastal elite. “ The (Chinese) government is ... very aware of the need to reduce the country’s export dependence and stimulate the growth of domestic demand by increasing the working classes’ disposable income. Such a redirection of priorities has to involve moving resources and policy preferences away from the coastal cities to the rural hinterland, where protracted social marginalization and underconsumption have left ample room for improvement. But the vested interests that have taken root over several decades of export-led development make this a daunting task. Officials and entrepreneurs from the coastal provinces, who have become a powerful group capable of shaping the formation and implementation of central government policies, are so far adamant in their resistance to any such reorientation. This dominant faction of China’s elite, as exporters and creditors to the world economy, has established a symbiotic relation with the American ruling class, which has striven to maintain its domestic hegemony by securing the living standards of U.S. citizens, as consumers and debtors to the world...

So where does this leave us? Pretty much where Robert Brenner does – a global capitalist system ever more dependent on “titanic” waves of credit creation and repeated jolts of Keynesian stimulus that grow less effective and more costly with each round. Japan long led the world in that credit creation. But it has now been surpassed by a China that finds itself today where Japan has been for decades: locked into an entangling embrace with the system's hegemon – ironic, in that it is occurring at just the time when new leaders in Japan are contemplating ways of running their economy that may involve extrication from their own reflexive support for American hegemony. The new U.S.-China embrace is held together by the same dynamic that re-enforced the long-standing U.S. - Japan financial relationship: the mutually assured destruction that would ensue should either set of arms loosen. That one party to today's embrace is the world's leading avatar of capitalism while the other was born out of implacable opposition thereto is another irony – dare I say “contradiction?” – that perhaps only a Karl Marx – or a Robert Brenner – could fully savor.