The stock market peaked at the end of 1989, while corporate capital spending peaked in early 1991. That's when the Bank of Japan realized its mistake and finally started cutting rates. But it was too little, too late. It is nearly impossible to imagine that Japan would have been worse off if the investment boom had been allowed to run longer. Even a slight rise in inflation would have been preferable to the decade of stagnation Japan has endured.
Nobody expects the U.S. to mirror Japan's experience.
In today's economy, that's the right way to assure America's long-term prosperity. By Mike Mandel Economics Editor Mandel covers the New Economy. To read a letter to the editor about this story, click here . The McGraw-Hill Companies Inc. All rights reserved.