By Greg Peel

"We think this could be the beginning of a fresh reflation cycle for the global system," BNY Mellon's Simon Derrick told the London Daily Telegraph, "combining with the US recovery to mark a turning point in the crisis".

If we don't count the eurozone as a bloc, Japan is still the world's third largest economy behind China and ahead of Germany. Yet despite the influence of the Japanese economy on the world, and notwithstanding the 2011 tsunami and its aftermath, Japan does not really get that much attention. This is particularly true in Australia, where everything is China, China, China, yet Japan remains one of Australia's most important trading partners.

The reason is because Japan's economy bubbled and burst ? spectacularly ? in the early nineties and has never recovered. For fifteen years the country has seen no growth in nominal GDP. The Japanese deflation experience has been held up by central bankers such as Ben Bernanke as a model of "what not to do". The general opinion is that Japan's governments and central bank have done everything pretty much wrong since the nineties crash which sent property prices plunging and knocked the share market down 75% ? a level from which it has never meaningfully recovered.

The "Japan of the twenty-first century" ? China ? has grabbed all the attention. Europe has been the focus since 2010. And the US, as the world's largest economy, will always be in focus. Meanwhile Japan just bungles along in a stable, or as the Telegraph's Ambrose Evans-Pritchard puts it, "almost comfortable", equilibrium in which the value of "real" savings rises beneath the deflation perma-frost.

But all has not been well. Despite the rising real value of Japan's extensive savings, the future obligation to a rapidly ageing population is becoming overwhelming. As a manufacturer nation, with as good as zero natural resources, Japan has long been a surplus, or creditor, nation. Yet global QE, particularly from the Fed, has pushed the yen so high as to make Japanese goods unaffordable. And, combined with the recent Chinese boycott due to the territorial dispute, and fuel exports required to replace suspended nuclear energy, has sent Japan's trade balance into rare deficit.

The Japanese Ministry of Finance, via the Bank of Japan, has fiddled around the edges of currency intervention to date. Yet after each brief reversal, the yen has powered back on fresh QE from the Fed, OMT from the ECB and monetary stimulus across the globe. Japan is in trouble, and that's what prime ministerial hopeful Shinzo Abe told voters during his election campaign. It is unusual for a politician to draw on the ethereal world of monetary policy as a major election platform. But that's exactly what Abe and his LDP party did ?successfully.

Very successfully. The LDP is now back in a landslide, and with coalition support will command a "super" majority in excess of two-thirds when the new government is sworn in early next year. A super majority gives the lower house the power to overrule the upper house in most cases. Abe may not immediately exploit this power nevertheless, particularly in matters of sovereign finances, lest he be seen as a tyrant. If he waits for the upper house election due mid-2013, he will likely gain a majority in both houses. Then he can really do what he wants with impunity.

And what he wants to do is once and for all kick-start Japan out of its long deflationary malaise. He wants to lift Japan's inflation target to 2% from 1%. He wants to replace 15 years of no growth with 3% GDP growth in 2013. And to do it, he is happy to use unlimited monetary stimulus. He will just keep printing till the job is done.

Switzerland suffered a similar fate to Japan in the wake of the GFC. As the Swiss franc rose sharply against the US dollar and euro, the Swiss National Bank was forced to swiftly and decisively intervene in currency trading. The effect of Switzerland's unlimited bond purchases, notes Evans-Pritchard, has been to finance most of the eurozone's budget deficits for the last year with printed money.