http://www.wsj.com/articles/as-japan-battles-deflation-a-bitter-legacy-looms-1434011826

As Japan Battles Deflation, a Bitter Legacy Looms

Prime Minister Shinzo Abe faces the difficult question of how far to follow the controversial policies of the man who led the country out of the Great Depression

Nearly 80 years after the assassination of Korekiyo Takahashi, Japan's Depression-era finance minister still shapes economic policy arguments.

By Jacob M. Schlesinger And
June 11, 2015 4:37 a.m. ET

TOKYO—Japan’s struggle to boost economic growth is being haunted by the ghost of a geisha-loving finance minister who steered the country out of the Great Depression but was assassinated for trying to dial back the stimulus.

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Nearly 80 years later, Japan once again is battling debilitating deflation, a cycle of falling prices and wages. And Bank of Japan officials now face the difficult question of just how far they dare follow Mr. Takahashi, a challenge complicated by the government’s mammoth debt.

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By 1935, Mr. Takahashi decided to cut spending to prevent economic overheating. That made him a target of Japan’s increasingly aggressive military, which was demanding funds for its expanding China incursion. At 5 a.m. on Feb. 26, 1936, two rebel officers plotting a coup stormed Mr. Takahashi’s bedroom. One officer shot him with a pistol and the other slashed him with a sword.

The attempted government takeover failed. But the military succeeded in cowing economic-policy makers. After Mr. Takahashi’s murder, inflation spiked to double-digit percentages.

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