Gary North says there's been no systematic deflation in Japan.

I almost always find Gary North's articles at Lew Rockwell interesting and full of good arguments. Today he writes about Japan and deflation. While I suppose I agree with his conclusions, I had a hard time following him today. Nevertheless, others might want to check out his article, Why Deflation Is Not Inevitable (Sadly) Part 2: The Deflationists’ Myth of Japan. Here is a small selection:

I offer two charts. One is a chart of the Bank’s monetary policies since 1992. The second is a chart of the Federal Reserve’s monetary policies since 1992. These charts are published by the Federal Reserve Bank of St. Louis in its quarterly publication, "International Economic Trends."

The charts may amaze you. What they show is simple to state: the two nations had similar central bank policies until late 2008, when the Federal Reserve went berserk.

Second, consider the year-to-tear rates of change in the money supplies in both nations. For Japan, M1 and M2 are on the same chart. The chart for the money supply for the U.S. in this publication compares MZM, which is a useless predictor of consumer prices, and M2, which isn’t much better than MZM. Both of them overestimate future consumer prices. (Is there an editor for "International Economic Trends"? Or is it an uncoordinated effort?) So, I have used the similar chart of M1 and MZM that is published in another St. Louis FED publication, "Monetary Trends." Ignore MZM.

The results of the respective central bank policies (adjusted monetary base) were similar. If we compare Japan’s M2, which was mildly inflationary (usually under 3%, 1992–2002; about 1%, 2003–2009), with America’s M1, which was also mildly inflationary – actually deflationary, 1996–98 – we see little difference. These two monetary aggregates are the best indicators of future consumer prices in their respective nations.

Let us now look at charts comparing rates of change in the consumer price indexes of both nations. The rate of annual change in Japan has been slightly deflationary, but no greater than 1% in any 12-month period, and rarely that low. In two years, prices rose by 2%: 1997 and 2008.

Conclusion: there has been no systemic price deflation in Japan.

I understand the Mr. North does not regard price deflation as a decrease in price, but others do. So I'm not entirely sure I follow his line of argument here. I probably need to go back and read the article again.