Something that has no current or flow and often has an unpleasant odor defines the word stagnant. The Japanese economy has been stagnant for about two decades now. There are many reasons for this "unpleasant odor". First, fiscal policy in Japan, the savings surplus, its economic bubble power, and political management in Japan have put an end to any flow that once was there. Secondly, global flow and structural obstacles are the cause of the power failure. The Liberal Democratic Party, vested interest groups and even the monetarist explanation come into play. By looking closely at these topics one can gain a better view and understanding of Japan's stagnant economy. First, in 1997, Japan's fiscal policy was causing the government to contract production. Taxation is the use of government taxation to influence the economy. Over the previous decade, tax cuts did much more to stimulate demand than increased government spending, in part because public works were widely seen as inefficient. This suggests that a decrease in public works accompanied by an identical decrease in taxes would improve GDP (Gross Domestic Product). A tax increase would reduce growth and therefore tax revenues, thus further increasing the government deficit. Households in Japan know that taxes will become, and are, an issue where they will increase, so they tend to save more by reducing purchases, thus neutralizing the fiscal stimulus. Japanese savers remain unwilling to move their money overseas in search of more income. The government may proclaim that the sales tax rate will be changed instantly from 5% to zero for a limited period, after which the retention model will progressively increase. Bibliography• "BestThinking / Articles / Economics / Behavioral Economics / Japan: The Ravages of a Stagnant Economy and Its Implications for the United States (Article)." Best Thought. Network. November 22, 2011. .• "Causes of Japan's Economic Stagnation - Shorenstein APARC." Walter H. Shorenstein Asia-Pacific Research Center (Shorenstein APARC). Network. November 22, 2011. .• http://www.economist.com/nod/133612. Network. • Ludwig Von Mises Institute. Network. 22 November 2011. .• Web. .