At the rate they are going, someday we’ll be calling it “The Lost Century” in Japan as they now embark on their third “lost decade” with little sign of changing course. The scourge of deflation is once again being countered by a doubling of the Bank of Japan’s “quantitative easing” program, otherwise known as “money printing”, as reported this morning.

Governor Masaaki Shirakawa and his board increased the three-month loan facility to 20 trillion yen ($222 billion), the bank said in a statement after its meeting in Tokyo. They also held the overnight lending rate at 0.1 percent.

Shirakawa said there is no “miracle” cure to stem declines in prices that are deepening even as the economy sustains a revival from its worst postwar recession. Prime Minister Yukio Hatoyama’s administration, restrained from adding to fiscal stimulus by a record debt load, has been pushing the bank to do more to bolster growth.

The move “could implant a strong impression among the government that the stronger it presses, the more it can get from the BOJ,” said Mitsuru Saito, chief economist at Tokai Tokyo Securities Co. The expansion “is highly unlikely to shore up the macro-economy, while having only a limited impact on liquidity,” he said.

Nobel Prize winning economists Joe Stiglitz and Paul Krugman (among many others) are again talking about a “liquidity trap” and how this may not end well for more than just Japan.

As is the case for the Great Depression, any “liquidity trap” discussion always seems to begin with, “Here we are in an awful mess, how do we get out of it using the tools of mainstream economic theory?”, whereas, maybe, just once, they should start with, “Mainstream economic theory has failed us again, maybe we should do nothing for a while and see what happens or, better yet, improve economic theory so we don’t make messes.”