NEW YORK - If you want to spook an economist, ask him about Japan. He will tell you of a ghastly place whose undying stagnation devours even the strongest stimulus. Quantitative easing, bank recapitalizations and fiscal spending all failed to revive the world's soon-to-be fourth-largest economy.

As the same measures fall flat in America, some are beginning to worry that the United States could be headed for its own lost decades.

Japan's example is chilling: NominalG.D.P. is lower than it was in 1992, and home prices are down 60 percent from their peak and still falling. Given the size of its bubble, Japan was due a painful deleveraging, but what is truly striking is the country's inability to recover more than 20 years later.

Deflation is the main culprit. Prices for almost everything in Japan fall steadily and offer little incentive to buy today when it will be cheaper tomorrow. Deflation needs little help destroying an economy, but in Japan's case it is abetted by aging demographics and lagging innovation: Japan's working-age population started shrinking in 1995, and productivity growth ground to a halt shortly thereafter.

David Fuller's view I agree with just about every word of this article so I will cite a few other differences between Japan and the USA. 1) Unlike the BoJ, the US has a central bank that is determined to err on the side of future inflation, for better or worse. 2) America was founded by immigrants; they created a pluralistic culture and their continued arrival will help to revitalise the country over the longer term. The Japanese have many remarkable qualities but Japan's homogeneity and demographics do not help it to break out of its current cycle. 3) Japan has no natural sources of energy. In contrast, the USA should be energy dependent in the next decade, thanks to shale gas and oil.