New Delhi, Oct. 7 -- Japan's Nikkei-225 index leapt to a record high on Monday in cheerful reception of Sanae Takaichi's election as its ruling Liberal Democratic Party's leader. She will be Japan's first woman prime minister and investors seem quite thrilled that she's likely to loosen fiscal policy and nudge the Bank of Japan (BoJ) to ease credit.

On paper, the BoJ is independent, but it displays a propensity to act in line with the government's will. Ironically, Japan has long been a notable example of diminishing returns on stimulus action aimed at rescuing an economy from stagnancy.

The BoJ even ran a negative interest rate policy for about eight years, penalizing banks for keeping cash idle, with little to show for it. That ended ...