Is a surge in government spending coupled with a confiscatory death tax the formula to trigger a sustained boom in Japanese equities? Morgan Creek CIO Mark Yusko, interviewed at the fourth annual Innovative Alternative Investments conference in Denver, thinks it is.

Over the last 15 years, the U.K. has tripled government spending and the U.S. has doubled it, while the Japanese have slashed their government outlays by nearly 50%. The insular nation's Prime Minister Abe recently won control of both houses in the Japanese legislature, giving him the ability to push through a 200 trillion yen infrastructure plan over the next 20 years.

Meanwhile, Abe's proposed mega-death tax could spawn a spending boom among older, wealthy Japanese citizens with few or no heirs, said Yusko.

Here's how the proposal works.

If someone dies with no heirs, the estate is taxed at a 90% rate. A person with one heir pays 80% when he or she dies, while someone with two heirs pays 70% after checking out.

Unfair as it might sound, the proposal, which has yet to become law, serves two purposes. It encourages wealthy Japanese senior citizens to boost their consumption dramatically while creating incentives for younger, emerging affluent people to have more children, thus addressing Japan's chronic demographic problem. Some demographers estimate the nation will see its population shrink 20% by 2035.

Those are only two factors driving Yusko's bullish attitude for Japanese equities. After Abe was forced out of power in 2007, his successor, Prime Minister Koizumi, reversed all the stimulus. Interest rates for businesses surged. The result was that the yen rose dramatically and Japanese companies were operating with a 40% higher cost basis by the time the global recession hit in 2008.

At the same time, German exporters were benefiting from a weak euro, thanks to the financial crisis afflicting other euro zone nations like Greece, Spain, Italy and Ireland. That made it nearly impossible for Japanese exporters to compete during the early years of the anemic global recovery.

"[Japanese] stocks fell, exports fell and then came the tsunami and earthquake," Yusko said.

He thinks the Bank of Japan's strategy to weaken the yen could produce a 57% increase in big Japanese companies' earnings this year and another jump of 25% or more in 2014. "If the yen was 110 [to the dollar] instead of 85 at the start of the year, Toyota's earnings would be 70% higher in 2013," Yusko said.