I Think I’m Turning Japanese

There is no subtler, surer means of overturning society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction and does it in a way that not one man in a million is able to diagnose. — John Maynard Keynes A fall from grace At one point in the late 1980s, there was a square block of real estate in downtown Tokyo, near the Imperial Palace, that was worth more than all of California. The country was booming… The Japanese led the world in electronics. Every teenager had to own a Sony Walkman. The Toyota Supra and four wheel drive pickup were the two bests car of the decade. Japanese investors bought up American icons like Rockefeller Center, Columbia Pictures, and the Pebble Beach Golf Course. Along the way, Japan also created the 100-year mortgage and had an unassailable cadre of elites that ran the banks, the government, and the corporations. The country was run by one political party— the Liberal Democratic Party — from 1955 to 2009. Stimulating death This political party’s main platform was “spend money and create growth.” It tried stimulus after stimulus… They’ve built bridges in mountainous villages where few people live… They’ve forced banks to take on massive debt, and shuffled other debt to different banks. And after twenty years of spending, Japan has $9.7 trillion in public debt — twice its GDP in 2009. They still have no growth. A few months ago, in the thick of the Greece debt crisis, the Prime Minister warned the Japanese Parliament, “It is difficult to sustain a policy that relies too heavily on issuing debt. As we have seen with the financial confusion in the European Community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone.” Death spiral Japan has been in a deflationary spiral for 20 years. The nation’s housing bust has still not hit bottom. People hold onto money because they know what they want to buy will be cheaper later. Core consumer prices fell 1.0 percent in August, marking 18 consecutive months of decline. And to top it off, they just aren’t making any more Japanese. Check out the population pyramid: As you can see during the “Economic Miracle” period from 1950 to 1990, Japan was youthful, ambitious, and…

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I Think I’m Turning Japanese

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