Japan Desperately Printing Money To No Success

[Economy 52,834]

https://www.thebalance.com/japan-s-economy-recession-effect-on-u-s-and-world-3306007

 

When Abe swore to do whatever it took to lift sluggish economic growth after a "lost decade" of stagnation one of the attempts was to flood the economy with stimulus spending. The deficits are huge but the success has been moderate at best

 

Japan's Central Bank is printing a lot of money that it uses to buy Japanese Government bonds, in fact nearly all the borrowed money is printed. It keeps Interest rates low and creates more money in the system. This is called "Quantitative Easing" which the USA also did after the 2008 crisis for a time and Europe is still doing it.

 

Despite exchange currency devaluation in markets and more money in the system the Country continues to be plagued with Deflation.

 

A rapidly shrinking population means demand for most goods and servicesis falling leading to deflation. A huge rise in people nearing retirement age is leading to a lot of saving. So despite more money on the system, because people are hoarding money and not spending it, the country continues in deflation

 

Deflation also makes simply holding on to money and hording it a good investment as it's risk free and gains value while stocks on the otherhand struggle as Corporate earnings don't grow. Lack of investment prevents Capital to be put to use productively in the private sector.

 

Japan's Population is expected to fall by nearly 40 Million in the next 40 years with a lot more retired individuals than working people, people who spend less than working population. No amount of money printing may offset the deflation trap that seems to feed itself.

[Economy 52,834]

A side mention. Unlike just printing money and throwing it in the economy, with money printing by quantitative easing the Central Bank can at a later time remove the money from the system by selling the bonds it bought with printed money and making the money it got back from the bonds disappear into non-existance

 

The US started removing money from the system this way over a year ago as Inflationary pressures rise with improving economy, Japan could do the same if it started getting the opposite problem with too much Inflation

 

However because their debt is so high, the higher interest rates this could cause would be a serious challenge

 

 

[Lord Temptation 11,209]

Blame America. Japan holds the worlds second biggest foreign exchange reserves of USD. If they were to sell it all the US dollar will tank, triggering further panic selling worldwide.

Hence the US is forcing Japan to print more Japanese yen. 

Japan has been stagnant for two decades. At first they called the 1990s the “lost decade” for its abysmal growth but now they are calling the twenty years the “lost score”.

Japan is aging badly, with the highest debt in the world (200% of GDP) so barely hanging by a moment.

[Economy 52,834]

6 minutes ago, Lord Temptation said:

Blame America. Japan holds the worlds second biggest foreign exchange reserves of USD. If they were to sell it all the US dollar will tank, triggering further panic selling worldwide.

Hence the US is forcing Japan to print more Japanese yen. 

Japan has been stagnant for two decades. At first they called the 1990s the “lost decade” for its abysmal growth but now they are calling the twenty years the “lost score”.

Japan is aging badly, with the highest debt in the world (200% of GDP) so barely hanging by a moment.

If it wasn't for super low rates that would of triggered a financial meltdown by now

 

I wonder how long rates can stay below 1% with a debt load so high even with on and off deflation

[Lord Temptation 11,209]

48 minutes ago, Economy said:

If it wasn't for super low rates that would of triggered a financial meltdown by now

 

I wonder how long rates can stay below 1% with a debt load so high even with on and off deflation

But by suppressing rates for so long they will only make the inevitable meltdown even worse. It’s like a bottle of champagne that’s been shaking - albeit very slowly - for 25 years. There is so much built up pressure that this can only end in disaster. They should’ve busted open the bottle a long time ago. This is what happens when you sweep your problems under the rug. They build up until it’s too big to feasibly do anything about. A ripple becomes a tsunami.

[Mindblown 6,744]

NANI!?

[Economy 52,834]

46 minutes ago, Lord Temptation said:

But by suppressing rates for so long they will only make the inevitable meltdown even worse. It’s like a bottle of champagne that’s been shaking - albeit very slowly - for 25 years. There is so much built up pressure that this can only end in disaster. They should’ve busted open the bottle a long time ago. This is what happens when you sweep your problems under the rug. They build up until it’s too big to feasibly do anything about. A ripple becomes a tsunami.

Many Nations are guilty of sweeping problems under rug and kicking can down the road

 

Japan's issues just happen to be extra bad due to exceptionally bad demographics

 

When Japan crashes tho it won't be pretty, the whole world financial system will be shocked including America's which in turn will bring down the world

 

Countries can get their debt to GDP ratio down even without completely eliminating the deficit if they can get their economy to grow faster than the deficit...

 

With a shrinking population and workforce (the decrease is due to accelerate substantially each year) they will need rising productivity per worker just to keep GDP flat...

 

So in their case they NEED surpluses long term to fix their financial issues and I don't know how they can do that when their deficit is already so large and their working base shrinking. 

 

I think Japan is beyond repair unless they found a way to not only accept a lot more immigrants but also successfully integrate them into society so they can be productive shortly after moving there

 

their retirement age also needs to go up several years and productivity needs to go up further

 

[Lord Temptation 11,209]

1 hour ago, Economy said:

Many Nations are guilty of sweeping problems under rug and kicking can down the road

 

Japan's issues just happen to be extra bad due to exceptionally bad demographics

 

When Japan crashes tho it won't be pretty, the whole world financial system will be shocked including America's which in turn will bring down the world

 

Countries can get their debt to GDP ratio down even without completely eliminating the deficit if they can get their economy to grow faster than the deficit...

 

With a shrinking population and workforce (the decrease is due to accelerate substantially each year) they will need rising productivity per worker just to keep GDP flat...

 

So in their case they NEED surpluses long term to fix their financial issues and I don't know how they can do that when their deficit is already so large and their working base shrinking. 

 

I think Japan is beyond repair unless they found a way to not only accept a lot more immigrants but also successfully integrate them into society so they can be productive shortly after moving there

 

their retirement age also needs to go up several years and productivity needs to go up further

 

Productivity wont solve anything. They already do killer overtime. Most Japanese workers commit to going to work early and finishing very late - at least after the boss has gone home.

Increasing immigration won’t work like it does in Germany. Germany has been accepting immigrants since the end of WW2, from poorer parts of Europe like southern Italy, Romania and especially Turkey. Multiculturalism has been part of their culture for generations. Japan’s culture on the other hand has historically been defined by monoculture. Accepting millions of cashed up expats will create so many unseen problems of alienation, racist holistilities and resentment. The youth of Japan will be even worse off, now having to compete with newly arrived Westerners (with impeccable CVs and loads of experience) who the employers will undoubtedly prefer over the “inexperienced” youth.

A few things can happen:

-The Yen can devalue

-Real estate can crash

-The stock market can crash

The worst case scenario? All three happening at the same time.

That’s how bad the older generation of Japanese have let it get. Stockpiling USD instead of passing wealth over to the youth has been their strategy to fight sluggish growth: completely defensive and destructive. It’s only a matter of time.

I can picture riots on the streets...they already have one of the highest rates of suicide. This is gonna get ugly. 

Not to mention what will happen to the rest of the world...

 

[Economy 52,834]

1 hour ago, Lord Temptation said:

Productivity wont solve anything. They already do killer overtime. Most Japanese workers commit to going to work early and finishing very late - at least after the boss has gone home.

Increasing immigration won’t work like it does in Germany. Germany has been accepting immigrants since the end of WW2, from poorer parts of Europe like southern Italy, Romania and especially Turkey. Multiculturalism has been part of their culture for generations. Japan’s culture on the other hand has historically been defined by monoculture. Accepting millions of cashed up expats will create so many unseen problems of alienation, racist holistilities and resentment. The youth of Japan will be even worse off, now having to compete with newly arrived Westerners (with impeccable CVs and loads of experience) who the employers will undoubtedly prefer over the “inexperienced” youth.

A few things can happen:

-The Yen can devalue

-Real estate can crash

-The stock market can crash

The worst case scenario? All three happening at the same time.

That’s how bad the older generation of Japanese have let it get. Stockpiling USD instead of passing wealth over to the youth has been their strategy to fight sluggish growth: completely defensive and destructive. It’s only a matter of time.

I can picture riots on the streets...they already have one of the highest rates of suicide. This is gonna get ugly. 

Not to mention what will happen to the rest of the world...

 

I'm not talking number hours worked I'm talking productivity. That can go up with things like automation increasing output per worker. They can also increase their workforce (or slow shrinkage down) by encouraging more females into workforce as their participation rate is low by Developed World Standards

 

As for immigration monogamy issues, societies can change that's why I said they need to find a way to integrate them. They are hurting themselves if they refuse to adapt

 

Higher immigration, higher female participation rate and higher retirement age can change the size of the workforce by millions over a course of several years.

 

If they can keep their workforce flat to not decline with general population, then if productivity keeps rising, their economy can still grow slowly

 

Their financial issues tho won't be solved by that alone unfortunately

 

At least their debt issue is mostly held by Government. Japanese consumers and private sector have high savings rates and low debt making economy more resilient to reduced income or earnings with an event such as raised taxes or decreased spending in relation to say North America

 

Also most government debt is held domestically so it does not leave the nation when bonds mature which is another advantage. It's worse if the debt is held by foreigners

 

Long story short, they have enough domestic savings and wealth, and have enough room to make reforms that could send them on a path to salvation but I just don't think the people will accept the sacrafice so they won't fix their issues and one day they will crash

[Lord Temptation 11,209]

59 minutes ago, Economy said:

I'm not talking number hours worked I'm talking productivity. That can go up with things like automation increasing output per worker. They can also increase their workforce (or slow shrinkage down) by encouraging more females into workforce as their participation rate is low by Developed World Standards

 

As for immigration monogamy issues, societies can change that's why I said they need to find a way to integrate them. They are hurting themselves if they refuse to adapt

 

Higher immigration, higher female participation rate and higher retirement age can change the size of the workforce by millions over a course of several years.

 

If they can keep their workforce flat to not decline with general population, then if productivity keeps rising, their economy can still grow slowly

 

Their financial issues tho won't be solved by that alone unfortunately

 

At least their debt issue is mostly held by Government. Japanese consumers and private sector have high savings rates and low debt making economy more resilient to reduced income or earnings with an event such as raised taxes or decreased spending in relation to say North America

 

Also most government debt is held domestically so it does not leave the nation when bonds mature which is another advantage. It's worse if the debt is held by foreigners

 

Long story short, they have enough domestic savings and wealth, and have enough room to make reforms that could send them on a path to salvation but I just don't think the people will accept the sacrafice so they won't fix their issues and one day they will crash

Well the recent Turkish lira crisis has hit Japanese investors big time (https://www.ft.com/content/40ad2df2-a1ca-11e8-85da-eeb7a9ce36e4)

Ultimately there are too many factors but above all else modern Japanese culture is proving itself to be a living relict of it’s former imperial self: patriarchal, inhibiting and kamikazesque.

Funny how Japan is always perceived to be such a modern country. All vending machines, robots and doors that open without you needing to touch anything. Yet their laws against LGBT, and treatment of women, high rates of suicide and of course their failing economy speak volumes.

This crisis has been 60 years in the making.

[Economy 52,834]

26 minutes ago, Lord Temptation said:

Well the recent Turkish lira crisis has hit Japanese investors big time (https://www.ft.com/content/40ad2df2-a1ca-11e8-85da-eeb7a9ce36e4)

Ultimately there are too many factors but above all else modern Japanese culture is proving itself to be a living relict of it’s former imperial self: patriarchal, inhibiting and kamikazesque.

Funny how Japan is always perceived to be such a modern country. All vending machines, robots and doors that open without you needing to touch anything. Yet their laws against LGBT, and treatment of women, high rates of suicide and of course their failing economy speak volumes.

This crisis has been 60 years in the making.

I don't disagree with u there

 

Their problems are still technically fixable. But their attitudes will prevent the changes they need

[Chuckles 2,549]

I just love reading these exchanges @Economy @Lord Temptation makes me feel not that ignorant anymore 

[Economy 52,834]

20 hours ago, Chuckles said:

I just love reading these exchanges @Economy @Lord Temptation makes me feel not that ignorant anymore 

How sweet. I have a few users I like to discuss economy with. My top ones are:

 

@Woolfsmck @Luc  and lately @Lord Temptation 

 

A few others less frequently include @PartySick @GagaMonster to name a few

 

GGD is quite economical actually

 

[GypsyBabe 22,836]

I always love reading your threads because I am very uneducated on topics such as these. Thanks @Economy and @Lord Temptation...you have taught me a lot. 

[Rino 5,124]