3 ms·
>But the growth problems of Japan is largely an illusion and myth caused by population decline. The piece that many miss when discussing Japan's high quality o
by ddeck 11y ago
>But the growth problems of Japan is largely an illusion and myth caused by population decline.
The piece that many miss when discussing Japan's high quality of life despite lack of growth is that in order to maintain 0% growth over the last 20 years, the central government had to borrow and spend nearly 10% of GDP every single year.
- jahnu 11y agoThey borrowed it mostly from themselves though which makes it more complicated and much less of a problem than it might at first appear.
- ddeck 11y agoI doubt the average Japanese saver would see it that way. I agree, we're not talking about an external default, but monetization is still likely to severely impact the wealth of the middle class.
- toomuchtodo 11y agoCompound interest isn't a physical system law though, its a human law. Just because it has worked previously because you could continue to extract productivity from labor does not mean that rule will continue. What if capital loses its value and no longer earns interest? You can't say its not happening, when central banks are charging interest on capital.
- ddeck 11y agoI'm not entirely sure what you're referring to, but to clarify, I was discussing the potential impact of sustained deficit monetization on Japan's middle class savers via its effects on the monetary base and inflation.
- toomuchtodo 11y agoMy understanding of your comment was you pointing out the average Japanese saver would be upset about their savings rate being non-existent due to the debt owed to them being internal (and therefore, dependent on central bank monetary policy). My comment insinuated that Japanese savers may have no other options other than an insignificant savings rate due to internal monetary policy and a bleak worldwide investing landscape. I should've expounded! My apologies!
- AnimalMuppet 11y agoMonetization means inflation, right? That doesn't seem to be happening in Japan. In fact, it's almost the opposite of negative interest rates.