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America by comparison [0]. Japan has a declining population, the pension scheme is considered to be running on fumes by most, and now the stock market is proppe

America by comparison [0]. Japan has a declining population, the pension scheme is considered to be running on fumes by most, and now the stock market is propped up by government itself. https://www.businessinsider.com/who-actually-owns-the-stock-market-2016-5 https://www.businessinsider.com/who-actually-owns-the-stock-...

lotsofpulp 7y ago
Same situation in US in my opinion. It’s crazy to not be all in on equity index funds, since everyone is invested in them via 401k and pension funds, of course the government is going to do whatever it takes to prop up the value.
- deleted 7y ago
  [deleted]
- doctorpangloss 7y ago
  You're getting it backwards my dude. Baby boomers turned 65 this year, the peak retirement there will ever be in the history of the world. Individuals selling small amounts of stock, each for slightly below midpoint, actually has a much larger negative effect on prices than one large sale at slightly below midpoint does. Think about what the order book looks like over time. People expect a sudden recession. The ride to the bottom is going to be a-historically long and slow, as retirement accounts unwind contractually slowly, and big institutional investors wait out lower capital gains taxes.
  - scotradamus 7y ago
    This is interesting, and hadn't thought about the cashing out of index funds with age. Given that idea though, the money IS being spent, put back into the economy.
  - lotsofpulp 7y ago
    I think the government will be incentivizing stock ownership much more via state sponsored 401k, or HSAs, or 529, etc. Even now, we're only at just above 50% of population having a stake in public companies: https://www.chicagotribune.com/business/ct-americans-dow-22000-investing-20170803-story.html https://www.chicagotribune.com/business/ct-americans-dow-220... Also, number of public companies is decreasing, with the bigger players getting bigger and bigger. And finally, I would expect even more international funds to flow in to the large conglomerates as their efficiencies of scale take over.
- basetop 7y ago
  The government is in a tough spot. The largest retirement asset for most people is their homes. The second largest is their 401k. With baby boomers starting to retire in droves, the government has no choice but to keep housing prices and stock prices inflated so that retirees can cash out. If housing or stock prices decline for an extended period, it would be politically and societally destabilizing.
  - ezoe 7y ago
    >The largest retirement asset for most people is their homes. That is if they actually own their homes. In Japan, large potion of current working generation can't afford to own a land and house. So the real estate is not going to be the largest retirement asset for the most people in Japan. That and the fact Japanese population is shrinking so there will be less demand for it, I'm wondering the real estate value will continue to raise like it currently is.
    - rangibaby 7y ago
      > That and the fact Japanese population is shrinking so there will be less demand for it, I'm wondering the real estate value will continue to raise like it currently is. Japan's population is shrinking as a whole but still growing in cities (especially Tokyo). You can already get a house in the countryside for free : https://inakanoseikatsu.com/category/不動産物件/無償譲渡（0円）の空き家物件/ https://inakanoseikatsu.com/category/不動産物件/無償譲渡（0円）の空き家物件/
      - User23 7y ago
        Is this offer open to Americans or only Japanese citizens?
        basementcat 7y ago
        Not really free and there are strings attached. But a great deal if you qualify and really want to live there. https://www.rethinktokyo.com/free-houses-japan-countryside https://www.rethinktokyo.com/free-houses-japan-countryside
basetop 7y ago
We are not in as bad a shape as japan, but you are right. The stock markets around the world have been propped up by central banks since the financial crisis. The FED stepped in with a few trillion in QE to save wall street. The ECB implemented their own QE. BoJ also in japan. And even china has stepped in to prop up it's stock market although their stock market is much younger, smaller and less systematically important. And so the world goes round and round. Historically, printing money and artificially propping up assets doesn't end well, but if everyone is doing it, maybe it'll work out?
- martinald 7y ago
  I did read that if you stripped out demographics, Japan was one of the best performing economies on GDP growth per (working) capita and productivity. I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes. If my theory is right, in 10-15 years after the baby boom generation demography will level out again and we will be back to higher growth.
  - User23 7y ago
    Japan will be Japan long after the United States has splintered apart due to its own internal contradictions. The idea that GDP growth is the most important metric for the health of a society is not even wrong.
  - jk27277 7y ago
    ”I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes.” You are a quick thinker my friend. If you figure out how capitalism can work on a shrinking or even steady state economy you will get the Nobel price. No kidding.
    - green7ea 7y ago
      Doesn't the need for continuous growth come from the interest charged on newly created money? We always have to grow to be able to afford the ever growing amount of money we owe. With a non debt based currency, capitalism could do just fine in a shrinking economy no?

lotsofpulp 7y ago

Same situation in US in my opinion. It’s crazy to not be all in on equity index funds, since everyone is invested in them via 401k and pension funds, of course the government is going to do whatever it takes to prop up the value.

deleted 7y ago
[deleted]
doctorpangloss 7y ago
You're getting it backwards my dude. Baby boomers turned 65 this year, the peak retirement there will ever be in the history of the world. Individuals selling small amounts of stock, each for slightly below midpoint, actually has a much larger negative effect on prices than one large sale at slightly below midpoint does. Think about what the order book looks like over time. People expect a sudden recession. The ride to the bottom is going to be a-historically long and slow, as retirement accounts unwind contractually slowly, and big institutional investors wait out lower capital gains taxes.
- scotradamus 7y ago
  This is interesting, and hadn't thought about the cashing out of index funds with age. Given that idea though, the money IS being spent, put back into the economy.
- lotsofpulp 7y ago
  I think the government will be incentivizing stock ownership much more via state sponsored 401k, or HSAs, or 529, etc. Even now, we're only at just above 50% of population having a stake in public companies: https://www.chicagotribune.com/business/ct-americans-dow-22000-investing-20170803-story.html https://www.chicagotribune.com/business/ct-americans-dow-220... Also, number of public companies is decreasing, with the bigger players getting bigger and bigger. And finally, I would expect even more international funds to flow in to the large conglomerates as their efficiencies of scale take over.
basetop 7y ago
The government is in a tough spot. The largest retirement asset for most people is their homes. The second largest is their 401k. With baby boomers starting to retire in droves, the government has no choice but to keep housing prices and stock prices inflated so that retirees can cash out. If housing or stock prices decline for an extended period, it would be politically and societally destabilizing.
- ezoe 7y ago
  >The largest retirement asset for most people is their homes. That is if they actually own their homes. In Japan, large potion of current working generation can't afford to own a land and house. So the real estate is not going to be the largest retirement asset for the most people in Japan. That and the fact Japanese population is shrinking so there will be less demand for it, I'm wondering the real estate value will continue to raise like it currently is.
  - rangibaby 7y ago
    > That and the fact Japanese population is shrinking so there will be less demand for it, I'm wondering the real estate value will continue to raise like it currently is. Japan's population is shrinking as a whole but still growing in cities (especially Tokyo). You can already get a house in the countryside for free : https://inakanoseikatsu.com/category/不動産物件/無償譲渡（0円）の空き家物件/ https://inakanoseikatsu.com/category/不動産物件/無償譲渡（0円）の空き家物件/
    - User23 7y ago
      Is this offer open to Americans or only Japanese citizens?
      - basementcat 7y ago
        Not really free and there are strings attached. But a great deal if you qualify and really want to live there. https://www.rethinktokyo.com/free-houses-japan-countryside https://www.rethinktokyo.com/free-houses-japan-countryside

basetop 7y ago

We are not in as bad a shape as japan, but you are right. The stock markets around the world have been propped up by central banks since the financial crisis. The FED stepped in with a few trillion in QE to save wall street. The ECB implemented their own QE. BoJ also in japan. And even china has stepped in to prop up it's stock market although their stock market is much younger, smaller and less systematically important. And so the world goes round and round. Historically, printing money and artificially propping up assets doesn't end well, but if everyone is doing it, maybe it'll work out?

martinald 7y ago
I did read that if you stripped out demographics, Japan was one of the best performing economies on GDP growth per (working) capita and productivity. I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes. If my theory is right, in 10-15 years after the baby boom generation demography will level out again and we will be back to higher growth.
- User23 7y ago
  Japan will be Japan long after the United States has splintered apart due to its own internal contradictions. The idea that GDP growth is the most important metric for the health of a society is not even wrong.
- jk27277 7y ago
  ”I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes.” You are a quick thinker my friend. If you figure out how capitalism can work on a shrinking or even steady state economy you will get the Nobel price. No kidding.
  - green7ea 7y ago
    Doesn't the need for continuous growth come from the interest charged on newly created money? We always have to grow to be able to afford the ever growing amount of money we owe. With a non debt based currency, capitalism could do just fine in a shrinking economy no?