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> For those saying the Fed is running out of ammunition, study what the Bank of Japan has done. Oh you mean the economy that has been stagnate for 20 years?

by mbesto 7y ago

scarmig 7y ago
If I were a Japanese retail investor in 1990 in his 30s, what would have been the best strategy? Just stay out of domestic markets and focus on areas with potential for growth?
- lazyier 7y ago
  > what would have been the best strategy? Put your money into the USA.
- thedudeabides5 7y ago
  Buy as many levered Japanese Government Bonds (JGBS) as possible! 0.67 Sharpe Ratio from government bonds in local currency from 1990 to 2000.
lazyier 7y ago
Bingo. We have a winner.
heartbeats 7y ago
That's just how it is with democracy. You can either be the politician who didn't really do anything for the economy, or you can be the politician who plunged the country into a recession. Nobody wants to rip off the band-aid, even if it's infected underneath.
blackearl 7y ago
Better than the hyper growth and subsequent pop they went through in the 80s and 90s
WhompingWindows 7y ago
That's probably much more to do with their population pyramid than their monetary policy...they are a rapidly aging, insular society. If your working age population is decreasing, it's going to be nearly impossible to grow your economic output, especially when you turn away all immigrants.
rtkwe 7y ago
Stagnant or not the real question is what would have happened if the bank wasn't holding all those stocks? That is did buying all those stocks/ETFs successfully prop up the economy that would have otherwise gone into a recession or worse or did it cause the stagnation?
- a_tractor 7y ago
  The argument could (and should more often) be made that recessions are sometimes healthy and that propping up failed or stagnant businesses or industries usually only prolongs the suffering. It also locks up resources that could be invested elsewhere in less entrenched but more promising new growth areas. So I would argue that it is likely to cause the stagnation To use an analogy from botany, its like how certain types of plants need periods of dormancy, but its actually possible to create or install a given plant into specific environmental conditions where the inducement of dormancy is prevented, for a time... But overtime, without the time to rest and regenerate, the plant will become incredibly weak. It will stop flowering or producing delicious fruit. It will grow frail and live to only a fraction of its potential age limit. Similar to this are how efforts to reduce the spread of wildfires only ends up with a far more dangerous and uncontrollable situation down the road and the 'debt' of uncleared deadwood piles up. Just a thought.
  - heartbeats 7y ago
    This is a very good and thought-out comment - I don't understand why it was marked as dead.
  - rtkwe 7y ago
    From a purely macroeconomic sense you're probably right but if we zoom in there's huge amounts of pain that don't go away when the economy turns around. People get worse educations because they can't afford to go to college/university or get sick and can't get treatment and wind up with long term health problems. [0] It's a problem that shows up everywhere in trying to discuss and measure how well the economy is doing, the top level numbers keep going up but it doesn't translate to the kind of generational improvements in wages or standards of living we used to see. [0] Admittedly this is more of a problem in places without a national health service like the US.
adrianN 7y ago
GDP per capita doesn't look stagnant: https://tradingeconomics.com/japan/gdp-per-capita https://tradingeconomics.com/japan/gdp-per-capita
- wyxuan 7y ago
  Capita is decreasing thanks to demographic trends, and gdp had flat lined
  - coliveira 7y ago
    The US is also moving into a demographic downturn, thanks to republican policies.
    - throwaway3157 7y ago
      > The US is also moving into a demographic downturn, thanks to republican policies. Please don't post partisan political comments without a source. Edit: I appreciate the downvotes for kindly asking people to follow HackerNews' guidelines
      - Brain_Thief 7y ago
        Since when are sources required for basic observations on reality? Thanks to Republican opposition to providing first-world amenities to U.S. citizens (universal health care access, education access, childcare access, etc.) new generations of Americans are finding it increasingly difficult to start families. The evidence for this is multitudinous and moments away via any search engine...
        toomuchtodo 7y ago
        Fertility rates are equally low in other developed countries that offer universal healthcare, subsidized childcare, etc. https://ourworldindata.org/fertility-rate https://ourworldindata.org/fertility-rate I plugged in Denmark and Portugal, and both show lower fertility rates than the US.

> For those saying the Fed is running out of ammunition, study what the Bank of Japan has done. Oh you mean the economy that has been stagnate for 20 years?

by mbesto 7y ago

> For those saying the Fed is running out of ammunition, study what the Bank of Japan has done. Oh you mean the economy that has been stagnate for 20 years?

scarmig 7y ago

If I were a Japanese retail investor in 1990 in his 30s, what would have been the best strategy? Just stay out of domestic markets and focus on areas with potential for growth?

lazyier 7y ago
> what would have been the best strategy? Put your money into the USA.
thedudeabides5 7y ago
Buy as many levered Japanese Government Bonds (JGBS) as possible! 0.67 Sharpe Ratio from government bonds in local currency from 1990 to 2000.

lazyier 7y ago

Bingo. We have a winner.

heartbeats 7y ago

That's just how it is with democracy. You can either be the politician who didn't really do anything for the economy, or you can be the politician who plunged the country into a recession. Nobody wants to rip off the band-aid, even if it's infected underneath.

blackearl 7y ago

Better than the hyper growth and subsequent pop they went through in the 80s and 90s

WhompingWindows 7y ago

That's probably much more to do with their population pyramid than their monetary policy...they are a rapidly aging, insular society. If your working age population is decreasing, it's going to be nearly impossible to grow your economic output, especially when you turn away all immigrants.

rtkwe 7y ago

Stagnant or not the real question is what would have happened if the bank wasn't holding all those stocks? That is did buying all those stocks/ETFs successfully prop up the economy that would have otherwise gone into a recession or worse or did it cause the stagnation?

a_tractor 7y ago
The argument could (and should more often) be made that recessions are sometimes healthy and that propping up failed or stagnant businesses or industries usually only prolongs the suffering. It also locks up resources that could be invested elsewhere in less entrenched but more promising new growth areas. So I would argue that it is likely to cause the stagnation To use an analogy from botany, its like how certain types of plants need periods of dormancy, but its actually possible to create or install a given plant into specific environmental conditions where the inducement of dormancy is prevented, for a time... But overtime, without the time to rest and regenerate, the plant will become incredibly weak. It will stop flowering or producing delicious fruit. It will grow frail and live to only a fraction of its potential age limit. Similar to this are how efforts to reduce the spread of wildfires only ends up with a far more dangerous and uncontrollable situation down the road and the 'debt' of uncleared deadwood piles up. Just a thought.
- heartbeats 7y ago
  This is a very good and thought-out comment - I don't understand why it was marked as dead.
- rtkwe 7y ago
  From a purely macroeconomic sense you're probably right but if we zoom in there's huge amounts of pain that don't go away when the economy turns around. People get worse educations because they can't afford to go to college/university or get sick and can't get treatment and wind up with long term health problems. [0] It's a problem that shows up everywhere in trying to discuss and measure how well the economy is doing, the top level numbers keep going up but it doesn't translate to the kind of generational improvements in wages or standards of living we used to see. [0] Admittedly this is more of a problem in places without a national health service like the US.

adrianN 7y ago

GDP per capita doesn't look stagnant: https://tradingeconomics.com/japan/gdp-per-capita https://tradingeconomics.com/japan/gdp-per-capita

wyxuan 7y ago
Capita is decreasing thanks to demographic trends, and gdp had flat lined
- coliveira 7y ago
  The US is also moving into a demographic downturn, thanks to republican policies.
  - throwaway3157 7y ago
    > The US is also moving into a demographic downturn, thanks to republican policies. Please don't post partisan political comments without a source. Edit: I appreciate the downvotes for kindly asking people to follow HackerNews' guidelines
    - Brain_Thief 7y ago
      Since when are sources required for basic observations on reality? Thanks to Republican opposition to providing first-world amenities to U.S. citizens (universal health care access, education access, childcare access, etc.) new generations of Americans are finding it increasingly difficult to start families. The evidence for this is multitudinous and moments away via any search engine...
      - toomuchtodo 7y ago
        Fertility rates are equally low in other developed countries that offer universal healthcare, subsidized childcare, etc. https://ourworldindata.org/fertility-rate https://ourworldindata.org/fertility-rate I plugged in Denmark and Portugal, and both show lower fertility rates than the US.