Wealth Wire
The Future of America is Japan: Stagnation
Japan's economy has stagnated for two decades despite the global economy experiencing one of its greatest economic booms ever. To get a sense of the stagnation, let's look at some charts, courtesy of frequent contributor B.C.
It's difficult to maintain widespread prosperity if the percentage of the populace powering the economy declines. Here is a chart of the employment-population ratio in Japan and the U.S.
B.C.'s comment: The US is 12 years behind the Japanese peak Baby Boomer curve (1947-49 and 1956-61). Beginning next year, the peak demographic drag effects begin in earnest for those peak Boomers turning age 62-65 en masse. With US fertility rate falling below replacement at 1.9, we will not experience a reacceleration of the employment-population ratio.
Despite 23 years of unprecedented stimulus and deficit spending, Japan's consumer price index (CPI) is at 1994 levels. Japan's stock market and real estate bubbles peaked between 1989 and 1991. CPI rose smartly in the post-bubble decline and then leveled off, rising during the tech/dot-com bubble of the late 1990s and the global commodity bubble of 2008. But despite these temporary (and modest) spikes, adjusted CPI is back to 1994 levels. So much for inflating away one's debts.
Japan's gross domestic product (GDP) has oscillated around the zero line for 20 years. Japan was in effect bailed out by China's massive stimulus spending after the 2008 global financial meltdown, but now that China's growth and stimulus are both slowing, saviors of Japan's export-dependent GDP are nowhere in sight.
Japan has relied on government deficit spending to prop up its economy and GDP.Deficit spending means borrowing money via the bond market and squandering it on sclerotic fiefdoms, entrenched cartels and bridges to nowhere (the construction industry cartel).
Subtract government spending from GDP and we get a snapshot of the private-sector economy. The private-sector GDP topped in 2007, and has not recovered that peak.
Yesterday we covered Japan's "fiscal cliff," as tax revenues don't even cover interest on the national debt and Social Security. ( The Future of America Is Japan: Runaway Deficits, Runaway Debts)
Japan continues to avoid fiscal or financial crisis, and perhaps it can do so for decades to come. But we should note that Japan has had the incredible, once-in-a-lifetime tailwind of a global boom for the past 23 years. That has enabled Japan, and all the other developed economies, the means to avoid facing their structural and demographic problems.
If Japan's economy has stagnated during a global boom, what will it do during a global bust? How will it fare as demographic forces reduce its workforce while increasing the number of retirees depending on government spending? Can a nation borrow its way to prosperity while its tax base erodes and its Central State expenses skyrocket?
Japan's stable stagnation will continue in a linear fashion--until it doesn't.
*Post courtesy of Charles Hugh Smith at Of Two Minds.
+4
Add a Comment (Pro Members Only)
More like this...
Osaka Mayor: "Japan Needs a Dictator"Toru Hashimoto gets voter attention in a rather unusual manner: advocating the need for a dictator...
While All Eyes Are on Europe, Japan Circles a Black Hole
While all eyes are on the absurdist tragicomedy playing out in Europe, Japan is quietly circling a financial black hole as its export economy is destroyed by its strong currency and the global recession.
Japan is Buying Up the World
Watch out China, Japanese companies have been buying overseas assets at a frenzied pace...
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/gold/t24_au_en_usoz_2.gif)
![[Most Recent Quotes from www.kitco.com]](http://www.kitconet.com/charts/metals/silver/t24_ag_en_usoz_2.gif)
Ron Paul: If Gold Isn't Money, Why Are Central Banks Buying It Up? +131
Ron Paul's statement after the Bernanke hearing exposes how deeply the Fed has damaged our economy and why gold is still money.
The Sequester Explained in One Ridiculous Chart +70
These are catastrophic cuts? Think again...
Gun Control, Ron Paul Style +44
While I oppose most gun control proposals, there is one group of Americans I do believe should be disarmed...
11 Economic Crashes Happening RIGHT NOW +35
In many ways, all of this is extremely reminiscent of 2008...
Jim Rogers: 'Run for the Hills', Why Investors Should be Worried +33
"If you're going to listen to government, you're going to go bankrupt very quickly," says Jim Rogers.
Ron Paul's statement after the Bernanke hearing exposes how deeply the Fed has damaged our economy and why gold is still money.
The Sequester Explained in One Ridiculous Chart +70
These are catastrophic cuts? Think again...
Gun Control, Ron Paul Style +44
While I oppose most gun control proposals, there is one group of Americans I do believe should be disarmed...
11 Economic Crashes Happening RIGHT NOW +35
In many ways, all of this is extremely reminiscent of 2008...
Jim Rogers: 'Run for the Hills', Why Investors Should be Worried +33
"If you're going to listen to government, you're going to go bankrupt very quickly," says Jim Rogers.
The Sequester Explained in One Ridiculous Chart
These are catastrophic cuts? Think again...
Ron Paul: If Gold Isn't Money, Why Are Central Banks Buying It Up?
Ron Paul's statement after the Bernanke hearing exposes how deeply the Fed has damaged our economy and why gold is still money.
11 Economic Crashes Happening RIGHT NOW
In many ways, all of this is extremely reminiscent of 2008...
Eric Sprott: Central Bankers Are Gaming Gold
Why Billionaire Eric Sprott favors gold, platinum, palladium and especially silver, over the near and long term.
What's Going On with Silver?
Investors continue to buy silver coins as fast as they can be pressed. Dealers are responding by boosting their premiums on silver coins. April broke a record, with over 4 million ounces sold... and yet silver prices themselves are languishing.
These are catastrophic cuts? Think again...
Ron Paul: If Gold Isn't Money, Why Are Central Banks Buying It Up?
Ron Paul's statement after the Bernanke hearing exposes how deeply the Fed has damaged our economy and why gold is still money.
11 Economic Crashes Happening RIGHT NOW
In many ways, all of this is extremely reminiscent of 2008...
Eric Sprott: Central Bankers Are Gaming Gold
Why Billionaire Eric Sprott favors gold, platinum, palladium and especially silver, over the near and long term.
What's Going On with Silver?
Investors continue to buy silver coins as fast as they can be pressed. Dealers are responding by boosting their premiums on silver coins. April broke a record, with over 4 million ounces sold... and yet silver prices themselves are languishing.
Silver's Bullish Cup Formation
This simple principle provides an enormous opportunity to those who are willing to buy physical silver and have the patience to hold on to it no matter how volatile the price swings.
Warren Hits Back Against 'Too Big to Jail' Banks
Elizabeth Warren demands limits on how much big banks can get away with before facing legal action...
Big Banks Bouncing Foreclosure Settlement Checks
Two years after a $8.5 billion foreclosure settlement, patient recipients are outraged to discover they can't even cash those checks...
Wal-Mart Warns Of Economic Disaster Are You Prepared?
If you want to understand what's going on in the world, don't look at Government data... focus on corporate revenues instead.
Happy Sequester Day!
Sequester day is upon us... yet Obama and lawmakers are just NOW -- right now -- beginning to try to hash out a deal regarding the looming $85 billion budget cuts.
This simple principle provides an enormous opportunity to those who are willing to buy physical silver and have the patience to hold on to it no matter how volatile the price swings.
Warren Hits Back Against 'Too Big to Jail' Banks
Elizabeth Warren demands limits on how much big banks can get away with before facing legal action...
Big Banks Bouncing Foreclosure Settlement Checks
Two years after a $8.5 billion foreclosure settlement, patient recipients are outraged to discover they can't even cash those checks...
Wal-Mart Warns Of Economic Disaster Are You Prepared?
If you want to understand what's going on in the world, don't look at Government data... focus on corporate revenues instead.
Happy Sequester Day!
Sequester day is upon us... yet Obama and lawmakers are just NOW -- right now -- beginning to try to hash out a deal regarding the looming $85 billion budget cuts.
Blog Roll
Ahead of the Herd
Before It's News
Bullion Bulls Canada
Carpe Diem
Coyote Blog
Commodity HQ
Dollar Vigilante
Dragonfly Capital
Dr. Housing Bubble
Economic Collapse Blog
Energy and Capital
Grizzly Rock Capital
Gold Bullion Vault
Investing Answers
Jesse's Cafe Americain
Ludwig von Mises Institute
Mad Hedge Fund Trader
Market Anthropology
Miller's Genuine Draft
Mish's Global Economic Trends
New Trader U
Of Two Minds
Oil Price
Palisades Hudson
Peak Prosperity
Prospecting Journal
The Road to Roota
Short Takes
SHTFPlan
Street Authority
Testosterone Pit
The Altucher Confidential
The Money Illusion
The Technical Take
The Real Asset
Wall Street Oasis
Wealth Daily
Wyatt Research
Zero Hedge