Japan's Debt, Inflation, and Energy Bind
The Tradeoffs Facing Japan's Economy
Japan's economy faces a triple bind: soaring debt, rising inflation, and an energy crisis worsened by the Iran War. Prime Minister Takaichi's growth agenda clashes with consumer pain, as food prices rise and approval ratings fall. The government weighs raising interest rates to curb inflation against the risk of hurting consumers and bond markets, while considering massive investments in defense, nuclear power, and technology to boost exports and outgrow debt. A recent US-Japan intervention to support the yen buys time, but tough choices loom.
This will not be an easy period for the country—and doubly so for its government—but promises to set Japan up for an exciting long-term growth trajectory.
- tonymet
economics < productivity < demographics (primarily ) & technology (secondarily)
Every country in the world is trying to solve the same problem: how to preserve economic growth despite a shrinking population and declining productivity.
The USA and western Europe chose to resolve it with immigration.
Japan & (some of) Eastern Europe chose to resolve it without immigration.
Japan is the economic canary because they had a 15+ year head start, and had the best discipline with immigration control. Their economic indicators are trailing-signals of the demographic freefall. Debt can only patch it for so long.
- recursivedoubts
I think the US helped Japan so that they wouldn't start dumping US treasuries to support the yen, making our already bad situation worse. I don't expect it to work as we are sitting down to a banquet of consequences.
- tsunamifury
It seems we are not able to talk about the economic effects of this era of capitalism as almost our entire monetary and economic theory seems to be defined by two events and institutions compeltely lack the ability to see anything else
1) The oil crisis of the 70s, inflation of getting off the gold standard
2) The invisible productivity print and GDP of the 90s due to the internet
These two solutions seem to be the only thing our current wonks can imagine as a solve for current crisis that are entirely different and need to be analyzed entirely on their own terms
For example
1) America printed 70% more currency over covid yet somehow did not experience anywhere near the global devaluation it should have (even if we experienced INTERNAL inflation) resulting in an extremely "monaco like" economy where everything is now hyper expensive and economy seems to be 'melting up.'
2) Nations like japan would dont run the world currency are experiencing MASSIVE devaluation while doing the same things, trapping their citizens inside their nation and cutting them off from global trade and weakening their borrowing position
These are net new scenarios the FED refuses to have a new playbook to deal with, and its an impressive illustration of our so called 'experts' complete lack of knowledge of what to do if it wasn't already written down in a book.
- alephnerd
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