restlessfox5 said:Man, when I was a kid, I remember hearing nonstop about how Japan was this unstoppable economic powerhouse. I clearly recall watching all those 80s and early 90s American movies and shows where everyone seemed terrified that Japan was gonna totally outpace the US economy. Then, just like that—poof—that whole vibe basically evaporated.
Plus, I've come across that "lost decade" thing mentioned a few times regarding Japan's economy.
Nowadays, when people talk about massive economic surges, it’s always about China or India, but nobody really mentions Japan anymore. So, if anyone actually knows what went down there, fill me in.
Back in the 80s, the central bank in Japan implemented massive monetary expansion—essentially keeping interest rates low and printing money—to prevent the yen from getting too strong against the dollar and to artificially boost their exports without much actual necessity.
As with any period of monetary expansion, this created asset bubbles. Stock prices and real estate values shot up to unrealistic levels, and companies took on way too much debt. These bubbles were bound to burst sooner or later, which is exactly what happened in the early 1990s.
Now, you might think the government would have learned its lesson and moved on, but that wasn't quite the case.
Following the classic Keynesian tradition of heavy state intervention, they decided to "fix" the economy through massive stimulus packages.
To put it simply, it resulted in a mountain of useless government spending (there's even a joke about how much of the Japanese coastline has been covered in concrete since then), enormous national debt, artificially propping up failing banks and corporations, and essentially gambling on a recovery that wouldn't come.
(It reminds me somewhat of what Obama is doing currently...)
So yes, we had the lost decade in the 90s, and things aren't looking much better now.
When you factor in a rapidly aging population on top of everything else, well, it's just tough luck. ☕