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Japan in the Grip of Utter Madness

Whom the Gods Would Destroy …
April 4, 2013 | Author Pater Tenebrarum

The idea that 'deflation is bad' has been reinforced by decades of Keynesian propaganda, but that constant repetition doesn't make it any more true. Of course, for those who are sitting closest to the printing press of the central banks, inflation is an advantage. Everybody else however gets shafted. And so Haruhiko Kuroda has apparently decided it would be a good idea to shaft the vast bulk of the population of Japan.

Inflation is always a bad idea, but it is an even worse idea in Japan. The country is aging rapidly and has practically no major raw materials resources except fish and rice. It must therefore import all major commodities, like crude oil, natural gas, iron ore, copper…you name it. By weakening the Japanese currency, the 90% of its economy that are not in the export business have just seen their import costs jump by 20% or more. Those in the export business are experiencing a one-off sugar high that will soon dissipate. Eventually their input costs will have caught up and their margins won't be any better than they were before. In fact, it is a very good bet they will be worse, as the current weakness in the global economy probably entices exporters to cut prices now that the exchange rate appears 'favorable' to them.

The growing number of Japanese retirees who depend on fixed income will see the buying power of their savings rapidly erode. What might have been a fairly secure retirement could well become a nightmare henceforth.

Japan is a society in demographic decline. It should be blindingly obvious that a policy of inflation is the by far worst thing that can happen to it. One must therefore ask: what is the government's true motive? It can only be a misguided plan to 'inflate away' its vast debt. However, that will actually require hyperinflation. Nothing can be gained by merely opting for 'mild' inflation, as the cost of servicing the debt load would explode and so throw a major spanner into the works. So we are left to ask: is that that they want? Has the Japanese government embarked on a policy of default via hyperinflation?


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little off topic but related to article

Rice & Fish are both set to crash from TPP (trans-pacific partership). My in-laws work in the Japanese Gov and said Obama has been putting the screw on Japan to sign. Anyway, it will zero out their 777.7% rice tariff!


last chart shows 84:1 jumping to 96:1
expand the chart it would show 125:1 and even 360:1
their mortgages have been 0.9-2.9% for 20+ years.
We work to borrow and spend. Japanese work because their culture says they must work. They're national socialists but don't have huge safety nets. Homeless sleep on the same sidewalks they sweep for beer and food. Healthcare is super cheap because everyone is charged the same amount and everyone pays.
I'm pretty sure they could have zero tax and every year print all the money Gov needs without crashing the yen.

It is not always as simple as you think

if we look at mixed economy of corporatism. When you start interfereing into economy, it is not easy to stop. The whole system is currently micro-managed in EU, USA, and Japan. So in order to apply free-market concept, one needs to either gradually reverse the trend or abraptly go into cold turky. Either of the choices does not do good to any politician who wants to be re-elected for the second term.

Deflation, in a free society, will also result in reduction of nominal wages (not purchasing power.) That is a "no-no" for trade unions phychic and long-term lending/mortgage schemas.

I live here, and as far as I can tell,

what most Japanese are in the grip of is utter cluelessness about
where this is all headed.

Nothing was ever liable to change here until the whole
thing collapsed anyway. Of course the real power
elite operates mostly behind the scenes and most
likely would like to get back to a system where the elite
can just rule over the peasants directly without having to go
through democratic pretenses. Serfs get uppity and
you just lop off a few heads

Hard to say if they can pull it off or how things will play out when
the whole economy melts down.

It's not really like Japan has no resources, though. They
still have an industrial base, especially in small scale specialty
manufacturing and they have a lot of water, timber and
underutilized farmland - all things that China is short of.

But they import a huge percentage of their food, all their oil
and gas, most clothing and mass produced daily household
type stuff and are used to being able to do that pretty affordably.

Problem is, yen becomes worthless and the price of all that stuff
is going to go through the roof... talk about reality checks, Japan
is in for a major one.

jrd3820's picture

Thanks for the input

From the source. I am moving to China in August and have been paying attention to what is going on over in that part of the world for a little bit now before my big move.

It's good to hear they have some resources, but you are right a huge reality check is headed that way.

Thanks again for your input. Good luck over there with the coming chaos.

Good luck with the

China move - it's bound to be educational.

I'm sure there's going to be plenty of chaos to go around...


Is their only hope imo. Otherwise they will be gobbled up by the Chinese.

Either that or go to war with China and hope they get lots of support from abroad ie India, EU, etc

Looking forward to the reports. Maybe they can join the EU/nato :)

Australia should be purchased by the Chinese in 10 years so this option is also available ;)


Incredible, I think. Japan has massive debt...

yet they are also the second-largest holder of U.S. debt.

Why not just sell our debt to pay their debt?

Probably because doing so would tank the U.S. economy, hurting Japan even worse than what they are doing now.

Chris Indeedski!

Daily Paul cured my abibliophobia.

Why not just sell our debt to pay their debt?

True it would tank our economy AND I'm sure Japan has been "encouraged" by US Foreign policy not to even THINK about that!

The US is also in "demographic decline."

As you probably already know.

Keynesianism is just a front.

Keynesianism is just a front. It allows policy makers to claim that they were misguided or mistaken, when the truth is that they are thieves, plundering the wealth of millions. Gold, silver and lead are the only salvation.

Excellent article. The comment section is educational also.

Thanks for posting.

jrd3820's picture

As SteveMT pointed out below

As goes Japan, goes the Eurozone, then it's our turn. Sound like fun?

Japan is Dying

The "money changers" are just getting a little head start robbing the grave.

πολλα γαρ πταιομεν απαντες ει τις εν λογω ου πταιει ουτος τελειος ανηρ δυνατος χαλιναγωγησαι και ολον το σωμα

SteveMT's picture

Japan is also doing what Krugman wants us to do.

That is print even more money. We are printing $85/month. Japan will now start printing $200B/month.

It is a race down to de-basement! Who will win?

jrd3820's picture


And they are calling it "shock and awe." I imagine it will be quite shocking, but I don't know if many people will be in awe of the results.

SteveMT's picture

Japan bond market just went KaBoom! Circuit breakers were needed

Japan is following the lead of its Big Brother, the U.S. They forgot that we have the reserve currency. They don't. This house of fiat cards is looking shakier everyday. Europe is next to go, then it will be our turn. Japan also needs a PPT! Thanks for posting this story.

Is It Beginning? Biggest JGB Price Collapse In Over 10 Years Triggers TSE Circuit Breakers

The move from 32bps to 65bps triggered circuit breakers on the Tokyo Stock Exchange in JGB Futures trading as JGB prices plunged by their largest amount since September 2002.