If Japan's economy has stagnated during a global boom, what will it do during a global bust?
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.
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)
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We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.
The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.
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