Japan: The Land That Forgot Time

In Japan, incumbent prime minister Shinzō Abe has won a new super majority in parliament.

And you know what that means?

More laughs.

Dumbbell policies

Yes, the whole world is doubling down on dumbbell policies that don’t work.

(At least, they don’t work for creating honest wealth. They work perfectly well for a predatory global elite, whose win-lose deals slow growth and transfer wealth from the people who earn it to themselves.)

In the US, the old gods — balanced budgets and small government — are dead.

In the latest news, ‘The Donald’ has been adding to US debt at the rate of $2 billion per day, even faster than Obama…and in his zeal to pass a tax cut, has chased away the conservatives’ last ghost of fiscal restraint.

Yesterday’s presidential tweet said ‘NO’ to their hope of paying for the tax cuts by tightening up on the 401(k) ‘loophole’.

In Europe, ‘Super’ Mario Draghi, the president of the European Central Bank, continues to do ‘whatever it takes’ to support the Old World’s new fantasy-finance regime…where Europe’s riskiest company bonds yield less than the safest credit on earth, 10-year US Treasuries.

And now, in Japan, Mr Abe says he will continue the super-duper policies that have produced such a success so far.

Broken arrow

Abe came to office five years ago promising to get the Japanese economy rolling. He had ‘three arrows’, he said:

  1. Monetary policy would be super loose.
  2. Fiscal policy would be inclined to super large deficits.
  3. Structural reforms would correct the problems created by previous super government programs.


The plan in Japan, as elsewhere, was the same old formula: create fake money…lend it at super-low rates…drive up inflation…and incite the public to spend and invest.

The whole idea is preposterous. What dopey jackass first came up with the idea that you could improve a market economy by feeding it fake money?

Can you make a horse run faster by giving it fake oats?

Can you get more mileage out of your car by diluting the gas with water?

Can you clean out your garage by pretending to work on a phony Saturday?

The real world has real challenges and real limits. Flesh and blood. Energy. Time.

An economy is a real thing…with real things in it…governed by universal laws. Time, for example; you can’t trick it.

And you can’t create more of it, either. Time passes. Assets wear out. People get older. They die.

Interest rates connect time, money, and the real economy. At 10% interest, you expect to make back the capital you lend within 10 years. But at 1%, it will take 100 years to make the lender whole.

The Bank of Japan’s target lending rate is MINUS 0.1%.

At that rate, you can wait until Hell freezes over; you’ll never get your money back. A less-than-zero interest rate implies that time goes backward…the future never comes…and capitalism goes into reverse.

Yes, Japan is in fantasyland for old people. The government has denied their main enemy: time. And if time can be stopped…we never have to die. 

Government rathole

Did Abe’s three arrows hit their targets?

Of course not.

Not even close. He aimed for inflation of 2%. (Why do all the world’s central planners think you need 2% inflation? Why not 3%, just to be different?)

Instead, Japan’s consumer prices rise at a rate of less than 1% a year…just as they did five years ago.

Mr Abe aimed for 3% annual GDP growth. But the Japanese economy grows at about 1.5%…just as it did before he took over.

All his arrows really did was turn Japan into the most indebted old-age home in the world, with government debt at 239% of GDP.

As for death, it remains a problem, too. Already, one-quarter of the Japanese population is over 65. And they’re getting older every day. And dying.

In 2014, for example, 1,200,000 Japanese died. But only 1,000,000 were born. The typical woman in Japan now has 1.3 children — not even close to replacement rate (two children or more).

The Japanese are disappearing. Which raises some basic questions:

Who’s going to buy Japanese houses? Who’s going to buy Japanese stocks and bonds? And who’s going to pay the taxes needed to support a country of old people?

And what’s going to stop a panic when people finally realise that their bonds are worthless and their savings went down a government rathole?

And that Japanese feds can’t honour their promises to their old people?

Instead of facing up to reality, Abe and his economists pull out the fake-money punchbowl.

Party on!


Bill Bonner,

For Markets & Money

Since founding Agora Inc. in 1979, Bill Bonner has found success and garnered camaraderie in numerous communities and industries. A man of many talents, his entrepreneurial savvy, unique writings, philanthropic undertakings, and preservationist activities have all been recognized and awarded by some of America’s most respected authorities. Along with Addison Wiggin, his friend and colleague, Bill has written two New York Times best-selling books, Financial Reckoning Day and Empire of Debt. Both works have been critically acclaimed internationally. With political journalist Lila Rajiva, he wrote his third New York Times best-selling book, Mobs, Messiahs and Markets, which offers concrete advice on how to avoid the public spectacle of modern finance. Since 1999, Bill has been a daily contributor and the driving force behind Markets and Money.

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