The Secret 1985 Deal That Destroyed Japan Is Being Repeated Right Now!
In 1985, five men gathered at the Plaza Hotel in New York and signed an agreement that would quietly dismantle the world’s second-largest economy. Japan never fully recovered. Now, forty years later, the same structural forces, the same overvalued dollar, the same trade deficit logic, and the same political pressure are back — and Washington is reaching for the same playbook. This is the full story of the Plaza Accord, the bubble it created, the Lost Decades that followed, and why the Mar-a-Lago Accord being discussed inside the Trump administration today is more than just a historical echo. From the Bank of Japan’s catastrophic rate cuts to the $38,000 Nikkei peak that preceded a 30-year stagnation, to China’s deliberate refusal to become the next Japan — this is one of the most important economic stories of our time, and almost nobody is telling it in full.
#PlazaAccord #MarALagoAccord #Japan #LostDecade #Economics #GlobalFinance #TradeWar #ChinaVsUSA #DollarDevaluation #Yen #Nikkei #AssetBubble #TrumpEconomy #MacroFinance #FinancialHistory #ElitePower #CurrencyWar #Rockefeller #GeopoliticsExplained #MoneyAndPower
41 Comments
As revenge for the Plaza squeeze, Japan leaked 9 axis submarine propeller cnc milling machines to Moscow
Optimistic. China is far too dependent on US markets and the US dollar. There is no obvious way to change that fact – which is why China remains a passive observer while the world burns.
You made a conceptual mistake at the beginning of Wikipedia. Japan was and still is occupied as country. The United States of America would have never allowed a country that is within its fear of influence and is occupied to become a new superpower.
Also, Japanese elites were not tricked into this deal. They did it willingly, and the secrecy of the deal means that, first, Japan, was not considered on the equal terms as other western European countries who are part of the deal. we should keep in mind that Japan is the world power was a very young country and was on the equal terms with the western Powers only after the end of Russo-Japanese war. In other words if the should have been chosen as a lamb. It would have been Japan rather than Western European countries. Doesn’t mean that it’s gonna be like this forever. Current situation in the world and geopolitics is an example that Europe is considered a sacrificial lamb now and also as the competitor.
Second, Japanese elite were allegedly interested in benefiting from the situation and especially when prices were skyrocketing in the country.
In Japan, people are very depressed about their future. In popular culture on may notice nostalgia of lost future.
Hopefully, Chinese elites (not all) understand the trap, and understand that the West should never be fully trusted. Situational alliances are possible (as between EU and China – consumption market, cheap goods). I want to end my comment on the positive note. But the world is volatile and will be even more dangerous. Japan may have a second change despite demography. It had been in much situations. However, it needs to regain sovereignty. The issue is that after, it will enter a long period of regional struggle.
What did happen to Japan?
In the 1980s, it looked as if Japan would take over the world, but bad financial practices have seen their economy flat-lining ever since.
Japanese companies found they could make more money from their financial arms (Zai Tech) than they could from their traditional businesses, for a while anyway.
House prices always go up, and their real estate boom would never end, until it did.
Jusen were nonbank institutions formed in the 1970s by consortia of banks to make household mortgages since banks had mortgage limitations. The shadow banks were just an intermediary put in place to get around regulations.
Japan has never recovered.
The Japanese used bank credit to blow up an enormous real estate ponzi scheme.
The inflated asset prices collapsed and all that was left were insolvent banks and the claims on future spending power in the banking system.
Japan was left facing a Great Depression in 1991.
Richard Werner realised banks must create money, and this had allowed Japanese real estate valuations to rise to stratospheric levels in the 1980s.
He eventually produced empirical evidence that banks do create money and this got the central banks to start revealing the truth in 2014.
https://www.bankofengland.co.uk/-/media/boe/files/quarterly-bulletin/2014/money-creation-in-the-modern-economy.pdf
He had rediscovered the fundamental flaw in free market theory.
Banks can keep creating more and more money to blow up enormous asset price bubbles, as they did in Japan.
You could see the problems developing in the banking system by looking at the private debt-to-GDP ratio.
No one did.
Not considering private debt always was the Achilles Heel of neoclassical economics.
Japan was left facing a Great Depression in 1991.
Japan learnt the lessons of the Great Depression.
They saved the banks and used fiscal policy to maintain the money supply as they deleveraged.
https://www.youtube.com/watch?v=8YTyJzmiHGk
They discovered a new problem.
What was the good thing about the Great Depression?
The claims on future spending power in the banking system were removed by the Great Depression, and the system was cleansed and ready to restart.
https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6
At 18 mins.
Japan left the debt in place and the claims on future spending power in the banking system would suck the life out of their economy for decades to come, Japanification.
Debt repayments to banks destroy money, and they have been fighting debt deflation since 1991.
They are still having to use fiscal policy to maintain their money supply over thirty years after 1991.
Japan had discovered how to avoid a Great Depression and deliver Japanification instead.
Save the banks, but leave the debt in place.
The debt in the banking system represents claims on future spending power.
Global policymakers always find out the hard way, and are oblivious to the problems developing in the banking system.
There was so much to learn from Japan.
I started after 2008, and I could benefit from the work of others who had started before me.
The most significant being Richard Werner, Richard Koo and Michael Hudson.
Richard Werner is good on the problems associated with banks creating money.
Richard Koo has been helping Japan fight debt deflation since 1991, and is good on the problems associated with debt repayment to banks destroying money.
Michael Hudson helped me to see how economics changed from classical economics to neoclassical economics.
Richard Werner had worked out what happened to Japan before the financial crisis in 1991.
Richard Koo had worked out what happened to Japan after the financial crisis in 1991.
I put these together to get the big picture on Japan.
I could now understand Irving Fisher’s Debt Deflation Theory of Great Depressions.
The debt run up before the financial crisis causes the problems seen after the financial crisis.
The neoclassical economist uses bank credit to plunder the future to pump up asset prices today.
They achieve early success at the expense of an impoverished future.
We call it Japanification.
It is the money creation of bank credit that makes the economy boom as money is borrowed from banks to purchase assets and pump up prices.
Debt repayments to banks destroy money and this makes the after effects so bad.
What have the Chinese done?
Chinese exports to the West fell off a cliff after 2008, and they turned to their neoclassical economists to revive the economy.
They started pumping bank credit into real estate.
They were oblivious to the claims on future spending power piling up in the banking system.
At 25.30 mins you can see the super imposed private debt-to-GDP ratios.
https://www.youtube.com/watch?v=vAStZJCKmbU&list=PLmtuEaMvhDZZQLxg24CAiFgZYldtoCR-R&index=6
The mechanics of the banking system are a mystery to policymakers.
They never realise the money to push up asset prices is coming out of the banking system, where the claims on future spending power pile up, out of sight and out of mind.
I may have worked out what happened to Japan, the Chinese are going to find out the hard way.
Japan was rather innocuous; China sends corona virus, weird balloons, and spies. Japan was cold, China is cancer.
It wasn’t a problem, it was the exorbitant privilege.
The US had the exorbitant privilege of having the global reserve currency.
The only real saving instruments were US treasuries allowing them to run big Government and trade deficits.
The US could afford its massive military budget due to the exorbitant privilege of having the global reserve currency.
By the time they got to Bill Clinton they had forgotten how the exorbitant privilege worked, and tried to balance the budget.
The zero sum nature of the monetary system is not understood.
This is the US (46.30 mins.)
https://www.youtube.com/watch?v=ba8XdDqZ-Jg
The private sector going negative is the problem as you can see in the chart. This is when the financial crises occur.
When the Government deficit covered the trade deficit they were fine, but then they tried to balance the budget
As the Government goes positive, into Bill Clinton’s surplus, the private sector is going negative causing a financial crisis.
The current account deficit/surplus, public deficit/surplus and private deficit/surplus are all tied together and sum to zero.
What were those old rules of thumb they developed over the years by trial and error?
Balanced government budgets AND balanced trade (current account)
You can’t have one without the other, as the Americans have demonstrated so well.
The US could fund its massive military expenditure due to the exorbitant privilege.
Then they forgot how it worked.
They could no longer afford to keep funding NATO as they had in the past.
Uniparty betrayed Detroit?
japan got screwed by you know who , bill gates the crook who stole
there was a giant property bubble. it was good when it popped. if it was not popped, in 2 years, it would have been worse
DJT has a great gift , For he is able to turn Lead into rock which is worthless.. If he is try this trick on Japan , they have own military missiles and home grown Navy. The Leverage America enjoy no longer exist thank to Canada. Every country out there stop doing business with USA because no one will trust them. Who tp blame Mark Carney of Canada. Japan place a poison pill into the Billions of dollar in investment deal is conditional on the renewal of the USMCA. The power has shift to Canada. Its Mar A loco
Kind of an interesting yet bizarre video as China’s percentage export to the USA is around 3%. In theory it could completely operate without the USA with its Belt & Road Initiative & other trade agreements. With this fragmentation & $ devaluation all roads lead to Gold. Even to settle trade imbalances with. Breton Woods tied Gold at $35 oz. Did not work. The new system will likely have fx more realistically priced & imbalances settled in Gold. The USA does not hold any cards here
Japan is occupied there economy didnt go wrong the Epstein elite changed things.
Just watch Ned Beatty's scene with Peter Finch in 1976 film Network.
Japan had no choice but to sign the Plaza accords for all the reasons mentioned however I would also observe that most of the Japanese elites were heavily influenced by US institutions, policy makers and as such followed generally accepted economic policies at that time…. National interests became subservient for the greater world good so to speak…. A notable aspiration perhaps however doing the same thing over & over again and expecting a different outcome for the last 30 years seems…
Those 5 men were trojan horses. Every country gets them. If the leader is like India or Japan they will fail.
Fed Cut Rate 🤫🤫🤫
I think Japanese people in general are happier now than 40 years ago. People can chose what they really want to do in their lives without silent pressure from the society. 40 years ago, company employees were working from 8 am to 8 pm or even longer. Now there are more diversities and creativity for young people to survive.
The Plaza Accord not only wrecked the Japanese economy but it caused the historic crash of the stock market in October 1987. After two years of relentless decline in American assets, Europeans had enough and the Eurodollar market collapsed and brought down the stock market with it in an historic one-day decline of over 20%. The best laid plans of mice and men oft times go astray. Idiots.
Japan did not think it through enough – till now they are still in water. Any wise government has a team designed to study financial history and weaponisation of finance to counter them before it becomes an existential threat.
So much AI 🤖
$
'they studied the plaza accord and determined not to make the same mistake' they are far past having any control over what happens. This is due to their massive debt levels, official and shadow, declining demographics and productivity and recent real estate collapse. The recent real estate collapse has destroyed more wealth than can be mitigated
Generally, this channel is interesting, but the low-quality AI slop is really starting to detract. The B-roll is unwatchable. It's all computer-generated garbage, and increasingly I'm less sure whether the narration is human or AI due to mispronunciations a normal human fluent in English wouldn't make. AI slop is cancer. It destroys real research and real thinking, and creates a false illusion of competence that increasingly few are able to recognize as computer-generated.
The Japanese were not stupid to know the consequences. But they have to obey,because Japan is colonized and occupied by the US. And Japan domestic economy is small compared with China.
Ha, ha! It's so obvious you asked AI to show workers in bunny suits. This is a good example of why AI isn't ready for prime time.
USA is the big satan of the World, the Iranians is right
I don't understand why exporters so much dependent on low purchasing power..even though the exports drop and demand for export drop but you can sell it by volume domestically..the people will buy the products itself..coz now they have saving that appreciated by interest rate..that demands lose can makes more appreciate value than before
They tried with China .. I don’t think they can accomplish because China is huge no like Japan
Japan per capita GDP now at all time high. The story is only partly true, and mostly wrong. Recent Japan interest rates are something to look at, but the story does not track the downfall of Japan as accurately as changes in the value of business, failure in the software industry, birth rate crash, and direct pernicious meddling by the United States made possible because the dollar was overvalued.
British could wipe out indian manufacturing because it ruled it and could have a captive market
India could not have protective barriers. Same about other colonized countries. Now people will fight for jobs.
You left out the part where Japan’s central bank relaxed its lending policies. Prior to this they used what was called ‘Window Guidance’. Prof. Richard Werner has a book about it called: Princes of the Yen. There’s also a documentary about it on YouTube by the same name.
The way money is created via borrowing, and to who, is one of the keys to the entire modern economic system. It’s a must read if you’re interested in economics.
Japan is not a sovereign country.
It's not that complicated really. Countries get overly excited when they get in the lead. They think the winning will last forever. One might ask why do they call it the business cycle?
There was an airplane accident in August 1985. If the airplane was allowed to use one of US bases in Japan, more people would have survived.
where’s the Asian guy that narrates. This is old though.
Another misinformation of facts and fallacies. Japan housing bubble is about to burst similar to China now. Japan population peak then decline so is China now. Then the contradictions. Maybe China can avoid it
Nice!
Stooge of west
The conection between soverieng military might over soverieng ecconomic fight..😁.
The trade deficit in US was only cleared during Clinton administration and then grew again. The dollar dominance was positive for US as debt deficit allowed it more cash flow. The US consumer affecting Japan couldn't offset it's economy. It has adopted the high tech warfare sale and technology. The economic competition against China is only pushing US into more aggressive stance while China seems to defend it well. Most countries are cautious of starting another world war as the situation with Iran has shown. I don't think there'll be another US president who'll go around like trump do. US is still a rich and powerful country. It could just go about it's business and not involved with any more aggression.😊
Lol, at 25m40s Canada has become 中国 (=China) and Russia has become 国国国 or guoguoguo