why japan’s economy is worse than you think

why japan’s economy is worse than you think

i always thought Japan was on top of the world plain streets high-tech everything a disciplined culture but after being here for a couple days I realized that something was completely off japan’s economy is completely broken and it’s been like that for decades but why is that why does a place that feels so advanced feels so stuck in the past turns out this goes way beyond Japan in the 1980s Japan was unstoppable it was on track to dominate the world to put it into perspective it was the second largest economy people in their 20s had two to three homes yeah I said that right two to three homes to their names nowadays people can’t even afford a house let alone two stocks and land prices skyrocketed at one point land around the Imperial Palace which is where we are right now was worth more than the whole state of California like what that’s crazy because Tokyo is actually way smaller than California japan in the 1980s has become this manufacturing powerhouse right this tech giant that’s producing computers TVs stereos cassette tapes the issue at the time was that the Fed had hiked rates to you know 18% because of the huge problem of inflation that had merged during the 1970s that meant that um the dollar strengthened substantially against the yen and against the you know German mark in 1985 the monetary authorities got together and said “Okay we need to strengthen the yen against the dollar.” What they do is they decide they’re like “We’re going to frontr run this issue of you know potential recession by lowering rates to 2.5%.” Encouraging an explosion of of credit and speculation right all these banks start lending like crazy and we’re talking like 2008 on steroids and that results in this this massive bubble of speculation that starts to bleed over into every single sector of the economy so you can understand the Bank of Japan was just giving out free money telling everybody that you they can borrow as much as they liked for as little interest as they wanted so if you’re giving free money why wouldn’t you take it when they pulled the rug everything went crashing down the BOJ ended up increasing their interest rates and they choked off lending so they stopped giving out everybody free money and then they raised the interest rates that’s like your credit card going from 20% interest rate to 40% overnight you would be like “Yo hold up what are you doing?” Then the stock market lost 80% of its value that’s pretty self-explanatory because of all of this 5 million people lost their jobs in the financial crisis of08 in the United States 2.6 million people lost their jobs so that should have been a reset you know the perfect clean slate the perfect fresh start yeah that never happened in the aftermath of this bubble you know popping and the stock market falling 70% and the real estate market falling 75% the Bank of Japan now they don’t have the window loans to you know manipulate the market so they have to find some other way and the best way that they could think of is let’s you know last time we created a bubble with 2 and 12% rates let’s go to zero so let’s go even deeper problem was the deflation was so strong that it wasn’t enough so they say let’s create something new and so they invented QE which is essentially printing bank reserves to buy financial assets the yen is getting like weak in terms of um how rapidly it’s weakening right is kind of um astonishing one of the most significant reasons that I think that your viewers would be like very uh relevant to is there is capital flight out of Japan the government has so much debt that everyone feels like they’re on their own to build up like kind of retire because the government’s not going to fulfill its obligations for social security and all those sort of things because of how much debt it has and how much money it owes holding cash is basically the safety it’s a safe thing to do in Japanese society save save save save but when you have inflation in Japan which is currently happening and you have the value of the yen getting crushed but you’re going to see this huge pool of forgotten cash that’s in like bank accounts and mattresses and desk drawers and all that around the country some of that move out of the yen and into different assets and currencies and things like Bitcoin things like gold real estate and whatever it is but anything except for the yen so the currency crisis is I don’t think it’s quite underway yet you ain’t seen nothing yet the yen is getting weaker and weaker and weaker on the ground level it’s it means socioeconomic misery it’s not good it’s not a good thing at all all right so the money’s broken the system is broken and what we can tell from Japan is that a small group of people in the top are the ones that make the rules decide to print money and obviously regular people pay the price but the real question is how does one escape that kind of system my friend relax because there’s still hope let’s go find out we’re here at the Metaplanet shareholdering meeting and I don’t think you guys understand this is history in the making what’s happening here is insane for the first time in 30 years Japan’s stock market hit a new all-time high yeah I said all-time high after 30 years that’s like buying a stock in 1990 and finally breaking even 34 years later right when you’re about to retire like that’s not growth that’s a lost generation the problem is that even with all of that the Japanese government makes it really hard to escape but obviously there’s a way around that here’s the solution this company called Metaplanet is giving the Japanese investors exposure to a unique asset that actually gets you out of the system what is my role at MetaPlanet um my my role as director of Bitcoin strategy my job is to raise capital you know issuing bonds issuing equity buying Bitcoin new Japan has had uniquely low interest rates for a long time they’re still quite low um the short end is less than 1% as inflation started to increase many people are are starting to seek alternatives so Bitcoin offers you know sort of a radical technological solution you know that’s a message we’re conveying is that there is an alternative now and in our opinion it’s the best money the world has ever seen we’re kind of in this gold rush phase where you know the world hasn’t figured it out yet what’s it like to give Bitcoin exposure to millions of Japanese investors it’s incredibly exciting incredibly inspiring we know that Japan has been looking for interesting new investment opportunities something different something special bitcoin can represent that in so many ways you know Japanese retail investors that have 9 trillion yen of cash sitting in their bank accounts just to hold it there for the next generation is the worst possible thing they can do the yen has been weakening as purchasing power has been declining that is not the path to securing um you know your future and so Bitcoin is is something that I think easily solves that bitcoin is a scarce asset that’s growing in value um that will give people options and hope japan used to be the second largest economy in the world and now it’s sort of like the fifth how could have Bitcoin avoided that i wish there was a more kind of clear and direct answer for how Bitcoin can solve everything i I personally think Bitcoin does solve everything for large nation states it might take 10 20 30 years a generation you know if there are more companies like ours in each country wanting to onboard more people into Bitcoin I think those are the countries um where the citizens will benefit the permissionless nature of it it’s that uh it is untethered from the systemic risks of our financial and monetary system you know with every bank account or every other asset you hold other than something like gold if there was a financial crisis everyone’s exposed to it and with Bitcoin you truly um own your own destiny japan is ground zero for uh what happens when your money is broken what happens to society when you have broken money and you know I don’t think it’s a coincidence that Satoshi Nakamoto is a Japanese name can Bitcoin save Japan not only can it it it will save Japan i like that japan isn’t some failed experiment it’s a warning this was one of the strongest economies in the world until a handful of people in the Bank of Japan decided who wins and who stays behind you know the question is do they see it do they realize what’s happening here because the thing is after 30 years of being stuck in the same cycle they finally have a chance to break free and if Bitcoin catches on here that could change everything [Music]

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Japan looks like the future. But its economy? Stuck in the past.
It took me one week, a crash course in central banking, and a visit to the Bank of Japan to realize:

This isn’t just about Japan.

This is about control.

And the escape route… might just be Bitcoin.

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