Boom to Bust – Lessons From Japan’s Economic Decline
In the 1980s, the unstoppable Japanese economy was the fastest growing in the world. But, the bursting of property bubble led to decades of stagnation the economy has struggled to escape.
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31 Comments
Only person wanting inflation are those with big debts!
They got wrecked but I'd wager its a safer place to live than many EU countries.
Lesson 1: Don't become a peer competitor to the USA as they'll use economic warfare to wreck you.
I pray that they finally get the automation that they desperately need and don't fall into the immigration trap. You can already see it in some areas of Osaka and Tokyo, and the same issues you see in Europe you see in those areas.
I don't understand why countries are now having to pay interest on the artificial money created under QE. We were told that it could simply be cancelled.
Why haven't the majorly indebted economies all jointly agreed to run inflation at 5% for 14 years, to half the debt ?
I was looking for safer currencies as a store for my cash (being out of the market) and noticed that the Big Mac Index calculates that the Yen is 44% undervalued vs the USD, even after it's 42% appreciation due to rising interest rates. Wondering how accurate it is and if there are better measures to calculate relative currency valuations ?
Since 2012, the Japanese stock market has increased by 335% / 13%pa annualised, but it's P/E is still average (~16), similar to developed Europe markets. This won't save it in a worldwide crash, but it looks interesting. As you say it all depends whether exporters adjust to normalised interest rates (~2%, matching GDP growth?), or whether they've been stupid enough to base their projections on zero rates forever.
I wonder how pension flows effect things as people retire and repatriate some of their funds ? Personal, defined contribution, schemes have been available since 2001, so I wonder about the nature & extent of the pension problem.
Tokyo record land prices have grown at an annualised 17% since 1989. It might not say much about the wider economy, but it demonstrates that Japan is again a hotspot.
(a global vid on worldwide anticipated pension repatriation flows would be interesting)
Are we REALLY in a position to lecture anyone on Economics?
Japan has great infrastructure, clean and safe streets, jobs are for the most part still pretty stable, housing is less of an issue than in the UK, universities are great and just look at the number of patents their industry registers every year. They got the bullet train in the late 60s and the UK has not been able to build a full route yet. I could go on!
Been seeing doomer videos about Japan's economy for years, yet every mall is packed.
Lessons From Japan’s Economic Decline:
The lesson is that the West and Japan no longer have a monopoly on product manufacturing industries.
From 1960 to 2025, 95% of products (from a T-shirt to a nuclear power plant) can be manufactured by companies outside the West and Japan.
In addition, neither the West nor Japan have any raw materials.
Surprise also, the "others" can no longer stand us, they want to catch up with us economically.
The catch-up of "the others" will be rapid (like China with growth of 5% per year).
Clearly, the West and Japan have neither the driving force nor are they close to a new economic model.
Thus, stagnation is anchored in the West and Japan for the next thirty years.
Why does the BoJ have to 'unwind'? To what end?
I wonder how much demographics has been a primary driver rather than a side note in Japans story. Its dependency ratio hit its lowest ever point at the start of the 90s after decades of improvement. Its since went from ~40% to >70% over the 30 years of its stagnation. The UKs reached a similar inflection point at about 2007
I'm watching this from Japan while drinking free beer and free snaks at the hotel we staying in central Tokyo, kids are having fun with the activities programmed by the hotels staff and dressed up with the costumes of the main Nintendo's characters.
It costed 7.000 per person (37 £) per night. Later I'll have a sauna and get in the hot springs and think about the rest of this video.
Im looking at an apartment to rent and it will be around 400£ for thee rooms. (4 times less than avg monthly salary)
Japan may have a bad economy but as we know the economy of a country is an abstract concept, not a good measure of wellbeing and lifestyles of the country itself.
You forgot the Plaza Accords. Americans did not want the competition from Japan and made sure to crush them. The other thing to note is the Everything Bubble the Americans are in right now. At some point their bubble will also burst.
The only reason why the GDP of Japan rose that steeply was because I had been heavily under it for so long before it. They suddenly had money to burn, and threw it at copying technology from the West, and then designing on. But something like that can't last, as they went beyond their means, and now we see the results of that.
Mind you, comparing Japan to the UK is a wonky comparison, as the UK has been on the decline ever since the Golden Age.
The video you linked to on the screen at the end is not about China but rather about the Labour government's economic policies.
Decline? They have a high living standard.
Japan is simply a proof that economy on it's own, without a strong military to back it up, is NOTHING. And Germany is learning the same in these last several years. When USA president can force Plaza Accord on you then your economy is one big nothing. You do mention Plaza Accord. You should. As it's the main reason why Japanese economy went down. A simple order from the military owner of Japan, called the USA. These days USA is doing a double whammy vs the German economy. First it FORCED it to cut Russian gas, LITERALLY by BOMBING the Nord Stream 2 pipes and THEN USA elected the president that will put big tarrifs vs Germany. Germany is in a 3 YEAR long recession now.
And it's true that Japanese economy went down for a big measure. Italy now got higher nominal GDP per capita than Japan. Japan got around 33-34 000 dollars per capita, while Italy got around 40 000 dollars per capita. France got 48 012 dollars, Germany got 55 521 dollars, Netherlands got 67 984 dollars. Etc. Slovenia, Czechia and Estonia now got the same GDP per capita like Japan.
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Japan, hold up, do not bring immigrants. In a century you might be broke and much smaller but you will be you while the west will be long gone, replaced and (maybe) not broke. Identity is more important than economics.
Didn't the US also purposely mess Japan up?
I've lived in Japan since '99. My wages haven't really gone up, but then again neither did inflation until a year or two ago. Paying the same rent now that I paid in '99 and have a nice savings and pension pot as a result. Quality of Life still very, very good. I wouldn't buy property here as it depreciates, but I still own my own place in Britain anyway, if I ever want to go back.
This is a lie. japan is a better place than USA in every way.
You didn't mention the Plaza Accord of September 1985, which may have been the single most important catalyst for the subsequent property bubble…
Your no fluff approach to explaining complex economics simply is appreciated.
Is calling it a ‘bad’ economy appropriate? Japan’s population is slowly shrinking and aging so it’s unclear why its output shld be going up. It’s a stationary economy, but stationary at a very high standard of living. Why is that a bad thing? Growth on a finite planet is impossible. Sooner or later all economies need to converge to a stationary state… if not shrink a lot from their current level (more likely). in that sense japan is a model for the rest of the world
4:56 Nobody’s gonna wait to buy toilet paper one day because it might be cheaper the next.
The Japanese need to import many millions of African migrants.
Why can't our foolish politicians control inflation to be flat for 10 years. Then we will all be rich in 10 years with all that savings
2 giants collapsed in 1990s. Soviet Union and Japan. It is such a shame that Japan is not what it use to be
Japan does not have a BAD economy like Canada/Argentina so to speak. Japan is just……DECENT, it neither collapses nor skyrockets like America, Singappore, UAE/Qatar…
It's almost like SATURATEDLY developed lmao
Some of those stats about the Japanese bubble are eye-watering. This is such a good channel.
Yoy inflation from Jan 2024 to Jan 2025:
All items: 4.0%
All items minus food: 3.2%
All items minus food and energy: 2.5%
Pretty high inflation today in Japan. Even the core-core (taking away food and energy) is 2.5%.