How the US Broke Japan’s Economy

How the US Broke Japan’s Economy

you blame the US’s pressure for Japan’s economic decline they were richer than any European country then Germany then France uh than Italy they’ve moved to the bottom of the rung now we effectively forced them to move faster to open up and deregulate than culturally and politically they were ready to there’s this thing called the Plaza Accord in September 1985 where we push them to make their exchange rate more and I used to say well you did that in 1985 we date the crisis in 1992 it’s 7 years later and I think I continued to think that and but I would say over the years and particularly in recent years I’m thinking I was wrong you know these things unfold slowly crises don’t happen overnight they deregulated and it worked but they didn’t know what they were doing and I think this was a huge mistake by Japan to agree financial repression’s bad but financial liberalization needs to be done gradually and if you do it too quickly you get a crisis that’s many crises caused by that suppose that crisis hadn’t happened how much wealthier is Japan today oh I think 50% wealthier per person i think way wealthier

Ken Rogoff is the former chief economist of the IMF, a professor of Economics at Harvard, and author of the newly released Our Dollar, Your Problem and This Time is Different.

On this episode, Ken predicts that, within the next decade, the US will have a debt-induced inflation crisis, but not a Japan-type financial crisis (the latter is much worse, and can make a country poorer for generations).

Ken also explains how China is trapped: in order to solve their current problems, they keep leaning on financial repression and state-directed investment, which only makes their situation worse.

We also discuss the erosion of dollar dominance, why there will be a rebalancing toward foreign equities, how AGI will impact the deficit and interest rate, and much more!