Kind of hard to evaluate the effectiveness of “radical” monetary policies when all the world’s central banks are all competing with each other rampantly to see who can devalue their currency the most.
Analysis of Japan’s deflationary environment usually leave me feeling meeeh, but you actually did a decent job of it. 2 related things you didn’t mention but that should have some form of explanatory power are immigration and (native) reproduction rates. Also, Japan hasn’t figured out how to channel all its excess savings into startups … looking forward to future videos touching on these topics about Japan!
The problem is that demographics basically rule everything, because people are the end consumer. You can mess with the market, to some short-term effect, but the intervention eventually gets priced in, and stops having an effect. It's like a subsidy: works like gangbusters at first, but eventually everything adjusts to account for it, and it loses its effectiveness. In the end, the market finds a way to do what the market does: put a price on things in a given environment and context. This also makes intervention and subsidies very difficult to withdraw, because you KNOW you will be hurting (in the short term at least) the people you wanted to help the most.
holy shit someone actually mentioned the plaza accord in a vid talking about Japan's economic stagnation. All the other economics vids ignore this. Guessing cos they are western but still surprising
Back in university my econ professor straight up denied the plaza accord. Some people just can't separate pride and nationalism from objective reasoning.
The Plaza Accords have gained a bad rap in recent years, but there were very real grievances the US (and other countries) had towards the 1980s (and, really, post-50s) Japanese Economy. For starters, it was extremely protectionist, especially with regards to things the US was traditionally strong at like agricultural products and financial services. The Japanese policy of "Sangyo Gorika" (industrial rationalization), which, among many things, emphasized foreign exchange controls, Ninka (strict controls on foreign technology imports), government mandated oligopolies, tax exemptions on all revenue from exported products (meant to drive down foreign competition), tax deductions on losses in foreign markets, informal exclusion of foreign companies in multiple markets deemed "strategic". The US ultimately forced Japan to engage in reciprocity by forcing it to weaken the Ministry of International Trade and Industry. Of course the Plaza Accords artificially strengthened the Yen, but the 300 Yen/USD exchange rate of the 80s was not at all organic either. These policies had basically babysat many Japanese companies, which were traditionally high-savings and low-investment, and many of them found themselves thrust into a world were they had to compete in free markets and also compete with industries that had grown large through subsidies that no longer existed for newcomers. it's also important to note that, despite perhaps defying stereotypes, the Japanese economy hasn't really been export driven since the 60s, and it certainly wasn't in the late 80's (in fact it is second, only to the US in exports-to-GDP. By that time the economy was mainly driven by internal consumption, so it is naive to think the Plaza Accords caused decades-long economic stagnation.
@@juliancohen9561 The problem is the impeccable timing of the Accord. By the time that Japan signed the accord, the country was in the middle of the bubble. Princes of the Yen documentary stated that it was Bank of Japan allowing the bubble to happen in the first place - they allowed MITI and MOF to have their ways through the BoJ. The BoJ could have said no, and there would not be no window guidance. However, most of the BoJ leaders were Goldman Sachs graduates as well as WAll Streets graduates. They perfectly engineered the crisis at the same time that Plaza Accord was signed. Everything was designed towards the collapse of Japanese economy which will make Japan more reliant on the West - through making the BoJ independent who always receives guidance from the FED. Now, Western capitalists swam the Japanese market for vulture raidings, while Japan is forced to endlessly buy American T-assets as China accelerates de-dollarization. Japan is permanently screwed! In the end, the US will eventually swallow the Japanese economy in the coming decades.
@@zurinarctus1329 They were abusing the currency exchanges though, you can only do that if other side won't react otherwise the whole system collapses.
The plaza accord has been hijacked by propaganda agenda’s especially the CCP. That keep promoting disinformation around it. What they don’t mention. Is that after the Plaza accord was signed Japan witnessed the greatest increase in material wealth in there history. As the per capita rose from 11,000 USD in 1985 to 43,000 by the year 1995.
Even if bond yields are increasing while stock prices are decreasing, the markets are still skeptical whether the Federal Reserve will stick to its goal to raise interest rates until inflation is under control. While I'm still debating whether to sell my $401k worth of equities, what is the best way to profit from the present down market?
Creating a solid financial portfolio is more difficult, so I recommend you seek professional assistance. Following that, the ideas you receive can be tailored to your long-term goals and financial desires.
@Abeb Michaels Due to the significant dips, I need advice on how to rebuild my portfolio and develop more effective strategies. Where can I find this coach?
Given that my stock portfolio lost $390k just last week, this advice was unquestionably timely. It is absurd. Recently, Sharon's credentials came under some web scrutiny. I sent her a letter outlining my goals for the financial market because she seemed like a very knowledgeable person.
Instead of inventing something new or even automating work, we just make home ownership and retirement harder to attain. A person who is 18 today getting their first job could calculate what they need to retire with a 30K USD income. The answer, if it is Wal Mart shares, is almost $2M because the dividend yield is 1.55%. This means to retire you must put in more than you’ll earn in your lifetime. And we complain when teenagers are basically communists now.
All they're doing is incentivizing pension funds to take more risks by lowering the yield they get on their investments. That's literally all they're doing. The rest is just an unsubstantiated claim with zero evidence. "In addition, QE can stimulate the economy by boosting a wide range of financial asset prices. Suppose we buy £1 million of government bonds from a pension fund. In place of the bonds, the pension fund now has £1 million in money. Rather than hold on to this money, it might invest it in financial assets, such as shares, that give it a higher return. And when demand for financial assets is high, with more people wanting to buy them, the value of these assets increases. This makes businesses and households holding shares wealthier - making them more likely to spend more, boosting economic activity." www.bankofengland.co.uk/monetary-policy/quantitative-easing Here in New Zealand, we've got the lower interest rates than even during the Global Financial Crisis and all the monetary policy has achieved is massively boosting property investment, cash building up in the banking system, falling term deposits, and business credit has fallen by $9 billion y/y. lol. I could have told them that would happen more than a decade ago. "A leading economist says New Zealand has the wrong mix when it comes to borrowing. ANZ's Business Outlook for May shows business lending has dropped by $9 billion in the past year while home lending has increased by $30 billion. Economist Cameron Bagrie told The AM Show low-interest rates are partly to blame. "From a purely economic perspective in regards to a productive, dynamic economy for the long term it's completely the wrong mix." www.msn.com/en-nz/money/homeandproperty/economists-warning-over-rampant-home-borrowing-falling-business-loans/ar-AAKzMWY?ocid=msedgntp
. Good comment! . Except: 1) "Communist" implies "OK to kill". 2) Large numbers of full time workers currently can't afford to buy a home or health care (or in many cases even afford rent). Is M4A or free college "Socialist"? What about free K-12? Tax supported military? Social Security? Medicare? Gigantic bank and big business bailouts? Subsidizing predatory "private" health protection rackets? How are our (American) youth any more "Socialist" than the rest of us?
@@red-baitingswine8816 For your point #1 I was not implying any such thing, rather I’m trying to say that they’re in a position where they have very little to lose so it almost makes sense for them to go radical left, from a purely self-serving perspective. It is a tradgedy of the commons. For your point #2 any reasonable conservative agrees there are some merit-goods that can never be achieved through private funding. Defense and Roads are the strongest examples. I would point to Clothing as a good example of something where government involvement can only make these things more expensive. I mean, up to a reasonable point of course, the clothing cannot be made from asbestos or depleted nuclear fuel or lead or something else absurd like that. Within reason though, they stay out of it and that’s why we have plenty for cheap. Same for Food or Hygene/Cleaning related essentials, with the exception of safety which is the FDA’s job. No lead soap and no nuclear algae soup.
Many videos on Japanese stagnation doesn't talk about the 'low desire society' which is what really keeps the economy from growing. The younger generation saw two decades of economic ruins caused by mismanagement of the older generation and are thus less willing to take on any risk and debt. This contributes to high savings and low consumption/investment. It is both a cause and an effect. It's not something that could be solved politically or economically. It's a cultural and education problem. What's very often overlooked globally is financial literacy education: teaching the younger generation on how to manage their income to both improve current quality of life and to prepare for the future. We either see overconsumption and massive debt (as in the case in USA) or under-consumption and over-saving (as in Japan). The education system needs to teach teenagers how economy works and how to be financially responsible. Unfortunately in most nations ECON101 is not taught until college (which means those who don't go to college don't understand economics at all) and there's no easily accessible personal finance education. Look at how many young Americans only started to learn personal finance on TH-cam since the start of the pandemic.
It would be wonderful if a modern elementary class in economics found it's way into all education. We have to live in this world. You need to understand how it works and what your options are.
It would really make a difference if you always put the dollar and Yen value on the screen as you mention them, as it takes a moment to think about the numbers you say and still follow the story. Sometimes you don't say the dollar amount right after, but continue to explain then reference the amount in us dollars.
the thing that fascinates me about Japan is that the JPY is kept appreciating despite all those floods of liquidity from BOJ. Who is on the other side? who are these JPY buyers?
Its the people themselves. By not spending most of their earned money, the prices in the economy tend to go down over time. Less money being exchanged means it increases in value.
Is it true that in the 1980s Japanese property were worth so much you could fill the building wall to wall ceiling to ceiling with gold and the property was worth more than the gold? That's the analogy I've heard!
They've already done helicopter money. That's what the stimulus checks and increases to unemployment benefits that Americans got were. Now Americans are sitting on their asses at home trading cryptocurrencies with each other lol.
The biggest macro-economic level that Japan can pull any time is the immigration tap. It would solve all their shrinking labor force problems very quickly, and potentially fix their demographic problems if they do a good job encouraging births and assimilating all new arrivals and their children. But unlike the West, Japan didn't have mass migration in the last few hundred years so is not an immigrant nation: they have strong cultural and racial aversions to this. But the immigration doesn't even have to be from the Middle East and Africa. It could be from East and South East Asia (from Laos to the Philippines). But Japan would rather see its population fall to 60 million people than become an immigrant nation. Which is fine -- that's their decision to make. It's just that it means the country will become increasingly economically irrelevant as time goes on (while the demographic of many western countries continues to be much healthier)
@@shazmosushi "demographic of many western countries continues to be much healthier" HAHA, name them so people can have more fun reading that left wing propaganda. All western countries have negative demographic even France that got plenty of "imported work force"+ plenty of social benefits for them and in the same time soldiers patroling streets year after year and the situation is only getting worse with every passing year. Now French high ranking officers writing open letters to warn people about grim situation in France and complete declain in French culture, spirit and honor...
Thanks goes to US for pressuring Japan to raise the value of Japanese Yen during the early 90s; now is 2021 and unfortunately, US can't use the same strategy to hold down and suppress China
@@omeroserti2799 You are right but the market is profiting if you are using really a good broker or account manager to help out with trades or provide signals
Hello Asianometry. I really like your video and analysis. I like the time you take to explain things. How your speech is not hurried. I have a question though : 'Why didn't you mention the negative interest rates that Kuroda implemented to go along with his other controversial 'aquisitions'?' I think you have to keep them also in mind because they most surely had side-effects. And, do you see negative interest rates comming to the US or if indeed inflation takes hold (not my opinion - but who am I?) , will this cause Europe and Japan to 'get back to zero interest rates?'. Thank you. - And what is your opinion on negative interest rates?
Coming from your "What Eating the Rich Did For Japan" video, I feel like the Keiretsu has completed full circle and became the new Zaibatsu. Just, the new Zaibatsu lives a step backward, deep inside the central bank and other financial fortress.
Interesting videos. Major corporate governance programs were launched by regulators over the past several years. Toyota is the obvious corporate success story but some others struggle. I would emphasize government efforts to diversify the assets of individuals to include stocks and improve retirement savings. Also, government inflation goals are simplified language that related to attempts to catalyze real growth. Some argue that 25 years after the bubble burst, the Japanese banking system had restructured and recovered. I was surprised how educated, wealthy, developed and safe Japan is.
What's interesting about the Plaza Accord is that people holding Yen got richer while people holding dollars got poorer. In other words as the Yen rose, Japan got richer vs the US. What Japan did after is simply outsourced manufacturing to Korea, Malaysia and China. At the end of the day its the US consumer that suffered. For example, if the Plaza accord didn't happen, there would be Made in Japan LCD TVs sold in stores in the USA with no backlight bleed and dead pixels.
They were largely shielded by the US Dollar being the world's reserve currency. People in developing countries with a US Dollar peg, were far worse off.
Great video, but you completely lost me around 17:00, where it sounded to me like you are arguing that the falling P/E ratio is one indication that the corporations did not grow their sales. However, does it not indicate that sales *did* increase (Assuming most earnings increase is due to increase in sales, with constant expenses)? If stock prices are going up and P/E is going down, or even holding steady, does this not indicate rising earnings? I'm missing something basic here.
Question: If japan has been in a deflationary spiral for some time, why are real wages stagnant? Even if the minimum wage weren't increased, the value of the yen would have gone up, meaning $1200/month would buy the equivalent of $1700/month 5 years later, for example. Apologies for the dollars, many people have issues with convertibility. Just add two 0s to the dollars for a rough yen estimate.
Wages might be stagnant in NOMINAL terms but they have been falling in REAL (adjusted for inflation) terms. If wages fall faster in Real terms than other price levels, then the currency would appreciate. Thus, $1200 a month would only buy you an equivalent of $700 a month 5 years later for example. You also have to take into account that currencies float against each other so a appreciation/depreciation of the US Dollar or Euro will also affect the value of the Yen. For example, if the value of the Yen stays constant but the value of the US Dollar depreciates then money will leave Japan and flood into the US chasing higher interest rates rates and returns on assets. Causing the Yen to then appreciate relative to the US Dollar, influencing inflation/deflation rates in Japan.
Wanted to check out the Soros - HK video, but couldn't find it. Also, I can't avoid to say: THANK YOU. it's really an amazing work what you are doing here. I'm stunned just seeing the rate at which you are releasing new content, lately. Moreover, after considering the level of detail in your research, the complexity of topics like these, being able to explaining them in such a clear, funny and entertaining manner. This is a gem of a channel. Thanks, again!
It is not profit. There is not one single historical example of a central bank debasing the currency without causing massive economic damage. I know that history is not taught anymore in schools, but whatever, it gives an an egregious trading advantage!
09:55 with the way inflation is calculated in the UK, sales (consumption) taxes are included in prices. So basically to fight deflation, they raised regressive consumption taxes to inflate the cost of goods for society at large but looked good on paper whilst depressing aggregate demand ironically. Consumption taxes are an inflation multiplier and raises the floor to entry for any buyer. This video doesn't provide context for income or corporation taxes, so I had to look them up. Of course these sales taxes were sleight of hand at work, they cut income taxes that disproportionately benefited the wealthy and cut corporation taxes and made up the shortfall in austerity measures ie cutting real term spending on public services and of course raised consumption taxes that disproportionately hurt the poor to compensate.
I am no economics expert. But it seems a bit weird for BoJ to hold on to those ETFs if they intend to stimulate the stock market. Wouldn't it be better to do a swap for foreign currency in exchange for those high quality ETFs with foreign investment firms and banks? That way, the BoJ can realised their profits and gain foreign currency as well, which they cna funnel into domestic champions to increase their competitiveness? Seems like they got the first part right and totally missed the other parts.
Thank you for mentioning that book, it explains very well how they're trying to turn Japan into a finance based economy. It's clear that the BOJ is looking for allies in the industry by inflating asset prices instead of productive investments. One of the ultimate goals in my opinion is to change the way Japanese companies are run: they want western style short term profits over long term survival and employment of the company and employees.
By the way, the Europoean Central Bank ECB is also buying corporate bonds like crazy. Former ECB president Mario Draghi used to say "Whatever it takes".
I'd like to see Japan create a sovereign wealth fund to reinvest its trade surplus and huge foreign exchange reserves and pension funds, a 1% to 5% allocation to msayoshi son's vision funds could greatly boost their returns. Japan need to move from a consumer and export based economy to something like Singapore, govt led economy with strong social policies
I was joking that about US fed, imagine if they bought all of the call options available on the market for GME and AMC, from 10-15% out of the money to 200% out of the money. Some hedge funds would've went bankrupt, big banks will lose some money (if hedge funds can't pay the margin call the brokers has to pay) the gov will have 100s of bil $.
Interesting take. But that would be a worse form of market manipulation thab whats going on now. Plus options can quickly turn the other way. And them Fed Chair would lose his job and talk of doing away with Fed will grow stronger. Not worth the risk imo.
Just a thought, but bonds are different from stocks and it's unlikely many central banks will buy stocks (ownership) of a company as many despise state capitalism, but will buy bonds (debt).
Seems like a failure. It's more direct action but it wasn't precise enough. If people didn't benefit then what was the point? You spent all this money and people didn't get higher wages or more jobs. Then it was a failure
You want inflation? Just print massive amounts of money and sign off one-time stimulus checks. The people will be happy and the economy will receive a short-time boost. Problem solved. Except for one minor detail. It won't help the Japanese economy to grow. There is one issue in Japan that stands out particularly and negates every economic measure that the Japanese government can undertake which is a rapidly aging population. It results in less economic activity in general, including less risky money that can be invested into the stock market, and more of the county's economy working to support the elderly. And the situation worsens with each passing year. Unless several more Japanese companies make technological breakthroughs and suddenly become popular all over the world with their products as it happened in South Korea the economy is doomed to decline. The other solution would be to open up its borders to immigrants but knowing Japan it's almost unrealistic.
Companies are not spending on R&D and their sales are low even after Bank of Japan bought the stocks of these companies. And wages are stagnant. Ain't this gonna result in inflation?
Most countries wish they had a deflationary economy. You could do so many things with this deflationary force, such as implement and increase universal basic income payments, or undertake big public works projects.
I watched your IC EDA video first... And now this. Wow. You present a fantastic analysis and decimation. Keep it up. Question: What is the real issue here? I'd argue it's complacency or shall we say "contentment". Those with the power to take risk for the sake of growth see no need. They have what they want -- affluence, status, comfort. A more effective strategy for engaging risky behaviour for the sake of gain is to change the value proposition. Don't say "Spend $100 on growing cucumbers for a 15% ROI in 12 months". Instead say, "For every $100 sat in the bank for 12 months, the Tax Office will take back $1" The fear of losing position is very dominant to the human psyche. See "Prospect Theory" developed by Kahneman and Tversky.
Actually... stock price increase has little effect on a company's standing. Apart from when going public, the company makes little to no money from the stock exchange. What the BOJ have done was just pumping some money into the pockets of shareholders. This is generating inflation without causing too much inequality. Actually whatever you do, the money will end up on the accounts of wealthy organizations pretty quickly anyway. So yeah, if your target is inflation, then you either lower taxes (remove less money from the economy), or print money and put it into someone's pockets. The problem is not with this mechanism. The problem is that this money goes to companies which doesn't even want to make profit, or actually should go bankrupt thanks to the way they were performing. Pushing money into ETFs also has this effect. Also, when you can't find even a very risky, but reasonably priced investment, then you will go for real estate. And that crowds out those people the houses are really for - the residents. So, printing money and spreading it creates grossly overpriced stocks, which will turn into a bubble, which you will doctor again with printing money, because, well, it worked the last two times. That is everything but healthy.
Japan is better off than the USA. Less violence, longer lifespans, and they export to the USA so they are not as in bad financial shape. If you back out the "net savers" in their society, their Debt-to-GDP ratio for government debt is not 200% as widely reported but more like 120%. The USA is also at about this level, but without net savers. The USA, not Japan, is in trouble.
Nice video. You could have added the never ending growing debt of Japan at 265% to GDP (2020), the decrease of the foreign currencies and deficit in trade balance even prior to covid. Also as you pointed out, the lack of good investments in R&D and pauperization of the Japanese society makes the future of Japan gloomy (an other lost decade?). Ideas for next videos about Japan are: Japan stuck in the 80's (fax and 3.5 floppy disk) and Softbank Son vision fund how they lost 24 billlions with Wework but gained 30 billions with Coupang.
To secure a company whose financial condition is forecast to collapse but has important technology patents, before the massive recession in America, Japan, and Europe.
Norway kinda does the same as Japan, thru its sovereign wealth fund. Buying up the worlds stocks, and using that controlling share in companies to have soft power. And uphold its values. Like its said Norway is one of the shareholders going hard on banning Alex Jones from the social media platforms. Norway owns a total of 1.5% of the worlds stocks. I have no problem with it when its a democractic goverment. And Norways sovereign wealth fund is not allowed to invest into Norwegian stocks. Due to due to the distortion and bubble it would create in the economic marked. Im not sure about Japanese bank distorting the economy like that. Well atleast not too much. But i guess they gotta venture into new territory due to the Japanese culture making a population so "allergic" to risk. I mean alot of Japanese wont even tell you their opinion if you ask them a question. Cause they are afraid of offending you or someone. They wont even cross the street if the street light is yellow and there is no car in sight for 100 miles. They will wait for the green man :P Very different from the culture i am from. Where people love taking abit of risk :P
How to keep asset prices high while the population decreases? Just have the Central Bank buy them. The BoJ should start buying houses in rural Japan...
Like owning a restaurant and nobody buys your food BUT you I’m not some smart guy But if nobody can outcompete you for your own food YOU MAKE, means it ain’t that great
Simple answer: Japan broke the Interest Rate lever, they cant get it any lower and now they are trying to buy stonks using money fresh off the printer and straight into the pocket of investors.
If it went into the pockets of investors it might do some good, they might spend it & circulate the money. The video says the money is being hoarded by the companies “for a rainy day”. The money is sitting under a mattress where it’s not doing anyone any good.
Great video. I think there is a lot of nuance in the answers here. Things could have gone many ways and I think governance, market structure, and culture all play a role. Addressing the 5 points you have at the end there: 1. Governance: To some extent ETFs already do this. "ETF socialism" is already a thing in the US, where most stocks are owned by institutional investors that are mainly passive. 2. Price discovery: As you said, already an issue with ETFs. As long as market makers have the right levers to pull (for example using options so they can cheaply hedge positions) and sufficient volume then even if large portions of outstanding shares are held without trading, price discovery can still happen. What happens in the long term is that decisions by the bank to buy one industry/sector/index vs another will be a thing that is a sector level risk. Governmental regulation similarly can already increase or decrease the value of whole sectors by percentages at a time. I think central bank (CB) actions could be modelled similarly. Counter is to spread out risk, trending to total market portfolio. In a total market portfolio, most changes basically don't change the value, since if someone is winning, someone is usually losing (barring removal of capital or increasing taxes, etc). On a society scale, you by definition have a TM portfolio. 3. Future: The goal could be dual purpose to increase prices/stability and to return capital to shareholders to spend or take on more risk. The CB can assume some specific risks, or just "own" 4% of the economy. Is there a fundamental difference between 4% inactive public ownership and 96% private ownership of all stocks? I assume we can construct some taxation/governance scheme that would make that equivalent to a 100% private ownership with another taxation/governance scheme. The distortions only happen if the CB prefers some industries to others. This would give them "five year plan" like powers of influence over capital expenditure. Except they would be able to take "value" from some class of equity holders and give them to some other class. Higher market caps also can mean easier raising of private capital. This gives the CB influence leverage. 4. P/E lowering might be the point. Making return on investment lower across the board to lower returns on investment in general and make people spend 5. Would love to see another video on this. Worker productivity in the last few years has started increasing again, but I suspect wages is different issue. I almost feel like you *need* a labor shortage to force wages to rise, given that businesses need to hire to expand operations, which means they need to be making money. Wages are sticky in both directions.
Its like society is run by narrow minded people. Very smart on narrow topics, clueless on grand picture of things. You won't grow an economy with a declining population, nor will you grow it without introducing new products and inventions to the market.
If the BoJ owns the stocks via ETFs, then it is not the BoJ directly owning any company, and they would not be able to exercise any control over votes or boards (at least directly). Instead, the ETF issuer may vote according to their stewardship policies. The issuers have public guidelines on how they will vote on behalf of the ETF holders.
Japan is a rich country...poor peoples and still is...the country created little jobs or no jobs at all for its own peoples.... Their economy still stagnant since the 80s...becuz banks keep pumping money into the economy instead of creating jobs...
I remember when the whole Social Security Trust Fund was proposed. It was a worry that if there was actually a fund rather than just an accounting entry the trust fund would compete with the rest of us investors and they would have such a big stick corporations would start doing what the Feds wanted them to do at the expense of other investors.
Kind of hard to evaluate the effectiveness of “radical” monetary policies when all the world’s central banks are all competing with each other rampantly to see who can devalue their currency the most.
Not all, what about the swiss francs?
I'm too lazy to write you a letter: I like your videos, they are very interesting, keep up the good work!
+1
Analysis of Japan’s deflationary environment usually leave me feeling meeeh, but you actually did a decent job of it. 2 related things you didn’t mention but that should have some form of explanatory power are immigration and (native) reproduction rates. Also, Japan hasn’t figured out how to channel all its excess savings into startups … looking forward to future videos touching on these topics about Japan!
Startups are scams, not profitable in the long term
The problem is that demographics basically rule everything, because people are the end consumer. You can mess with the market, to some short-term effect, but the intervention eventually gets priced in, and stops having an effect. It's like a subsidy: works like gangbusters at first, but eventually everything adjusts to account for it, and it loses its effectiveness. In the end, the market finds a way to do what the market does: put a price on things in a given environment and context. This also makes intervention and subsidies very difficult to withdraw, because you KNOW you will be hurting (in the short term at least) the people you wanted to help the most.
holy shit someone actually mentioned the plaza accord in a vid talking about Japan's economic stagnation. All the other economics vids ignore this. Guessing cos they are western but still surprising
Back in university my econ professor straight up denied the plaza accord. Some people just can't separate pride and nationalism from objective reasoning.
The Plaza Accords have gained a bad rap in recent years, but there were very real grievances the US (and other countries) had towards the 1980s (and, really, post-50s) Japanese Economy. For starters, it was extremely protectionist, especially with regards to things the US was traditionally strong at like agricultural products and financial services. The Japanese policy of "Sangyo Gorika" (industrial rationalization), which, among many things, emphasized foreign exchange controls, Ninka (strict controls on foreign technology imports), government mandated oligopolies, tax exemptions on all revenue from exported products (meant to drive down foreign competition), tax deductions on losses in foreign markets, informal exclusion of foreign companies in multiple markets deemed "strategic". The US ultimately forced Japan to engage in reciprocity by forcing it to weaken the Ministry of International Trade and Industry. Of course the Plaza Accords artificially strengthened the Yen, but the 300 Yen/USD exchange rate of the 80s was not at all organic either.
These policies had basically babysat many Japanese companies, which were traditionally high-savings and low-investment, and many of them found themselves thrust into a world were they had to compete in free markets and also compete with industries that had grown large through subsidies that no longer existed for newcomers.
it's also important to note that, despite perhaps defying stereotypes, the Japanese economy hasn't really been export driven since the 60s, and it certainly wasn't in the late 80's (in fact it is second, only to the US in exports-to-GDP. By that time the economy was mainly driven by internal consumption, so it is naive to think the Plaza Accords caused decades-long economic stagnation.
@@juliancohen9561 The problem is the impeccable timing of the Accord. By the time that Japan signed the accord, the country was in the middle of the bubble. Princes of the Yen documentary stated that it was Bank of Japan allowing the bubble to happen in the first place - they allowed MITI and MOF to have their ways through the BoJ. The BoJ could have said no, and there would not be no window guidance. However, most of the BoJ leaders were Goldman Sachs graduates as well as WAll Streets graduates. They perfectly engineered the crisis at the same time that Plaza Accord was signed. Everything was designed towards the collapse of Japanese economy which will make Japan more reliant on the West - through making the BoJ independent who always receives guidance from the FED. Now, Western capitalists swam the Japanese market for vulture raidings, while Japan is forced to endlessly buy American T-assets as China accelerates de-dollarization.
Japan is permanently screwed! In the end, the US will eventually swallow the Japanese economy in the coming decades.
@@zurinarctus1329 They were abusing the currency exchanges though, you can only do that if other side won't react otherwise the whole system collapses.
The plaza accord has been hijacked by propaganda agenda’s especially the CCP. That keep promoting disinformation around it.
What they don’t mention. Is that after the Plaza accord was signed Japan witnessed the greatest increase in material wealth in there history. As the per capita rose from 11,000 USD in 1985 to 43,000 by the year 1995.
at least BOJ bought stocks of its own country. What amazes me is that swiss central bank seemed to prefer Nasdaq
Even if bond yields are increasing while stock prices are decreasing, the markets are still skeptical whether the Federal Reserve will stick to its goal to raise interest rates until inflation is under control. While I'm still debating whether to sell my $401k worth of equities, what is the best way to profit from the present down market?
Creating a solid financial portfolio is more difficult, so I recommend you seek professional assistance. Following that, the ideas you receive can be tailored to your long-term goals and financial desires.
@Abeb Michaels Due to the significant dips, I need advice on how to rebuild my portfolio and develop more effective strategies. Where can I find this coach?
Given that my stock portfolio lost $390k just last week, this advice was unquestionably timely. It is absurd. Recently, Sharon's credentials came under some web scrutiny. I sent her a letter outlining my goals for the financial market because she seemed like a very knowledgeable person.
Instead of inventing something new or even automating work, we just make home ownership and retirement harder to attain. A person who is 18 today getting their first job could calculate what they need to retire with a 30K USD income. The answer, if it is Wal Mart shares, is almost $2M because the dividend yield is 1.55%. This means to retire you must put in more than you’ll earn in your lifetime. And we complain when teenagers are basically communists now.
excellent comment
All they're doing is incentivizing pension funds to take more risks by lowering the yield they get on their investments. That's literally all they're doing. The rest is just an unsubstantiated claim with zero evidence.
"In addition, QE can stimulate the economy by boosting a wide range of financial asset prices.
Suppose we buy £1 million of government bonds from a pension fund. In place of the bonds, the pension fund now has £1 million in money. Rather than hold on to this money, it might invest it in financial assets, such as shares, that give it a higher return. And when demand for financial assets is high, with more people wanting to buy them, the value of these assets increases. This makes businesses and households holding shares wealthier - making them more likely to spend more, boosting economic activity."
www.bankofengland.co.uk/monetary-policy/quantitative-easing
Here in New Zealand, we've got the lower interest rates than even during the Global Financial Crisis and all the monetary policy has achieved is massively boosting property investment, cash building up in the banking system, falling term deposits, and business credit has fallen by $9 billion y/y. lol. I could have told them that would happen more than a decade ago.
"A leading economist says New Zealand has the wrong mix when it comes to borrowing.
ANZ's Business Outlook for May shows business lending has dropped by $9 billion in the past year while home lending has increased by $30 billion.
Economist Cameron Bagrie told The AM Show low-interest rates are partly to blame.
"From a purely economic perspective in regards to a productive, dynamic economy for the long term it's completely the wrong mix."
www.msn.com/en-nz/money/homeandproperty/economists-warning-over-rampant-home-borrowing-falling-business-loans/ar-AAKzMWY?ocid=msedgntp
.
Good comment!
.
Except:
1) "Communist" implies "OK to kill".
2) Large numbers of full time workers currently can't afford to buy a home or health care (or in many cases even afford rent). Is M4A or free college "Socialist"? What about free K-12? Tax supported military? Social Security? Medicare? Gigantic bank and big business bailouts? Subsidizing predatory "private" health protection rackets? How are our (American) youth any more "Socialist" than the rest of us?
@@red-baitingswine8816 For your point #1 I was not implying any such thing, rather I’m trying to say that they’re in a position where they have very little to lose so it almost makes sense for them to go radical left, from a purely self-serving perspective. It is a tradgedy of the commons. For your point #2 any reasonable conservative agrees there are some merit-goods that can never be achieved through private funding. Defense and Roads are the strongest examples. I would point to Clothing as a good example of something where government involvement can only make these things more expensive. I mean, up to a reasonable point of course, the clothing cannot be made from asbestos or depleted nuclear fuel or lead or something else absurd like that. Within reason though, they stay out of it and that’s why we have plenty for cheap. Same for Food or Hygene/Cleaning related essentials, with the exception of safety which is the FDA’s job. No lead soap and no nuclear algae soup.
Its easy to become wealthy in America.but you cant do it on 30k. And if your only making 30k in America your doing something wrong.
Many videos on Japanese stagnation doesn't talk about the 'low desire society' which is what really keeps the economy from growing. The younger generation saw two decades of economic ruins caused by mismanagement of the older generation and are thus less willing to take on any risk and debt. This contributes to high savings and low consumption/investment. It is both a cause and an effect. It's not something that could be solved politically or economically. It's a cultural and education problem.
What's very often overlooked globally is financial literacy education: teaching the younger generation on how to manage their income to both improve current quality of life and to prepare for the future. We either see overconsumption and massive debt (as in the case in USA) or under-consumption and over-saving (as in Japan). The education system needs to teach teenagers how economy works and how to be financially responsible. Unfortunately in most nations ECON101 is not taught until college (which means those who don't go to college don't understand economics at all) and there's no easily accessible personal finance education. Look at how many young Americans only started to learn personal finance on TH-cam since the start of the pandemic.
It would be wonderful if a modern elementary class in economics found it's way into all education. We have to live in this world. You need to understand how it works and what your options are.
@@JohnLeidegren Too bad most elementary economists is junk though.
It would really make a difference if you always put the dollar and Yen value on the screen as you mention them, as it takes a moment to think about the numbers you say and still follow the story.
Sometimes you don't say the dollar amount right after, but continue to explain then reference the amount in us dollars.
This is kicking a can down the road on a macroeconomic scale
More like bailing out the US dollar.
Surprise! the road never ends.
@@Molybed1 when others are dumping like russia and china?
the thing that fascinates me about Japan is that the JPY is kept appreciating despite all those floods of liquidity from BOJ. Who is on the other side? who are these JPY buyers?
Trading partners I'd assume
Its the people themselves.
By not spending most of their earned money, the prices in the economy tend to go down over time.
Less money being exchanged means it increases in value.
Is it true that in the 1980s Japanese property were worth so much you could fill the building wall to wall ceiling to ceiling with gold and the property was worth more than the gold? That's the analogy I've heard!
the imperial palace was worth more than the entire state of californoa
A cubic metre of gold is worth about 1 billion dollars today, so I think that story is very exaggerated.
The value of real estate in Tokyo alone was larger than all property prices in the US combined.
How many macro-economic levers are there left to pull? You wonder how seriously they have discussed doing actual helicopter money
They've already done helicopter money. That's what the stimulus checks and increases to unemployment benefits that Americans got were. Now Americans are sitting on their asses at home trading cryptocurrencies with each other lol.
The biggest macro-economic level that Japan can pull any time is the immigration tap. It would solve all their shrinking labor force problems very quickly, and potentially fix their demographic problems if they do a good job encouraging births and assimilating all new arrivals and their children.
But unlike the West, Japan didn't have mass migration in the last few hundred years so is not an immigrant nation: they have strong cultural and racial aversions to this. But the immigration doesn't even have to be from the Middle East and Africa. It could be from East and South East Asia (from Laos to the Philippines).
But Japan would rather see its population fall to 60 million people than become an immigrant nation. Which is fine -- that's their decision to make. It's just that it means the country will become increasingly economically irrelevant as time goes on (while the demographic of many western countries continues to be much healthier)
@@shazmosushi "demographic of many western countries continues to be much healthier" HAHA, name them so people can have more fun reading that left wing propaganda.
All western countries have negative demographic even France that got plenty of "imported work force"+ plenty of social benefits for them and in the same time soldiers patroling streets year after year and the situation is only getting worse with every passing year.
Now French high ranking officers writing open letters to warn people about grim situation in France and complete declain in French culture, spirit and honor...
@@Bialy_1 not a pole trying to Shane the western world while your homeland is impoverished and polluted.
Honestly 2, controlling the central bank interest rate, and the supply of money lol. everything else is experimental.
Excellent research! Becoming increasingly worried about economic policy in the US!
Why aren't you happy maintaining the status quo with cbc?
Japan: spends less on R&D, pays less wages than 30 years ago and wonders why inflation hasn't gone up.
The lost decade lasting longer than 10 years...
Even the word "decade" has lost its value 😋
Thanks goes to US for pressuring Japan to raise the value of Japanese Yen during the early 90s; now is 2021 and unfortunately, US can't use the same strategy to hold down and suppress China
soon lost century lol
Soon coming for shit Pooria.
Stocks are good but the secret of the future is hidden in your daily routine. Crypto and forex trading is the future
@@omeroserti2799 You are right but the market is profiting if you are using really a good broker or account manager to help out with trades or provide signals
That wealth is just on paper... spot on
Simply Superb Content and Presentation. I just subscribed to your youtube Channel.Thank you. This is Venket from India.
Hello Asianometry. I really like your video and analysis. I like the time you take to explain things. How your speech is not hurried. I have a question though : 'Why didn't you mention the negative interest rates that Kuroda implemented to go along with his other controversial 'aquisitions'?' I think you have to keep them also in mind because they most surely had side-effects. And, do you see negative interest rates comming to the US or if indeed inflation takes hold (not my opinion - but who am I?) , will this cause Europe and Japan to 'get back to zero interest rates?'. Thank you. - And what is your opinion on negative interest rates?
Coming from your "What Eating the Rich Did For Japan" video, I feel like the Keiretsu has completed full circle and became the new Zaibatsu. Just, the new Zaibatsu lives a step backward, deep inside the central bank and other financial fortress.
The videos you make are always extremely well researched and presented. I always feel that I learn a ton after watching them
Good! Keep it up with the good info!
Interesting videos. Major corporate governance programs were launched by regulators over the past several years. Toyota is the obvious corporate success story but some others struggle. I would emphasize government efforts to diversify the assets of individuals to include stocks and improve retirement savings. Also, government inflation goals are simplified language that related to attempts to catalyze real growth. Some argue that 25 years after the bubble burst, the Japanese banking system had restructured and recovered. I was surprised how educated, wealthy, developed and safe Japan is.
What's interesting about the Plaza Accord is that people holding Yen got richer while people holding dollars got poorer. In other words as the Yen rose, Japan got richer vs the US. What Japan did after is simply outsourced manufacturing to Korea, Malaysia and China. At the end of the day its the US consumer that suffered. For example, if the Plaza accord didn't happen, there would be Made in Japan LCD TVs sold in stores in the USA with no backlight bleed and dead pixels.
They were largely shielded by the US Dollar being the world's reserve currency. People in developing countries with a US Dollar peg, were far worse off.
most Americans don't hold their wealth in USD, but in physical assets, and the USA has infinite USD so the lowered value doesn't matter nationally.
@@alexjohnward yep and those assets are massively inflating since around 2002.
Great video, but you completely lost me around 17:00, where it sounded to me like you are arguing that the falling P/E ratio is one indication that the corporations did not grow their sales. However, does it not indicate that sales *did* increase (Assuming most earnings increase is due to increase in sales, with constant expenses)? If stock prices are going up and P/E is going down, or even holding steady, does this not indicate rising earnings? I'm missing something basic here.
yeah.
he probably made a mistake there
Something like this is illegal in Europe/Germany, the ecb wanted to do something similar but a court ruled otherwise
Really? The Swiss Central Bank has bought US$150bn of US stocks (presumably as an alternative to Treasuries.)
Thanks for making this video man. You have really explained it well...
Question:
If japan has been in a deflationary spiral for some time, why are real wages stagnant? Even if the minimum wage weren't increased, the value of the yen would have gone up, meaning $1200/month would buy the equivalent of $1700/month 5 years later, for example.
Apologies for the dollars, many people have issues with convertibility. Just add two 0s to the dollars for a rough yen estimate.
Wages might be stagnant in NOMINAL terms but they have been falling in REAL (adjusted for inflation) terms. If wages fall faster in Real terms than other price levels, then the currency would appreciate. Thus, $1200 a month would only buy you an equivalent of $700 a month 5 years later for example. You also have to take into account that currencies float against each other so a appreciation/depreciation of the US Dollar or Euro will also affect the value of the Yen. For example, if the value of the Yen stays constant but the value of the US Dollar depreciates then money will leave Japan and flood into the US chasing higher interest rates rates and returns on assets. Causing the Yen to then appreciate relative to the US Dollar, influencing inflation/deflation rates in Japan.
Thank you so much - very informative
Very good video, congratulations.
Wanted to check out the Soros - HK video, but couldn't find it. Also, I can't avoid to say: THANK YOU. it's really an amazing work what you are doing here.
I'm stunned just seeing the rate at which you are releasing new content, lately. Moreover, after considering the level of detail in your research, the complexity of topics like these, being able to explaining them in such a clear, funny and entertaining manner. This is a gem of a channel. Thanks, again!
"Why the Bank of Japan Bought $300 Billion of Stocks"
Because Beep boop, stocks only go up.
🤡
Stonks
You realize that a central bank does not need to make benefits, right? It is the single actor that _literally makes money_. 🤦♂️
Good work. Thank you very much
Cant find the video on Soros and HK, can you send the link?
It is not profit. There is not one single historical example of a central bank debasing the currency without causing massive economic damage. I know that history is not taught anymore in schools, but whatever, it gives an an egregious trading advantage!
You mean what the Americans did at the Plaza Accord?
09:55 with the way inflation is calculated in the UK, sales (consumption) taxes are included in prices.
So basically to fight deflation, they raised regressive consumption taxes to inflate the cost of goods for society at large but looked good on paper whilst depressing aggregate demand ironically.
Consumption taxes are an inflation multiplier and raises the floor to entry for any buyer.
This video doesn't provide context for income or corporation taxes, so I had to look them up.
Of course these sales taxes were sleight of hand at work, they cut income taxes that disproportionately benefited the wealthy and cut corporation taxes and made up the shortfall in austerity measures ie cutting real term spending on public services and of course raised consumption taxes that disproportionately hurt the poor to compensate.
I am no economics expert. But it seems a bit weird for BoJ to hold on to those ETFs if they intend to stimulate the stock market. Wouldn't it be better to do a swap for foreign currency in exchange for those high quality ETFs with foreign investment firms and banks? That way, the BoJ can realised their profits and gain foreign currency as well, which they cna funnel into domestic champions to increase their competitiveness? Seems like they got the first part right and totally missed the other parts.
“Princes of the Yen” is such a good book. It’s almost like u summarized the book in this video.
Thank you for mentioning that book, it explains very well how they're trying to turn Japan into a finance based economy. It's clear that the BOJ is looking for allies in the industry by inflating asset prices instead of productive investments.
One of the ultimate goals in my opinion is to change the way Japanese companies are run: they want western style short term profits over long term survival and employment of the company and employees.
By the way, the Europoean Central Bank ECB is also buying corporate bonds like crazy. Former ECB president Mario Draghi used to say "Whatever it takes".
Back in the late 1980's I hadn't realized why the Japanese were buying so much US property. Now I get it.
why ?
@@fwefhwe4232 Too much import earning and too much property inflation in Japan, makes foreign assets a bargain.
@@maggiejetson7904 makes sense.
Really hard to maintain growth and prevent asset deflation when your population is not growing.
Japan exports their factories to young countries. Problem solved.
I'd like to see Japan create a sovereign wealth fund to reinvest its trade surplus and huge foreign exchange reserves and pension funds, a 1% to 5% allocation to msayoshi son's vision funds could greatly boost their returns. Japan need to move from a consumer and export based economy to something like Singapore, govt led economy with strong social policies
I was joking that about US fed, imagine if they bought all of the call options available on the market for GME and AMC, from 10-15% out of the money to 200% out of the money. Some hedge funds would've went bankrupt, big banks will lose some money (if hedge funds can't pay the margin call the brokers has to pay) the gov will have 100s of bil $.
Interesting take. But that would be a worse form of market manipulation thab whats going on now. Plus options can quickly turn the other way. And them Fed Chair would lose his job and talk of doing away with Fed will grow stronger. Not worth the risk imo.
It’s pushing on a string, inflation is made by actual cash flow, not one-time asset liquidations spent on consumption.
great reporting on this video
The 'Blue ocean' market would probably leave you stranded in life jacket
Just a thought, but bonds are different from stocks and it's unlikely many central banks will buy stocks (ownership) of a company as many despise state capitalism, but will buy bonds (debt).
Bond and stock are different but both helps the company and bullish to the market. Effect are the same
Seems like a failure. It's more direct action but it wasn't precise enough. If people didn't benefit then what was the point? You spent all this money and people didn't get higher wages or more jobs. Then it was a failure
You want inflation? Just print massive amounts of money and sign off one-time stimulus checks. The people will be happy and the economy will receive a short-time boost. Problem solved. Except for one minor detail. It won't help the Japanese economy to grow. There is one issue in Japan that stands out particularly and negates every economic measure that the Japanese government can undertake which is a rapidly aging population. It results in less economic activity in general, including less risky money that can be invested into the stock market, and more of the county's economy working to support the elderly. And the situation worsens with each passing year. Unless several more Japanese companies make technological breakthroughs and suddenly become popular all over the world with their products as it happened in South Korea the economy is doomed to decline. The other solution would be to open up its borders to immigrants but knowing Japan it's almost unrealistic.
Or they can print money to pay people to have children.
Companies are not spending on R&D and their sales are low even after Bank of Japan bought the stocks of these companies. And wages are stagnant. Ain't this gonna result in inflation?
Most countries wish they had a deflationary economy. You could do so many things with this deflationary force, such as implement and increase universal basic income payments, or undertake big public works projects.
We always nice 😊 good video thanks 🙏
Now Japan stocks especially Nikkei 225 are start to pick up.... As almost 30 years from 1989 haven't pick up.... Great approach from Bank of Japan
Stocks going up means nothing, have you heard of the 1920s?
I will avoid Nikkei
I might be just naive, but I never understood why deflation is a bad thing? Your yen gets more bang for the back why is that a bad thing.
Good one..👍🏽👍🏽
I watched your IC EDA video first... And now this. Wow. You present a fantastic analysis and decimation. Keep it up.
Question: What is the real issue here?
I'd argue it's complacency or shall we say "contentment". Those with the power to take risk for the sake of growth see no need. They have what they want -- affluence, status, comfort.
A more effective strategy for engaging risky behaviour for the sake of gain is to change the value proposition.
Don't say "Spend $100 on growing cucumbers for a 15% ROI in 12 months". Instead say, "For every $100 sat in the bank for 12 months, the Tax Office will take back $1"
The fear of losing position is very dominant to the human psyche. See "Prospect Theory" developed by Kahneman and Tversky.
Great video
where is the video soros and hong Kong talked about at 6.45min?
i can't find it in your channel.
@That's Crazy thanks. seems info cards was disabled on my TH-cam app. so they haven't been showing up.
In the future I hope, companies spend there stored cash, on capital investment and make Japan grow again forcefully.
nobody: .....
BOJ: To The Moon! 🚀🌙
3:49 Where have I seen this before?
Doesnt the swiss national bank do that aswell?
2:33 You would have thought the US would make the same stupid mistake.
Actually... stock price increase has little effect on a company's standing. Apart from when going public, the company makes little to no money from the stock exchange.
What the BOJ have done was just pumping some money into the pockets of shareholders. This is generating inflation without causing too much inequality.
Actually whatever you do, the money will end up on the accounts of wealthy organizations pretty quickly anyway.
So yeah, if your target is inflation, then you either lower taxes (remove less money from the economy), or print money and put it into someone's pockets.
The problem is not with this mechanism. The problem is that this money goes to companies which doesn't even want to make profit, or actually should go bankrupt thanks to the way they were performing. Pushing money into ETFs also has this effect. Also, when you can't find even a very risky, but reasonably priced investment, then you will go for real estate. And that crowds out those people the houses are really for - the residents.
So, printing money and spreading it creates grossly overpriced stocks, which will turn into a bubble, which you will doctor again with printing money, because, well, it worked the last two times. That is everything but healthy.
Japan is better off than the USA. Less violence, longer lifespans, and they export to the USA so they are not as in bad financial shape. If you back out the "net savers" in their society, their Debt-to-GDP ratio for government debt is not 200% as widely reported but more like 120%. The USA is also at about this level, but without net savers. The USA, not Japan, is in trouble.
Insider trading ...
It also happen in Korea
They are buying BTC and Dogie, sicretly
This guy is my Asian Quant
S T O N K S ✨
S T O N K S
But how did the Japanese real estate market perform over that same period*?
Nice video. You could have added the never ending growing debt of Japan at 265% to GDP (2020), the decrease of the foreign currencies and deficit in trade balance even prior to covid. Also as you pointed out, the lack of good investments in R&D and pauperization of the Japanese society makes the future of Japan gloomy (an other lost decade?). Ideas for next videos about Japan are: Japan stuck in the 80's (fax and 3.5 floppy disk) and Softbank Son vision fund how they lost 24 billlions with Wework but gained 30 billions with Coupang.
Ofc they lost on we work.
Great video as usual！
To secure a company whose financial condition is forecast to collapse but has important technology patents, before the massive recession in America, Japan, and Europe.
This all sounds freaking familiar
well, because stonks!
Norway kinda does the same as Japan, thru its sovereign wealth fund. Buying up the worlds stocks, and using that controlling share in companies to have soft power. And uphold its values.
Like its said Norway is one of the shareholders going hard on banning Alex Jones from the social media platforms. Norway owns a total of 1.5% of the worlds stocks.
I have no problem with it when its a democractic goverment. And Norways sovereign wealth fund is not allowed to invest into Norwegian stocks. Due to due to the distortion and bubble it would create in the economic marked. Im not sure about Japanese bank distorting the economy like that. Well atleast not too much. But i guess they gotta venture into new territory due to the Japanese culture making a population so "allergic" to risk.
I mean alot of Japanese wont even tell you their opinion if you ask them a question. Cause they are afraid of offending you or someone. They wont even cross the street if the street light is yellow and there is no car in sight for 100 miles. They will wait for the green man :P Very different from the culture i am from. Where people love taking abit of risk :P
Japan has been printing money and buying stocks to maintain the prices. It is a huge bubble which will bankrupt Japan.
Japan cannot catch a break!
:p
How to keep asset prices high while the population decreases? Just have the Central Bank buy them. The BoJ should start buying houses in rural Japan...
Money printer go brrrrrrrrrrr
just thnking,what if japan starts spending more on it's military.
incredible
BOJ should just buy Bitcoin.
Like owning a restaurant
and nobody buys your food BUT you
I’m not some smart guy
But if nobody can outcompete you
for your own food YOU MAKE,
means it ain’t that great
stonks only go up
End the Jones Act and allow The Kingdom of Hawaii to trade directly with our Pacific allies.
Its a way to inject money in Japan big companies. Buy new stock issuers.
Simple answer: Japan broke the Interest Rate lever, they cant get it any lower and now they are trying to buy stonks using money fresh off the printer and straight into the pocket of investors.
If it went into the pockets of investors it might do some good, they might spend it & circulate the money. The video says the money is being hoarded by the companies “for a rainy day”. The money is sitting under a mattress where it’s not doing anyone any good.
sound vicious cycle to me
I came in to find out about BoJ buying stocks -- and they told me about the stonks as well. What a bonus!
Great video. I think there is a lot of nuance in the answers here. Things could have gone many ways and I think governance, market structure, and culture all play a role.
Addressing the 5 points you have at the end there:
1. Governance: To some extent ETFs already do this. "ETF socialism" is already a thing in the US, where most stocks are owned by institutional investors that are mainly passive.
2. Price discovery: As you said, already an issue with ETFs. As long as market makers have the right levers to pull (for example using options so they can cheaply hedge positions) and sufficient volume then even if large portions of outstanding shares are held without trading, price discovery can still happen. What happens in the long term is that decisions by the bank to buy one industry/sector/index vs another will be a thing that is a sector level risk. Governmental regulation similarly can already increase or decrease the value of whole sectors by percentages at a time. I think central bank (CB) actions could be modelled similarly. Counter is to spread out risk, trending to total market portfolio. In a total market portfolio, most changes basically don't change the value, since if someone is winning, someone is usually losing (barring removal of capital or increasing taxes, etc). On a society scale, you by definition have a TM portfolio.
3. Future: The goal could be dual purpose to increase prices/stability and to return capital to shareholders to spend or take on more risk. The CB can assume some specific risks, or just "own" 4% of the economy. Is there a fundamental difference between 4% inactive public ownership and 96% private ownership of all stocks? I assume we can construct some taxation/governance scheme that would make that equivalent to a 100% private ownership with another taxation/governance scheme. The distortions only happen if the CB prefers some industries to others. This would give them "five year plan" like powers of influence over capital expenditure. Except they would be able to take "value" from some class of equity holders and give them to some other class. Higher market caps also can mean easier raising of private capital. This gives the CB influence leverage.
4. P/E lowering might be the point. Making return on investment lower across the board to lower returns on investment in general and make people spend
5. Would love to see another video on this. Worker productivity in the last few years has started increasing again, but I suspect wages is different issue. I almost feel like you *need* a labor shortage to force wages to rise, given that businesses need to hire to expand operations, which means they need to be making money. Wages are sticky in both directions.
Its like society is run by narrow minded people. Very smart on narrow topics, clueless on grand picture of things. You won't grow an economy with a declining population, nor will you grow it without introducing new products and inventions to the market.
Why? because of let not any body to control Japanese company asset but only Japanese ( Government borrowed saving Japanese )
disliked for "stonk" & "yolo"; is no one sane left in the world... everybody wants to be relatable/relevant no matter how stupid they look doing it...
Can we yell hello to you?
I dream of 8% sales tax fuck VAT at 20% that's theft.
There is a reason why Japenese nationalist see the plaza accord as the third atomic bomb
If the BoJ owns the stocks via ETFs, then it is not the BoJ directly owning any company, and they would not be able to exercise any control over votes or boards (at least directly). Instead, the ETF issuer may vote according to their stewardship policies. The issuers have public guidelines on how they will vote on behalf of the ETF holders.
Japan is a rich country...poor peoples and still is...the country created little jobs or no jobs at all for its own peoples....
Their economy still stagnant since the 80s...becuz banks keep pumping money into the economy instead of creating jobs...
I remember when the whole Social Security Trust Fund was proposed. It was a worry that if there was actually a fund rather than just an accounting entry the trust fund would compete with the rest of us investors and they would have such a big stick corporations would start doing what the Feds wanted them to do at the expense of other investors.
Because