12 Aug 2021
Japanese Reflation
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
No matter which way we look at today’s economic conundrum, we keep arriving at the same conclusion and that is that the World is turning Japanese.
Japan mass printed money for well over two decades in an attempt to drive economic growth following its property and stock market collapse in 1991 but the strategy has failed.
Mass printing money has lead to the creation of a vast debt pile for Japan and coupled with zero population growth the result has been low growth, low interest rates and low inflation.
If this sounds familiar it should because the United States, China and the Eurozone are all in exactly that same situation.
They have all increased debt and Total Debt to GDP (Gross Domestic Product) for the United States, China and the Eurozone has now almost reached 300% for all three while population growth is effectively zero with the United States at 0.5%, China at 0.4% and the Eurozone at 0.1%.
Click for charts.
Mass debt piles plus zero population growth can only mean that low growth, low interest rates and low inflation are the most likely economic outcomes for the United States, China and the Eurozone for the next 10 years at a minimum.
Yes our thinking could be wrong but struggling to see how the United States, China and the Eurozone are going to overcome their already insane debt piles when they just keep printing more and more money.
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