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OK....back to your original point though. Who ever said that Japan's high personal savings rate was going to save/defend them from their high public debt accumulated by Japan's government spending? If anything, Japan's high personal saving rate might exacerbate the situation as the Japanese were saving instead of spending which may have served to keep the economy afloat (to a certain extent...it didn't work here!)
More to the point though: Just because the high personal savings rate of the Japanese may not help their economy as a whole doesn't mean that its not smart for the average Japanese citizen (or a citizen of any country for the matter) to save their money.
Hi broadbill,
Again I had asked the question and I was hoping for answer I also wanted to point out that there is more than blaming American consumers.
However it leads to my other question of why the Japanese government did what they did to stop saving.
Pay attention to Japan and it's financial crises. It's the model for this crises. Not the depression, not any previous recession.
It's not a consumer problem, which is why Obama's stimulus package won't work at all. Consumer savings, or spending, or unemployment, has nothing to do with this financial crises, not directly anyways. It's a cause and effect relationship, and savings, or the lack of it, is a contributing factor in the effect of the cause. The cause being - a financial institutional crises.
What should we learn from Japan?
-The problem doesn't resolve itself by trying to stimulate the economy. Consumer stimulation is practically worthless. The government just wasted $800 billion today.
-If you don't address the cause - banking laws and regulations, it will also not correct.
-Bank bailouts and such. OK but do it right. Don't write a blank check. Right now what are banks doing? Not lending, using TARP funds to make there balance sheet better.
-Regulate carefully. Yes some banking regulations need to be strenghtened, but you can go overboard and delay recovery.
But Japan does have to borrow from foreigners like we do and pay the interest to tehm. Also the individaul japanese wil be better off when the economy turns like it has now;juts as amerocains who saved are better offf than those that ar ebroke or in financial debt.Look at what negative savings( spending more than you make ) has done to many people when the economy first started going south. Ask anyoine who has alot of credit card debt what that does to your finances in a downturn. Remember that the money the governamnt is borrowing to help p[eople in the stimulus has to be apid back with interest and not much of that interest is going to US citizens in the future.
Hi texdav,
I want to focus on Japan but that is not the ultimate goal. Japan just happens to expose the absurdity of our financial system so very well.
Why does a country with massive surpluses and idle labor for 10 years need to go into debt? Who do they owe? Can no one answer this or suspect something is horribly wrong?
Now here is a link about the nature of Japan's debt
So for those of you educated in economics you know what selling bonds is for I hope. How does selling bonds jive with near 0% interest rates in that lost decade? Those don't go together too well do they?Not unless you really look at the difference which should horrify you. Do you see how this rapes the Japanese citizens?
If you saw someone putting broken glass in their pocket and cutting themselves would you not wonder that they have gone mad.?Do not people follow their own perceived self interest? This is why I think people may think at time I have gone mad to say that saving is pointless. However until there is reform it is pointless.
Pay attention to Japan and it's financial crises. It's the model for this crises. Not the depression, not any previous recession.
It's not a consumer problem, which is why Obama's stimulus package won't work at all. Consumer savings, or spending, or unemployment, has nothing to do with this financial crises, not directly anyways. It's a cause and effect relationship, and savings, or the lack of it, is a contributing factor in the effect of the cause. The cause being - a financial institutional crises.
What should we learn from Japan?
-The problem doesn't resolve itself by trying to stimulate the economy. Consumer stimulation is practically worthless. The government just wasted $800 billion today.
-If you don't address the cause - banking laws and regulations, it will also not correct.
-Bank bailouts and such. OK but do it right. Don't write a blank check. Right now what are banks doing? Not lending, using TARP funds to make there balance sheet better.
-Regulate carefully. Yes some banking regulations need to be strenghtened, but you can go overboard and delay recovery.
Hi Dd714,
IMHO bank bailouts are the worst possible thing that could be done. The result is the best evidence. They just cleaned up their balance sheets. As I have dug up from the past, given the opportunity, banks will exchange money for government bonds during a depression which is usually engineered by them and actually accelerates the effect as well as their profits. They have no incentive to lend at all.
Why was it necessary for Japan to go into debt while the society was sitting around doing nothing in depression?
Why was the government thwarting Japanese personal saving?
Who does Japan owe?
What are the effects of 0 interest rates?
Why is their a Japanese bond market along side this?
Why are the taxes not adjusted?
The true problem is that most people don't know how to save appropriately. We put our fiat money in the bank and then put our heads in the sand about bank runs, hyperinflation etc. "That can't happen here." "the dollar will never collapse." Even though history has shown us that EVERY fiat currency collapses.
If you guys saved in hard assets that provide value to humans, your savings will always pay off handsomely.
I am working on developing a website that explains this type of investing very clearly.
I always see doom and gloom but what most people don't realize is that there is a lot of opportunity to protect yourself and make yourself wealthy. People just need the information and I plan to give it to them.
IMHO bank bailouts are the worst possible thing that could be done. The result is the best evidence. They just cleaned up their balance sheets. As I have dug up from the past, given the opportunity, banks will exchange money for government bonds during a depression which is usually engineered by them and actually accelerates the effect as well as their profits. They have no incentive to lend at all.
Yes they cleaned up there balance sheet, even worse however is they still have not accuratly valued there balance sheet to reflect some of the bad assets. So we don't even know the extent of this crises if they still carry loans on the balance sheet that are bad.
Frist step should be to have them revalue their assets to an accurate value.
The true problem is that most people don't know how to save appropriately. We put our fiat money in the bank and then put our heads in the sand about bank runs, hyperinflation etc. "That can't happen here." "the dollar will never collapse." Even though history has shown us that EVERY fiat currency collapses.
If you guys saved in hard assets that provide value to humans, your savings will always pay off handsomely.
I am working on developing a website that explains this type of investing very clearly.
I always see doom and gloom but what most people don't realize is that there is a lot of opportunity to protect yourself and make yourself wealthy. People just need the information and I plan to give it to them.
Hi killer2021,
Thomas Mun of East Indies company actually destroyed the myth that gold was the real source of capital. Gold is a currency. There is a difference.
However this post addresses the currency and legal tender not investment or capital.
Bank runs are the direct result of fractional reserve banking not fiat currencies.
Yes they cleaned up there balance sheet, even worse however is they still have not accuratly valued there balance sheet to reflect some of the bad assets. So we don't even know the extent of this crises if they still carry loans on the balance sheet that are bad.
Frist step should be to have them revalue their assets to an accurate value.
Hi Dd714,
I would like to keep it on Japan for now but I would not mind opening up a new thread on credit markets and the fact that our whole debt and security valuation system is dead. In others words Moody's tossed us down a hole. However again, that was just more juice for a bad system, we can't let that create money. I want to continue with the Japan paradox because I think it exposes the scam financial interests are running best.
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Again is there an answerfor these?
