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Why would you worry about UK, we are the ones who are heading to decades of no growth and stagnation thanks to idiotic FED policies that mirror policies of Japan central bank.
We are the ones who look more like Japan unless we raise interest rates and allow deflation to do its job.
The UK is nothing like Japan was, for many reasons. From a social-national-identity standpoint they did the right thing. From an economical standpoint it was a bad thing. It will take years for the fallout from this to settle but it won't be fallout within the UK, it will be global fallout. The UK has put the brakes on globalization which has been the foundation of most countries over the last 20 years. The US will feel the result of this as much as the UK will.
Last edited by TwoByFour; 06-25-2016 at 08:40 AM..
The threat of long-term worldwide economic stagnation is real. Despite the protests of C-D's tinfoil hat brigade, the threat of economic stagnation has nothing to do with central bank monetary policies over the past 20 years. The real threat comes from the demographics of aging -- an increasing percentage of formerly-employed workers who retire and then receive their promised social-welfare entitlement payments.
Around the developed world:
the ratio of retirees drawing public pensions to the total population is increasing
the ratio of entitlement payments to the total government budget is increasing
In fact, in the developed world, these two ratios move together. As the developed countries age, the required entitlement payments to support the aged increases... and increases... and increases.
Throughout the developed world, entitlement payments to the aged are crowding out public fiscal investments in public infrastructure in all the many other areas of government expenditure. The alternative is an ever increasing expansion in the government take from the private sector to support the ever growing entitlement payments to the ever growing retiree population.
The threat of long-term worldwide economic stagnation is real. Despite the protests of C-D's tinfoil hat brigade, the threat of economic stagnation has nothing to do with central bank monetary policies over the past 20 years. The real threat comes from the demographics of aging -- an increasing percentage of formerly-employed workers who retire and then receive their promised social-welfare entitlement payments. ...
Good point. Skewed demographic trends, and not some sudden collapse of values or loss of civic virtue or spate of corruption and mismanagement, are what lead to long-term stagnation. That said, governments (and business) can exacerbate the travails of demographics, by panicked attempts at "remedies"; or on the contrary, by doing nothing, and letting accumulating problems mount into crises.
The US has perhaps the strongest demographics of any industrialized nation. But there's plenty of opportunity to fail, principally by isolationism and xenophobia. This is exactly the grievous mistake of Brexit. England's demographic trends are quite bad. The deleterious effects of this will be made worse by Brexit.
Japan's stagnation had less to do, I think, with an overheated real-estate market or "corporatist" policies, than with demographics. It was because Japan had its Baby Boom in the 1920s and 1930s, a generation before that of the West. Better government policies would have smoothed the blow, but would not have obviated it entirely.
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