Japan and Us
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 2 June 2023
⏱️ 17 minutes
🧾️ Download transcript
Summary
Today's Post - https://bahnsen.co/3qmaIH8
For a long time there was only one country on earth dealing with a bubble that had burst, spending way more than it was bringing in, seeing revenues decrease, juggling banks that weren’t actually solvent, and running extreme monetary policy to try and keep all the holes in the dam from bursting. That country was Japan in the 1990’s and into the next decade. For over 30 years now they have favored radical fiscal and monetary policy as a means of dealing with their economic woes, and the result has been well-documented in these pages of Dividend Cafe.
The balanced budgets and high real GDP growth rates of the American economy in the 1990’s went away when our own credit bubble burst in 2008. Asset prices fell, deficits exploded, and the Fed played pharmacist to it all, providing ample medicine to make it all feel better as we muddled through.
Japan now has ample company to the fundamental shared sickness of “excessive indebtedness.” Across the developed world those Japan-like characteristics of high debt, muted growth, and monetary discretion are now par for the course (see: America, Europe).
Today we’re going to look at a few things with Japan and see if we can’t learn a little about the future state of the American economy and policy. It is one thing to refuse to learn from the past. It is another thing all together to not even learn from the present.
Let’s jump in to the Dividend Cafe …
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the Dividing Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:10.0 | Well, hello and welcome to the Dividend Cafe brought to you this week from our studio here in Newport Beach. |
| 0:18.0 | We've kicked off the month of June and, you know, getting ready to |
| 0:23.0 | call the first half of the year complete. In the meantime, I want to talk today about the land |
| 0:30.9 | of the rising sun, the country that is Japan, and sort of make a case for where the U.S. has been playing catch-up with some of their |
| 0:40.8 | policies. And there's a reason why we're doing the second, not first, why they were ahead of |
| 0:48.1 | the game across the world and some of these things I'm going to be talking about and talk about what it looks like for |
| 0:56.6 | U.S. risk, U.S. opportunity going forward. The 1990s were fascinating decade because essentially |
| 1:05.1 | as you got into the late 80s and early 90s, there really was only one country on earth, and then this extended all |
| 1:13.0 | through the decade, one developed country in particular, that was struggling with an asset bubble |
| 1:19.4 | that had burst, and it was a massive bubble. |
| 1:22.1 | You know, their stock market is still to this day, not back to its high of December |
| 1:27.4 | 1989, a real estate bubble that is one in |
| 1:32.2 | the history books. And that the byproduct of that bubble bursting was essentially a really |
| 1:42.0 | radical debt deflation spiral that was happening in Japan. |
| 1:48.0 | And yet, at the same time, the U.S. was several years in the 90s running balanced budgets. |
| 1:56.0 | I mean, their debt to GDP ratio was very low. |
| 2:00.0 | You had really high, real GDP growth in the, |
| 2:04.6 | in the U.S. There was good enough growth, certainly real growth with lower inflation in the European |
| 2:14.1 | countries. And so Japan was unique. And they embarked upon an experiment of |
| 2:21.6 | growing debt to GDP in kind of a Keynesian response to their woes and what was hurting them in |
| 2:30.7 | terms of the aftermath of their asset bubble bursting. |
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