Randolph Kinney
Elite Member
- Joined
- Apr 7, 2005
- Professional Status
- Retired Appraiser
- State
- North Carolina
David, you are correct in that the U.S. is not Japan and its policies are different.David R. Stevenson said:A couple things are different between the Japan asset bubble and ours ....
Peak oil had not been reached ..... (Today we are crossing unchartered waters)
Japan is a net exporter (We are a net importer)
Japaneese have a savings rate of about 4% (Our savings rate is -1%)
Japan controls its borders (we have wage regulations yet import illegals)
Japan did not practice monetization of its debt although the interest rates on their 10 year bond was under 1%. They had deflation as a result because as you point out, their population are net savers.
Japan lost significant share of its export markets to Taiwan, South Korea and now China. It is no longer the low cost producer and it has been loosing its ability to control is currency exchange rates.
Japan really had no way to increase its imports because they are not consumers like we are. That hurt their economy. They are outsourcing now, however. But they have too because their population growth is slightly negative; their birth rate is less than the replacement rate and they don't allow immigration like we do to add to their population numbers.
Japan does not have a social security system like we do. Their population has to supply their own retirement income. That comes from savings or you keep working until you die.
The way the Japanese economic system is with its population growth (negative), any down turn in Europe or the United States means deflation in Japan as their export markets shrink. In order for them to maintain market share, they have to either cut their prices on exports or manipulate their currency to devalue it, or both.
We have a problem in this country. We don't save, we spend. The government makes up the difference in our income and our spending with social programs (transfer payments) and government spending (deficit spending). The government makes up the difference it has in tax receipts (income) with borrowed money. If the money is not printed, it must come from savers. We don't save. That means the rest of the world is buying our debt. Who? Japan, Korea, Taiwan, China, Europe, oil exporting countries, etc. They are net exporters to us and net savers. They have excess dollars. They recycle dollars to us, buying our debt.
It is a wonderful world that will allow us to consume without real payment, just dollars. :Eyecrazy: