Why no inflation in post-bubble Japan. U.S. hyperinflation to come? hmmmmm

[BLUESKYS4EVE]

The difference between the average American and Japanese is that the Japanese recognizes the pit falls of uncontrollable debt as it pertains to a nation and it's citizens. The Japanese consumer is protecting himself while the American is drawing a pencil mark over his jugular.

[BLUESKYS4EVE]

I live in Okinawa, a prefecture of Japan. It is true that Japanese have an entirely different mindset from Americans when it comes to consumerism. And for good reason. The Japanese government has leveraged their national debt to a ridiculous level. The difference between the average American and Japanese is that the Japanese recognizes the pit falls of uncontrollable debt as it pertains to a nation and it's citizens.

[mayaforpeaceful]

save first and buy later japanese attitude

wow

as our granpa taught us

only in japan

thumbs up for japanese and this guy on video :)

[mrpaizuritatsujin]

this guy is for real

[Trimbler00]

Looking at credit through a social/cultural lens? Who would of thunk it! Good vid

[badsign1980]

imk like you, and i also try to learn everything about something before calling someobne else to do it, i only do and pay if i cant fix something or really cant understand something, or else i do it myself, great way to understand things, ppl think because they pay interest rates and everybodys in debt the prices will go up, well they will its called inflation and deflation, in the end you loose, gold and silver are the only things worth going into debt because you dont actually go into debt

[Snikitysnake]

You clearly belong in Japan. Very Japanese mentality.

[707hoser]

Hi there,

Just stumbled on your video. This reminds me so much of how we lived when I was growing up in England. We paid for everything with cash and saved up for everything we bought. Of course, that was before credit cards and easy credit. I believe that the availability of credit has driven inflation and made us feel that our standard of living has improved. We have all been duped but we should learn a lesson from Japan. Good luck.

[milestracy]

One problem

Paying off credit cards doesn't change the fact that new money that wasn't there before is now in the pocket of the institutional investors.

When you use a credit card you are participating in a money laundering system for counterfeiters. They do not loan you what they have, and paying your cc bill does not make that money disappear. They create that money out of nothing and after you give it to them they put it in their pocket. A reserve ratio does not mean nor does it imply nor

[asdfgoogle]

Adverse to waste? Is that why I see videos of japanese shitting and pissing down a urinal hose that is strapped to a naked young females mouth? lol.

[kmarinas86]

Gold (REAL MONEY) always "deflates" with respect to fiat currency. As time passes by, less gold is needed to buy the same dollar.

Why do elites say that deflation is bad? Because the elites possess much of the gold, and by throwing fiat (DEBT) into the system (INFLATION), they can reduce the wealth of others and increase it for themselves (INTEREST).

In summary, currency deflation is good, except if 1) you're an elite fiat hoarder or 2) you're enslaved to debt by the elite.

[KRYTEN451]

great piece, thanks

[kmarinas86]

"Conquest is not in our principles. It is inconsistent with our government."

"Delay is preferable to error."

"Dependence begets subservience and venality, suffocates the germ of virtue, and prepares fit tools for the designs of ambition."

"I abhor war and view it as the greatest scourge of mankind."

"We did not raise armies for glory or for conquest."

"War is an instrument entirely inefficient toward redressing wrong; and multiplies, instead of indemnifying losses." - Thomas Jefferson

[UrielWN]

Japan has no hyperinflation because there are no trade deficits, budgets are balanced, the economy works like a swiss clock. The way westerners see the fact that the bank control inflation is fallacious. The setting of interest rates while totally ignoring debt bubbles is wrong and can lead to total destruction of the economy as it causes severe resource misallocation to sectors that otherwise would not attract attention. It is speculation that causes inflation and bubbles

[dannydarias1]

Good video. Finally some sense.

[sustaincain]

Thank you flaskofcoffee. I wasn't aware of Japan's interest rate situ, and it makes such an interesting counterpoint to the usual hegemony regarding deflation.

[sustaincain]

Thank you flaskofcoffee. I wasn't aware of Japan's interest rate situ, and it makes such an interesting counterpoint to the usual hegemony regarding deflation.

[sustaincain]

Thank you flaskofcoffee. I wasn't aware of Japan's interest rate situ, and it makes such an interesting counterpoint to the usual hegemony regarding deflation.

[quadcatfly]

Japs have always saved and produce. Japan is one of the biggest producer and their gov borrowed money from their own people. US on the other hand doesnt produce anything and savings are negative. There is nothing in common between US and Japan.

[Tiwaking]

This was a wonderful video. Thank you for making it

As a side note: Chinese regard real estate as an 'investment option'.

Personally: Houses are, will and always will be an expense and never an asset

[chimpanchu]

Australian are crazy over real estate. They truly believe that Real Estate will go up and up FOREVER...!

They hell bend on owning a house even it if means going into massive debt, because in 5-10 years time they can always sell their house at "much higher price and keep the profits". Well, we'll see about that.

[sfsTrader]

everything u just said is typical/picture-perfect statements that describe bubbles right before they burst, or a time to exit a long trade as i think of it.

[jskim1]

5:23 - "...privilege of paying an $100 to see two fat men in diapers rolling around in sand..."haha~

[mallamoozoo]

My japanese wife and I want to buy a house in japan - I want to spend time in the nagano alps but my wife hates the cold - so I am looking to compromise by choosing somewhere at lower altitude a bit further south - and just making short trips up to the mountain.

I've narrowed it down to somewhere in southern Nagano ken/Gifu ken/Aichi ken. Does anyone recommend anywhere in particular?

Cost is a big issue- I have only $300,ooo to my name and hope for a semi-rural small house for about half that.

[mallamoozoo]

I would consider a bit further away - as far as Wakayama for a significant cost trade-off.

[fox20012]

I agree, I just got back from japan where is was house hunting. I've lived there for 3 months.

They always warned me that houses will depreciate. They're not flippers any more!

but.. My first thought is , seriously Japan has a dire problem, Govt debt at 217% of GDP, Inflation will be the govt's best friend in the future to pay off that debt? The Japanese govt may want inflation soon??

Secondly the Japanese Govt debt may have gone to America in the Japanese carry trade thus no inflation???

[BobCassidy]

Crispy cream donuts! Oh jaysus. Saw them queuing for the donuts myself. They love a good queue so they do!

[fox20012]

I brought a book to Japans Disney land because of the crazy ques lol

[SBStreater]

Hi flaskofcoffee!

Your videos were mentioned on the ADVFN gold thread (one of my interests!). Also, I have family in Fukuoka, and have experienced a lot of the things you have talked about for a long time. My Yen cash really is worth more than when I bought it more than 10 years ago!

The text comments allowed here are very short - so I'll tell you my reason behind this comment if you are around and interested!

[flaskofcoffee]

Hi SBStreater.

Yes, I'm very interested in reading your further comments. Send me a pm from the youtube channel if you like.

Also, I'd be grateful for a link to the ADVFN gold thread please, if you have it handy.

Thanks for the comment on my other video (Where does money go...?) too. I might remake that video, as it was my first attempt.

Looking forward to hearing from you.

[chinaownseverything]

@flaskofcoffee what do u expect for Japan in the future, do u expect collapse, or do u think japan can make an economic comeback

[mrtom999]

thanks flaskofcoffee

im studying this topic at university in england and your video just helped me massively! :)

[flaskofcoffee]

Hi Mr Tom.

That is fantastic to hear, I am delighted that the video has been of some practical use. It is only my own, personal, opinion but at least based upon experience.

Best of luck with your studies.

[Brainman94]

Is now a good time to buy real estate in japan? Will it hold value or may it decline much further yet?

[flaskofcoffee]

Hi Brainman.

Real estate seemed to bottom (in Tokyo, but not in the rest of the country) back in 2007 or so. However, I think it has levelled off again now.

Personally (just my own opinion) I don't see it taking off anytime as deflation remains in play and, frankly, prices still seem too high compared to income.

There are no bullets left to fire at the mortgage market - they even tried mortgage periods of up to 100 years to reduce monthly payments, but it didn't stop the rot.

[ulysseinvest]

PPPS

Also, around

8:00

when you say 800 billions have been added to the money supply, this new amount of currency is added to M0 which represents a relatively huge percentage in change... to M0, not to be confused with M2 or M3... (your last comment seems to hint at this issue but...)

[30percentplusreturns]

All the more reason to buy gold if we get delfation in the US. Gold performs better during deflations.

[30percentplusreturns]

Dont have a refrigerator,lolol. Thats ridiculously stupid. God forbid something happens to the distribution chain and shelves are empty. You should have a fridge. Plus, dont you want to cook fresh meals? Do you even have a shower buddy? I mean, you could just use the one at the public pool. Its one thing to save and be frugal, its another to be cheap and not live your life. Sometimes these frugal people take it to extremes. Live your life for godsake. You should die broke.

[flaskofcoffee]

Good advice. ;-)

I recently moved apartment, upgraded, and now have a well-stocked fridge.

Most recent problem is late-night snacking, from said fridge, and consequent weight gain.

Ho-hum. ;-)

[fox20012]

I think its an awesome Idea, but prolly would do it lol

I store all my food supplies for emergency as rice, flour, honey and pasta etc. A fridge wont help you in a real emergency like the Zimbabwe situation....

I watched a few documentaries on their food shortages which was pretty scary

[prescottbill]

The Yen has held up pretty well through out their crisis. The dollar is crashing and it is the reserve currency of world trade. We could have a situation where leveraged assets like real estate fall in value, but imported goods double in price (oil being the most important one).

[ulysseinvest]

By the way, "inflation" (as most Austrian Economists see it and as it should be defined I think) is merely a process through which you add money to the current Money Supply. Price fluctuations only represent "one of the" various results of inflation and the fluctuations can show up in various spheres of the economy (goods and/or assets). I believe that the current USA M0 is of (approx) 2 Trillion and I "assume" this numbers includes all the cash found abroad as well. Is my understanding wrong?

[ulysseinvest]

flaskofcoffee-san,

Brilliant. I have been in Japan for 15 years. Enjoyed your video.

Keep up the good work.

PS: It's "ikkatsu-barai" :)

[flaskofcoffee]

arigatou gozaimashita.

I assumed it was 'ikkai' as in (one time) but further research confirms your advice.... "ikkatsu-barai". thanks for that.

Appreciate the nice comment, too.

Cheers.

[Nuanceqwest]

I dont see troubling inflation for years.

[KLguy133]

I have a good idea why this and I am very surprised why the media keeps getting stumped by this - maybe most so called experts on TV are bullshitters. ?

[Anothercoilgun]

"They buy a house to live in." I heard enough. I give this video the max rating possible. I need not even hear the rest of the clip. Add housing to the root of all evils along with money, side by side.

[largo2001]

flaskofcoffee,

a) Japan did NOT experience Deflation (maybe shortly for a few quarters in 98 but very very mild like -1% yoy) but asset price deflation

b) There is a major difference if a country is net Creditor (Japan) vs. Net Debtor nation (US).

[flaskofcoffee]

Thanks largo.

I totally agree with your point (b), and don't have any data to contradict your point (a).

I suspect that our slight difference of opinion on what deflation IS comes from the angle one views it from. I look at the big picture of how much total 'buying power' is in circulation (credit, leverage, asset EQUITY) rather than any new injections by the Fed.

If the Fed print but no-one borrows, inflation is stalled. We see that happening for the time being, imo. But it WILL change.

[hansxxxx666]

interesting stuff

[AFRIKTODAY]

Japanese are great savers despite the unresponsible monetary policies of their central bankers. The money borrowed by firms mainly comes from Japanese citizens! Americans have been living on credit for 30 years; we have no industrial basis, we have en ingrained tendency and a negative saving rate. Also, the dollar is the world currency and due to the government bailout policies, more and more people are losing confidence in the dollar; that is more like a recipe for inflation, not deflation!

[infinatestupidity]

Because in Japan GDP grew at the same time as inflation. GDP is falling in America whilst the Fed print money at the same time. If that isn't a recipe for hyperinflation then what is?

[mouljran7]

i live near shinjuku, so i understand exactly what you re saying :)

[flaskofcoffee]

Thanks for backing me up.

Obviously a personal perspective will always be somewhat biased so its nice to hear that someone else agrees.

[eatandtravel]

Coffee,

Great stuff.

In Japan, you have a very large aging population who spent even less money as the Japanese economy turned south. Furthermore, older people tend to spend less money relative to younger people because they already own a care or house. I bet Japan would have experienced some hyperinflation if its population was younger.

[flaskofcoffee]

Thanks for the comments everyone.

"Aging population a factor?".... yes, I'd say so.

"Where does the money go?"... sits on banks' balance sheets if they can't/won't lend it, or goes into savings and debt repayment when people turn pessimistic. Take a look at my other videos for a few thoughts on that.

"Japan was a creditor nation, U.S. is a debtor"... yes, and this model of collapse is untested as the meltdown is global and on an unthinkable scale.

Cheers all. Stay safe and solvent.

[jusblaze99]

where do u see the US econ in the next 1-10 years?

[Derukugi2]

Interesting video! I think your assessment of Japan is correct.

Although I still don´t quite understand where all this artificially created money goes. I mean, even if people do not consume on credit like crazy, doesn´t it have to go somewhere and eventually lower the value of the Yen?

I mean, surely there is no black hole out there that swallows all this paper (or electronic bits, as it were)?

[madridisinSpain]

Yes, it went to countries like the US or Iceland where they enjoyed this cheap credit. Haven't you heard about people taking loans on Japanese Yens to have 0% interest. That lowers the Yen when they get the loan but increases it when they pay it back. Plus Japan exported a hell of a lot of stuff. Another thing is that the cheap loans in Japan go to where they should go, that is to companies like Toyota so that they can build factories and do the R&D

[Derukugi2]

Yep, that is called "carry trade".

And now, that is all unwinding, and a lot of the carry traders are being burnt.

But I still have a conceptual problem understand how wealth can simply "disappear".

[madridisinSpain]

Well it disappears b/c our system works this way: you put your money in the bank and the bank gives loans with it. However you still have your money in the bank, but the economy has now 2 times your deposit (the one who borrowed the money has your "real" money and you have an account that says you have your money) When banks stop lending money and people keep paying their loans, that artificial money starts to go away and the bank has your deposit with the initial "real" money.

[thegangstareturns]

I think the asset bubble in Japan was much worse than what happened in the West. One of the reason why they had massive deflation. It is definatly not like for like.

II think in the West you will see hyperinflation because the cultural difference of the west is very different to Japan.

I think in Japan when it went bust it was a creditor nation. US and UK are both debtor nations.