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

This article sparked questions on potential for U.S. hyperinflation.....
http://www.generationaldynamics.com/cgi-bin/D.PL?xct=gd.e071221

Japan has had near 0% interest rates for decades, but still has no hyperinflation... Why?

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Just a personal perspective.


I have lived in Japan for a decade now, enjoying deflation (deflation is good for cash-savers) as prices remain unchanged or continued to fall.

The main things I notice about Japan is that the public has just not fallen for the bait of cheap credit since the bubble burst. Houses are perceived as a depreciating cost, only bought after due comparison to rental costs. There has been no speculative mood for property since the bubble burst. They think America was simply nuts to have followed a speculation fueled asset-inflation model which already failed so spectacularly in Japan. During the bubble, banks were lending 130% against land.

Japanese people now save for goods rather than use extended credit. That is how it seems to me, anyway.

My credit card works more like a debit card. I am asked at the point of sale if I would like to extend the terms of repayment. I always choose 'one-pay' and the full amount is automatically debited from my bank account at the end of the month. That is hardly a recipe for hyper-inflation, even at zero percent interest rates.

The culture of consumerism is alive and kicking in terms of demand for goods (lining up an hour for Krispy Kreme donuts, the latest iphone, or the privilege of paying $100 to watch two fat men in diapers rolling around in sand ), but the mentality is completely different to the West in terms of attitude to debt. Save, then buy, not the other way around. That is how it seems to me anyway and it would certainly help to explain the apparent oxymoron of deflation accompanied by cheap credit availability. Credit here is like Betamax video; great quality, but no thanks.

I'm not Japanese, but I do have an aversion to debt and live a frugal lifestyle way, way, below my means. Much to the surprise of posters on another board, I do not own a fridge. ;-) Why do I need a fridge - the shops are all within a short walking distance so I let them store the food until I want to consume it.

Yes, I realize that 'frugal' can also be termed 'tight-wad', but I am not a miser, just averse to waste.

In brief; people like me (and there are now many in Japan - they *learned* from the bubble experience) will not be the source of a price bubble in anything. Too 'frugal'. ;-)

Category:

Education

Tags:

• japan
• inflation
• U.S.
• economy
• hyperinflation
• weimar
• money
• gold
• cash
• hoarding
• post
• bubble

[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.

[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.

[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.

[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.

[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.

[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

[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