Mish goes Keynesian economist with a brilliant plan to dredge Japan out of its deflationary spiral . . .
Mish’s Sure Fire Proposal to End Japanese Deflation: Negative Sales Taxes, 1% Monthly Tax on Gov’t Bonds | MishTalk
. . . this plan is beyond brilliant!
Ok, that was tongue-in-cheek. Japan has a secret, after losing WWII, the people morose, the government entered into a compact, work, save, and all will be well. They forgot to tell them to have kids. So, the Japanese worked, and saved, and still do so, but they do not have children. The result is the savings, which go into the Japanese Postal Bank are used to buy government bonds. The old are so frugal that they only need to sell a small amount of their savings each year. This has allowed Japanese debt to be a nearly totally internal system. This is great since at 240% of GDP no one with a brain would buy Japanese debt.
The real question is how long can this bubble continue to increase, and how destructive will be the collapse? I am guessing it will be spectacular. Well, if you are not a Japanese.
Kyle Bass bets on full-blown Japan crisis - FT.com