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THE UNPREDICTABLE CERTAINTY OF A COMING JAPANESE ECONOMIC COLLAPSE
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Written by Hikaru Kitabayashiโ๏ธ
Today the dollar was briefly traded at 160 yen. This was a result of a Bank of Japan decision to keep base interest rates at 0 to 0.1%. The equivalent Federal Reserve Rate is over 5%. Because of the negative impact on ordinary Japanese perceptions, the Bank of Japan soon intervened by buying yen and, after going back and forth, trading ended for the day at 154 yen to the dollar. Actually, with 1.2 trillion dollars in reserves, the Bank of Japan is in a position to manipulate the exchange rate to any level it wishes. For the moment, it would like this rate to remain between 150 to 155, at least until Japanese get used to it.
The amount of Pandemic and post-Pandemic money created over the last four years has been obscene. Inflation has also been obscene, although certain tricks of the trade have been used by central banks to cover the true extent of what's happening. One of the easiest ways is in the definitions words have. Thus, inflation, by definition, does not include stocks and bonds. By directing the new money tsunami of the last several years into the stock market and into other financial markets, we have seen massive rises in stock prices in both Japan and America (and, one assumes, elsewhere), even though underlying economic factors have dramatically weakened. To make this easier, over the last several years, the Bank of Japan has created a shortage of stock-market traded stocks by regularly purchasing stocks on the stock market which it does not intend to sell. As a result, it is now the largest holder of publicly traded stocks in Japan, making it possible to create an image of Japanese resilience and strength when actually the only thing holding the system together is popular ignorance.
People have been brainwashed into believing that rising stock market prices are a sign of a good economy and most people believe it somehow must be true of the economy as a whole, even though, on an individual basis, they are suffering in a way that they have not suffered in Japan for the last 70 years. Most people don't remember a time that once existed 60 years ago when it was expected that dividends on a stock purchase would to pay for the purchase within 15 to 20 years. Now, a dividend repayment of an investment is not expected within one's lifetime, nor probably within the lifetime of one's children or grandchildren. Stock market inflation does have one positive effect. Money is kept from goods and services, so that the inflation rates people feel, though without precedent since the beginning of the Korean War, are still somehow just barely manageable for the time-being.
But, things can't continue as they are permanently. People are on the edge. Collapse could come tomorrow. It could come next year. It could take another five years. Because Japanese culture emphasizes courtesy and patience, people do what Japanese culture trains Japanese to do during a crisis. They pretend to laugh and their cheerful faces lie to the world about the extent of the pain that's tearing their hearts apart. And, that's the situation faced now by the average Japanese citizen. For the elite, though, just like their American counterparts, things have never been better.
So, collapse will come. That is absolutely certain. Exactly when, however, is just as absolutely uncertain as what the actual cause will be. At least in the case of the straw that broke the camel's back, we had the luxury of knowing it would be a piece of straw. In the case of the Japanese economy, the situation is so fragile and American foreign policy so predictably bad and its influence so pervasive, that it could be anything, at any time, anywhere in the world that starts the dominoes falling.
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