Japan Redux: A Video Case Study Of The Upcoming U.S. Lost Decade

Tyler Durden's picture

Whether one believes in inflation or deflation, one thing is certain: in many ways the current US experience finds numerous parallels to what has been happening in Japan for not one but two decades. While major economic, sociological and financial differences do exist, the key issue remains each respective central bank's failed attempts to reflate its economy. While long a mainstay of Japan, if the first failed version of our own QE, which pumped $1.7 trillion of new liquidity into the system, is any indication, future comparable efforts by our own Fed will be met with the same outcome (and hopefully with the same political result: the half life of an average Japanese prime minister is 6 months - if only our career politicos knew their tenure in office could be capped at half a year...). There is of course the "tipping point" optionality discussed earlier by Ambrose Evans-Pritchard, when comparing the hyperinflationary timeline during the Weimar republic, which noted that it took just a few months for the economy to slide from a period of price stability to outright hyperinflation. Either way, for an ironic look at the Japanese deflation scenario, targeted more at novices although everyone will likely learning something from it, we present the following informative clip from, ironically, the National Inflation Association, which asks whether Japan is a blueprint for America's imminent lost decade(s).


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SWRichmond's picture

We're for sure going to lose a decade at least, but it won't be Japan-style.

Lux Fiat's picture

I'm thinking tango and empanada-style, circa 1997-1999.  Unlike Prince, the party's ooover.

Pamela Anderson's picture

This article about Goldman Sachs is great!!!!


Why founding a three-person startup with zero revenue is better than working for Goldman Sachs.


"... go out and write your own story, or you’ll just be a character in someone else’s..."   what a great article!!!

Bendromeda Strain's picture

It would appear some juvenile is running through the thread with a can of spray paint. Go eat your cereal before it gets soggy little junk warrior. Anarchists - so cute when they're little...

jdrose1985's picture

Well we already have, actually, given the Dow/Gold ratio.

We're working on the second as I type this.

We're just making it look easy ;)

midtowng's picture

Now why would you want to go and scare people like that? Denial is a way of life in America.

Eally Ucked's picture

why not, it's maybe worse than you think. What the fuck we produce the world needs except arms? You want your banks prosper, sucking money from lower classes, your service industry trive on money never made, sorry, they made it already and the last bastion of prosperity is trading - shit back and forth and it's over! Now is the question how to survive? Don't give me those fucken charts to support further expansion of US economy based on somebody's else money, that's past, lets look what we are facing now. Lets /sarcasm/build more houses, financed by who knows who, and get all those interest rate profits for the banks, everybody in the world wants to get to US to get pedicure or manicure, they will travel thousands of miles to do it.

Caviar Emptor's picture

If you're a consumer or small business caught between deflation and inflation, it doesn't take very much of either to kill you. It doesn't need to become "hyper"inflation if your income, assets and employment prospects are deflating. You burn through all your savings, credit and then join the ranks of food stamp recipients. Similarly for a small business, margins get savaged fast, forcing cutbacks and cost-savings measures that feed on themselves. 

That's why the current situation is so precarious. The Fed can no longer afford the luxury of "Print, baby, Print!". That would quickly inflate the economy into oblivion. 

theone's picture

I completely agree either will kill the economy. I believe that deflation will be better for the future. It will teach people to become responsible and not become so complacent. Any sort of inflation will further increase the gap bettween the rich and the poor and rewards bad behavior.



Oracle of Kypseli's picture

Agree Caviar. There is no way out.

The reason Japan has survived, is that the debt is held by the Japanese people and Japan was still able to export its way since the world had been stable.

This time around, if deflation sets in, the US can not export its way out, as the whole world is suffering. If Hyperinflation gets a foothold, all bets are off within months.

Either way, much suffering.

Agri-land, gold & silver coins, guns & ammo, spam and dry food for those who can.

mudduck's picture

The fed will only print if the banksters want them to. So there are 500 trillion(?) in derivatives floating around out there mostly with the big US banks, and a whole lot of them are interest rate swaps. If inflation drives up the cost of holding cash (and thus interest rates) do the banksters collect or pay? If they pay, the fed won't print until it's to late to stop a deflationary spiral, because the banksters will wanna make sure that everyone can see there will be no inflation first. If it  goes that way then the gov. might just decide to handle the creation  of 'money' itself, then watch out, all bets off. My 2 cents. 

Kayman's picture

So who is on the other side of these economy killing bets?  Oh, yeah, ultimately the U.S. taxpayer.

And the Government already prints the money, creates or supports the creation of credit. About a dozen boys in New York and their conspirators in Washington are in charge of the printing press.

Without the Fed buying Treasuries through other Central Banks and the Primary Dealers every Treasury auction would fail.

Dinosaurs were too big and they failed.  These financial monsters are too big and they must die. Or the country is lost.


mudduck's picture

The fed has not printed out in the open to help the government yet, only to help the banks. If they (the fed) are buying treasuries through whoever, they are not doing it in the open, so I'm not sure that government does have control of money supply at all. If they did I think these guys would have everyone in a new house with new appliances and cars by the next election cycle, and the dollars time would be numbered in days instead of months/years. As for the solution to the problem of the fed having control of the printing press (and their real job being to transfer all of the wealth to their masters), I don't know. Audit them, charge them, then hang them if you want, but just turning over the keys of money creation is not the answer (especially not to the IMF or BIS or any of that lot). The obvious answer is a gold standard currency, but first the doors to the US gold vaults need to be opened to make sure that there is gold left still, because if there isn't then its the same guys in charge of currency creation again.

Max Hunter's picture


Speaking of; do you think there is gold in the vaults?.. I don't. Otherwise, we would have seen an open and public verification of it.

Kayman's picture


Wink, wink, nod, nod, of course the Fed is NOT playing patty cake with other Central Banks and Primary Dealers. Otherwise they would be happy to declare it... No ???

To limit panic selling of paper assets the Fed won't even deny what they are doing.

The ultimate Fed solution is to bust up the big banks. More government and more banking crooks is the last thing this country needs.

Until writedowns occur in the used-toilet paper assets with the attendant haircuts in liabilities and ultimately the bankrupties and break-up of the smart-ass TBTF crowd this country is sunk.

There is no possible GDP growth rate to support the money printing and debt creation that has occurred (is occurring) to paper over the worthless TP held by the TBTF and now the Fed.

Our national balance sheet needs a haircut in the $15-20 trillion dollar range. Without the haircut this nation is doomed to beggar status soon.

1100-TACTICAL-12's picture

Watched most of the video. There is job's job's to be had in Japan unlike here. Me think's that is the difference. Credit or Debit? Credit PLEASE.

Bendromeda Strain's picture

I too bailed out after 2/3 as the point was made. He did not however refute any of the points made in the NIA video. And the cultural differences are of course stark - we ain't "turning Japanese" anytime soon if Peggy Joseph has anything to say about it (and she currently still does). Credit PLEASE - it's still the American Way (for the sub 600 FICO).

mariner22's picture

OK - so our unfunded liabilities + debt is (slightly?) less than $80 trillion dollars and our Debt to GDP isn't really 560%. Time to party like its 1999 again?

I've seen videos from NIA periodically from Zero Hedge. I didn't even know they pumped stocks. I thought they just pumped gold. Just like Peter Schiff, Eric Sprott, et al. It is fine to attack the messenger, but I am more interested in attacking the message. $1.4 trillion budget deficit this year? 9.6% unemployment? Pension deficits of 2-3 Trillion. Plan to "cram down" agency mortgage rates & debts with the public picking up the tab?

God, things are going so well. Forget gold as the NIA guy pumps (although in a poorly publicized fashion) companies that pay him. Got to get more 10 year US Bonds before Benny brings the yield to 1%!

Oswald Spengler's picture

Japan- land of sliding doors and slant eyed whores.

MountainHawk's picture

The babes walking around Tokyo, wow, god I miss Tokyo!

ozziindaus's picture

This has got to be a junk record. BTW, noticed the Afro American "pimps" outside the massage parlors in Roppongi speaking perfect Japanese? Freaky. 

nmewn's picture

Life imitating kabuki.

theone's picture

Our deflation will be much worse than Japan's due to a much lower savings rate to begin with which is now rising. I expect the savings rate in the US to exceed 10% by the end of Q111. That will diminish final demand and throw us in a deflationary spiral. This is the reason why I believe that yields are so low. I do not see hyperinflation without rising incomes and home prices, and with an increasing savings rate.

Oswald Spengler's picture

I know it is popular to espouse deflation now and that is what the illuminati want you to se, but the dollar has no clothes. inflation is the only face saving response when you're swimming naked and all the girls are watching.

jdrose1985's picture

the illuminati just called, they have some gold they'd like to sell you.

oddjob's picture

Is it the tungsten or paper variety?

tmosley's picture

Just a hint:  mentioning illuminati makes you look like a nutcase.  Call them "bankers" or "politicians", or "insiders", and you'll look a lot less looney.

aurum's picture

with all of our liabilities, it is impossible for the fed to accept deflation. impossible. this mindset will pave the way to not only the dollar end game but also the end of all other fiats regardless of final demand. and if the rest of this country wakes up, the savings rate of 10% you mention will be denominated in hard assets rather than paper ie gold, silver, oil, ag, energy or self sustaining energy technology...the only thing holding the dollar up right now is our overstretched military.  

Max Hunter's picture

++.. Exactly.. way too much debt for deflation to be the answer or remedy or result.. .. you are right.. impossible..

rapunzel's picture

well, i really really really like your theme you got going here, mr durden.

damn, no S H A M E  from these guys, only from the geisha's, right.

your g o o d, your real g o o d.


Hammurabi's picture

hahaha you are sow innocent, there is no such a thing us deflation

CashCowEquity's picture

What effect will inflation have on Life Insurance, annuities and the same for deflation?

Oracle of Kypseli's picture

In an inflationary scenario, you will be getting your annuity, but it will have lesser buying power. In a deflationary scenario, you may or may not be getting all your annuity, but if you do, you will have higher buying power for discretionary items but not necessarily for food and shelter.

Bendromeda Strain's picture

Correct - at least "austerity" preserves some purchasing power for the fixed income defenseless. It also has a tendency to force the legalized embezzlement (think Bell CA) out into the open. Runaway or hyperinflation punishes all but the workers who are either self sufficient or can demand wage adjustments on the fly.

masterinchancery's picture

Great question! Hardly any have inflation trackers, so serious inflation means you have paid for an utterly worthless payoff.  Deflation is obviously good for the policy holder, except that the company may well run out of funds before they pay you.

Bottom line, if you see either one starting at a serious level, cash out as fast as you can.

Gimp's picture

Best thing out of Japan in the last decade - "Ninja Warriors"

repo 105's picture

I would have to say "rub-and-tugs" the best export myself.

Perseus son of Zeus's picture

Everyone in Japan seems to be inventive. I know some circuit designers who would blow your mind with depth of knowledge in their field.

But is the US headed to this extreme while we wait for the decade of nothingness to end?


Rusty_Shackleford's picture

No way.  Not even close.


It's clearly "Schoolgirl-Worn Panties Vending Machines"


rapunzel's picture

rusty rusty rusty, shackle me, oh i mean this --!--

japan, culture with a long history of regarding woman more as sex toys than people. true?

Aristotle believed woman are colder than men and thus a lower form of life. pretty much spells it outright, there mr. A. plus, he also believed that females could not be fully human.

these are the kind of conversations i would like to have .

New_Meat's picture


"these are the kind of conversations i would like to have ."

please, let down your hair.  We await your comments.  We will add in commentary from Sanger and Teddy R. as necessary.

dang, I like long hair in a woman.

- Ned



FranSix's picture

You can gainsay U.S. debt all you like, but the fact of the matter is that Japan's economy is very dependant on social obligations.(including employment)  In fact, its economy is so dependant on government spending that it would make the U.S. social programs look like some sort of Dickensian-era pickle-up-your-butt fiscal rectitude.

All of the mounting trading losses are coming from a decline in interest rates, and everybody still believes that interest rates will rise because you have 'social programmes.'  Give me a break.  What a scam.

And, quite frankly, peak oil theories which cast America as being totally dependant on Arab producers is totally out of whack with reality.  America is the third largest producer of oil in the world.  And American oil producers are firmly ensconsed in the middle east, which nobody can do anything about.


Suisse's picture

U.S. oil extraction has been in decline since 1970. Peak Oil is a geological phenemon. Simply because a U.S. company is developing foreign oil fields does not mean the oil must come here. Most of the Arab countries have state owned oil companies, not U.S. companies.


Extraction is around 8 million barrels per day, imports closer to 10 million barrels per day. However most of the oil imported is not from Arab states, but oil is of course fungible so a shortfall from elsewhere can affect imports. http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPUS1&f=M

VK's picture

Peak oil is not a theory. It's a geological fact. Onshore oil production peaked in 1982, why else would companies spend billions of dollars developing offshore fields 30k feet deep? Denying reality doesn't mean it stops existing. It just makes the eventual punch a lot harder.

tmosley's picture

Because laws, regulations, and NIMBY make drilling new wells on shore, or in shallow water uneconomical?

The more I think about it, the more I think that peak oil in the US is a political phenominon, rahter than a geological one.  Much liike we had "peak manufacturing" during that time as well, as new onerous laws and regulations ground new projects to a halt, and forced many of them overseas.

i-dog's picture

How do you expect to buy oil from overseas sources when the USD loses reserve status (and all credibility)?

The US will go into Iran by hook or by crook, because it has no other choice to ensure supplies that it will otherwise not be able to afford to purchase in a year or so.