Japan's "Deflationary Mindset" Grows As Household Cash Hordes Reach Record High

Tyler Durden's picture

After being force-fed more stimulus than John Belushi, and endless rounds of buying any and every asset that dares to expose any cracks in the potemkin village of fiat folly, Japan remains stuck firmly in what Abe feared so many years ago - a "deflationary mindset."

As Bloomberg reports, cash and deposits held by Japanese households rose for 42nd straight quarter at the end of June as the nation’s consumers continued to favor saving over spending.

The "deflationary mindset" that the Bank of Japan is battling to overcome was also evident in the money laying idle in corporate coffers, which stayed near an all-time high, according to quarterly flow of funds data released by the BOJ on Wednesday.

Still, as Bloomberg optimistically notes, with the economy expanding much faster than its potential growth rate, greater inflationary pressures could be on the way, which may prompt a shift in behavior by consumers and companies... or not!

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Sizzurp's picture

It's all fun and games until your central bank's rampant money printing finally destroys all confidence in the confetti they call money. 

strannick's picture

Household cash isn't household gold?

Pernicious Gold Phallusy's picture

Deflation is great for people with assets. For people and governments who borrowed far more than they can pay back, not so great.

deev's picture

No surprise there, when Japanese put money in the bank, it dissappears. Negative interest rates have that effect for some reason!


Meanwhile, Japan's economy is actually thriving, because they don't subscribe to the "greed is good" Capitalist theory for running their country. Of course US Economists call them a "basket case" because they don't have a clue about anything except "Wall St" capitalist concepts.


Much the same as Australia's "housing bubble" that US economists have been regularly predicting will crash, like the US housing market did, every year for the past 10 years.

hooligan2009's picture

thriving because there is a complete and total ban on all immigrants, including or especially, moslems?

perhaps you are right and a country needs to be racist, sexist, bigoted in every way, but where the youth (under 30's more so) respects its elders.

whilst the central bank thinks it's quantity, that counts, politically and economically repressed japanese people know that it is quality that counts.

where japan goes the US follows because america cannot escape libtard socialism.

to me fiscal defcits are a crime because they steal the taxes from people in the future - a future that had no chance to vote on donating those taxes to the current batch of voters.

you should only be able to "keep what you kill" not "keep what you haven't and minght not even kill" in futures.

imagine how wealthy irregular japanese workers would be without a government or a central bank to fuck things up for them.


"Irregular workers are paid substantially lower wages and Japanese labor law requires them to change jobs every 3 years. Furthermore, opportunities for career progression are typically limited. The wage gap between regular and irregular workers thus gets bigger over time. In Japan, irregular workers are predominantly women and an important policy measure would be to facilitate the move of irregular workers into regular jobs."


haruspicio's picture

It is unusual for a foreigner ever really understand Japan. The Japanese live mainly in cities and mainly in small flats. Space is at a premium. They do not have to the room for all the junk that an American buys as they do not have space to srtore it. It is very unusual for a Japanese to have more than one TV as they don't have enough rooms. They tend to buy high quality stuff....so they like small quantities of high quality goods....real LV luggage, real Hermes handbags etc. 


The thing is that despite being truly desperate shoppers they cannot buy stuff that they have no place to store. This is the deflationary mindset. The country folk who have space have no money.

heddahenrik's picture

The American morons a.k.a. tax-payerrs spend almost $1000 per year on interest on USA's debt. The Japanese tax-payers pay nothing for their state's debt, because they aren't total morons that simply give away their money to banksters.

TheSilentMajority's picture

This has nothing to do with a “deflationary mindset”. In fact, there is no deflation in Japan.

The Japanese people know that their government is broke and the japanese banks can fail at any time, so they are keeping their cash at home for safety.

Old-school “ hidden under the mattress” type of mindset, but wise.

Simple as that.

BiggestLoser's picture

Miss B would benefit from your understanding.

Quantify's picture
1 Japanese Yen equals 0.0089 US Dollar - rice and dead fish aren't that expensive, nor is a 300 sq ft apartment.
UmbilicalMosqueSweeper's picture

I remember when it was 360 yen to the dollar...1967.

shinobi-7's picture

Right now, the deflationary mindset in Japan is so strong that inflation has become almost impossible. Yes eventually inflation will return but it will be with a bang either internally if the government or BOJ make a mistake or more likely externally. We currently live with a Toyota Yen which fits the competitive power of the best companies (less than 20% of the exporters now) but not at all the rest of the country which is slowly becoming hopelessly uncompetitive. This will suddenly rebalance with a major choc, maybe a sharp increase of food prices (Japan imports 60% of its food.) at which point the value of the Yen will halve suddenly. Otherwise exports cannot increase to cover the higher prices and people will starve.

roddy6667's picture

All this aside, Japan has a higher quality of life than America.

nati's picture

that's why Japan has the highest suicide rate in the world. Because the quality of life is so fucking high.

D.T.Barnum's picture

That is leftover culture applied to modern life.  When you get drunk and post something embarrasing on facebook then you kill yourself. 

asteroids's picture

And a whole generation of Japanese snowflakes stuck to their computers, live with their mothers, and have never had sex.

quesnay's picture

How is that different than US snowflakes, except maybe the sex part?

quesnay's picture

In Japanese culture, suicide is acceptable and even thought honorable in some cases. In US culture, suicide is a sin that will literally send you to hell to burn for all eternity (if you believe in that stuff, which the majority of the population claims to).

Gee I wonder if that has any influence on suicide rates.

In the US people are 'accidentally' killing themselves with opiates at rates multiple times higher than Japan's suicide rate. But that's considered an 'accident' and not suicide. Life is so wonderful in the US that people choose to live in a drug-addled fantasy-land risking death. ;-)

Batman11's picture

To recognise Keynes's liquidity trap would mean getting more money to consumers.

They refuse to do it.


The markets have been signalling the problem.

Low returns on investment capital tell us there is too much of the stuff and there is no real demand for it.

Low inflation means there is insufficient demand for consumer goods and services.

The markets are signalling the need for redistribution from top to bottom to balance the system.

There is too much investment capital at the top.

There is not enough consumption capital at the bottom.


Ignore the markets!

BiggestLoser's picture

Miss B, I don't think capital means what you think it means. Your comment is nonsense. Too much Keynes.

desirdavenir's picture

1- when you're getting old, it's normal to want to save instead of spending on useless fads. Wanting to fight that is akin to building a sand castle and hoping that the rising sea won't destroy it.

2- It has been a long time that a first introductory paragraph was this well written. Short and informative, that's how I like my reading. 

D.T.Barnum's picture

Yes, and the birth rate is at a 100 year low, so the popluation is ageing.

Pigeon's picture

Solution? MOAR rapefugees!

wstrub's picture

John Belushi????


Stormtrooper's picture

When Saturday Night Live was still funny.

Last of the Middle Class's picture

You can almost spot the point at which economies go "full banker" and begin functioning to protect the chosen. It is the point at which corruption begins to occupy the government and the rules of the free market get suspended one by one until the government becomes nothing but a front for the large corporations who donate. Nothing is more obvious in the US than the implementation of Obamacare and it's effects will be felt far and wide until the "special rules" for insurance companies are finally repealed forever. Been in my business a long time and I can guarantee you that once an insurance company gets involved with government backing prices never EVER go down. That is the crux of Obamacare. Just how much healthcare can you afford for 3rd world immigrants that probably vote democratic. Liberalism is a suspension of all fairness for the advantage of a few with a political party always in the background jockeying for more power.

haruspicio's picture

Full banker is already here.....that is what a privatized Fed and QE gets you. Government governing in the interests of a select few billionaires

OCnStiggs's picture

Libs would rather tear the whole system down than admit defeat of their ideology.

They are the impediment to a new future of stability and honesty. They prefer suspicion and war.

They are the enemy.

overmedicatedundersexed's picture

i am japanese..who knew?

NoWayJose's picture

Central bankers still cannot 'see' this. The more they QE the lower the interest rates that savers can get. Thus a saver who could get 5% interest 10 years ago now needs twice as much in savings if they can even find 2.5% in interest. And such a person is NOT going to take out a lower interest loan in such cases.

Maybe the Fed is starting to realize this?? Nah!!

GotAFriendInBen's picture

New world currency coming soon

All others deemed worthless

Savers will learn

libertyanyday's picture

japan is printing massive amounts of  currency and issuing infinite amounts of unrepayable of public debt.  the BOJ owns 50 % of the stock market........this WILL cause hyperinflation and a financial collapse

Naruhodo's picture

No it does not.Deflation, low unemployment rates and strong nationalism in a monogamous country will keep that in check. Consumerism in Japan is among the highest in the world. They buy just about anything because they have good buying power and debt owed are paid up very promptly.


Rumors of Japan's Imminent Demise Have Been Greatly Exaggerated


bankbob's picture

With NEGATIVE interest rates - of course people pull money from the bank and keep it at home.

There is actually a major shortage of home safes in Japan.

JibjeResearch's picture

Those people are  morons because they don't know how to manage money globally.  Holding money/cash is a stupid thing that stupid people do.  They will be poor for a very long time.  They will suffer and continue to suffer because they ddin't learn economic101.

This applies to all people in all part of this world.

Naruhodo's picture

I have a relative who actually into safe customizing solutions in Asia. One of his largest markets is Japan, followed by China/Taiwan and several 3rd world south east asian countries. Doing quite well.

Naruhodo's picture

The only way to fight fraud money creation through interests rates and fractional reserve assets is to enforce negative interests rates.

You want someone to guard your money at the same time don't want money to be created out of thin air by having banks loaning them out without your will for interest collection, then the only way is to pay from your own stack.

Isn't that fair?