Over the weekend, the NY Times came out with an excellent article describing the effects of decades of slow growth on Japanese culture. Here is a small excerpt:
But his living standards slowly crumbled along with Japan’s overall economy. First, he was forced to reduce trips abroad and then eliminate them. Then he traded the Mercedes for a cheaper domestic model. Last year, he sold his condo — for a third of what he paid for it, and for less than what he still owed on the mortgage he took out 17 years ago.
“Japan used to be so flashy and upbeat, but now everyone must live in a dark and subdued way,” said Masato, 49, who asked that his full name not be used because he still cannot repay the $110,000 that he owes on the mortgage.
The article goes on about how people have learned to downsize. An underlying theme is that young people no longer strive to strike it rich and be flashy; they just do their best to get by.
Sound familiar to what is occurring in the US?
Of course, the NYT, being a liberal rag, totally missed the point on why Japan has stagnated. Little mention in the article was paid to the fact that Japan has done stimulus plan after stimulus plan, increased the size of government, raised taxes, and done as much monetary easing as they could. The NYT just describes the deflation as being self-perpetuating, no mention to the fact that the Japanese government has continued to swallow up more and more of the economy.
Government has grown so much in the US, and so steadily, that we have already become Japan before even realizing it. We will continue to have slow growth and poor job prospects as we inch closer and closer towards the socialist realm of the spectrum.
Japan, while not a vibrant economy, is not a third world one yet either. However, with a government debt in excess of 200% GDP and a government entirely dependent on paying less than 2% interest for most of its debt, avoiding a currency crisis shouldn’t be taken for granted in Japan.
And we shouldn’t be too cavalier about our debt situation in the US too.