Oil sends a shudder through the world economy. Japan goes for broke (probably literally) with the Japanese citizenry on board. China fears being sucked into a debasement black hole. Europe clings. We watch.
Japan, you gave us karate, Godzilla, walkmans (remember those?), sushi, Hello Kitty, and cars which didn’t fall apart. Though we fought you bitterly in World War II America came to love you more than any other country in the world with the exception of the United Kingdom (and maybe Australia, Canada doesn’t count). We hate to see you in your current straits. One, because we have a general affinity for the Land of the Rising Sun. But two, because we are riding the same bullet train here in the States, just a little further down the track.
It has failed. It has failed for over 2 decades now.
But I attach an interesting debate featuring Peter Boockvar (in the Abenomics is a disaster camp) and David Zervos (in the Abenomics is proof that Keynesian huja buja works camp). They are diametrically opposed and it is fun to watch.
Indeed. Europe is pretty much in depression. So is Japan. (But so what’s new?) And by the way deflation is not necessarily a bad thing. We had mild price deflation through the most prosperous part of American history between the Civil War and the Fist World War. Things should naturally trend toward being less expensive as innovation increases, delivery streamlined, and competition increases.- Just had to get that in.
Ah yes, all the hokus pokus is less magic and more smoke and mirrors. Some of us have said this for a long time. But in the wake of Japan falling back into recession, Europe’s continued depression, China’s slowing, and the ongoing troubles in the United States one gets the sense that on some level the grand poobahs of central banking are just tired. The act can only go on for so long. Sooner or later it has to end. Really the Bank of International Settlements, the central bank of central banks turned on the lights earlier this year.
If you want to see what happens when the Keynesian virus truly takes hold of an economy and a society check out Japan. The once juggernaut of economic power, The Land of the Rising Sun, is now a great example of economic and social zombification as Charles Hugh Smith illustrates below.
It took 1 generation.
Money isn’t wealth. It measures wealth the way a ruler measures length, a clock measures time and a scale measures weight.
Boy is this true, but so many people, including the supposed shamans at the Fed fail to grasp (or choose oddly to ignore) this basic concept. Dumping “money” into the economic system isn’t going to make the economy grow, it will only make the money currently in the system worth less.
It’s not quite that simple. But it’s nearly that simple.
Is the unwind here? It appears so. It’s coming sooner or later anyway and people are coming to terms with this. “Sentiment” is shifting.
To paraphrase David Stockman – The world’s central banks have not suspended the market mechanism. They can kick the can, they can lie, they can move assets around on balance sheets, they can even call debts assets. But in the end there is no free lunch.