The conclusion of Japan’s large-scale monetary experiment: What comes next?

by | Mar 24, 2024 | Invest During Inflation | 24 comments

The conclusion of Japan’s large-scale monetary experiment: What comes next?




On March 19, Japan’s central bank ended its latest economic experiment. The BOJ scrapped the world’s last negative interest rate policy, with the first rate hike since 2007. The move ends the most aggressive monetary stimulus program in modern history, signaling confidence that the country is finally leaving behind years of deflation and economic stagnation. How will this massive shift disrupt everyday lives across the country and beyond?

00:00 – Introduction
01:14 – The Japanese economic miracle
02:37 – Bubble burst
03:18 – Decades of deflation
04:23 – Era of QQE
05:40 – Inflation comeback
06:52 – BOJ ends negative rates

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Japan’s Massive Money Experiment Is Over. Now What?

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In an unprecedented move, the Japanese government recently announced the end of its massive money experiment known as Abenomics. The economic policy, named after Prime Minister Shinzo Abe, aimed to stimulate the country’s stagnant economy through a combination of fiscal stimulus, monetary easing, and structural reforms.

While the policy had some initial success in boosting growth and inflation, it ultimately fell short of achieving its goal of sustainable economic recovery. Now, as the experiment comes to an end, Japan faces the challenge of finding a new path forward.

One of the key components of Abenomics was the aggressive monetary easing policy implemented by the Bank of Japan. The central bank engaged in large-scale asset purchases and negative interest rate policies in an effort to spur lending and investment. However, these measures failed to have the desired impact on the economy, with growth remaining sluggish and inflation stubbornly low.

On the fiscal side, the Japanese government implemented a series of stimulus packages to bolster demand and support infrastructure projects. While these measures had some short-term benefits, they also led to a significant increase in government debt, which now stands at around 240% of GDP, one of the highest levels in the world.

In terms of structural reforms, progress was slow and limited. Japan’s rigid labor market, aging population, and high corporate taxes continued to hinder the country’s economic potential. Despite some measures to address these issues, much more needs to be done to make Japan’s economy more competitive and dynamic.

So what comes next for Japan now that the Abenomics experiment is over? The government is now faced with the challenge of finding a new economic strategy to revitalize the economy and put it on a sustainable growth path.

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One potential option is a shift towards more targeted fiscal stimulus and structural reforms to address some of the underlying issues holding back Japan’s economy. This could include measures to boost productivity, encourage innovation, and address the country’s demographic challenges.

Another option is for Japan to focus on increasing its international competitiveness by opening up its economy to more foreign trade and investment. This could help stimulate growth and create new opportunities for Japanese businesses to expand globally.

Overall, the end of Abenomics presents both challenges and opportunities for Japan. The country will need to carefully consider its next steps in order to build a stronger and more resilient economy for the future. It remains to be seen what path Japan will take, but one thing is clear – bold and decisive action will be needed to ensure a prosperous future for the country.

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24 Comments

  1. @dmytro1933

    5:52 "due to Ukraine War." is misspelling "Due to Russian invasion in Ukraine." Makes sense.

  2. @sumitomoO0O

    what is better than stable prices and stable salaries? There is no need for inflation. IN fact for thousands of years prices were stable when using gold as currency

  3. @georgesos

    Ukrane influence on japan is a joke.

  4. @deebil8099

    China is on an almost identical economic path as Japan was in the 1980s. The only difference is that China made enemies with the entire world and now every civilized country is decoupling from them. China also never got rich before their upcoming economic collapse. The vast majority of people in China are still dirt poor. 600 million people make less than $1.50 USD a day…. And now salaries are decreasing in China.

  5. @user-cs3nd8zk7v

    So if quantitative easing and interest rates didn't have an impact, they finally decided to move forward with wage increases, and inflation has started to increase, can we finally admit that inflation is directly linked to wages? And no, I'm not arguing against paying anyone a living wage.

  6. @kevjn15

    Inflation is a wealth transfer from the poor (cash holder) to the rich (asset holder).

    All small inflation does is hide bad companies by allowing them to lower your real wage without you noticing.

  7. @valyshknee4203

    well yeah Japan 30 years ago was advancing and growing so quickly that it gave birth to the Cyberpunk genre, Which started off with fears of hyper-modernization and corporitization which was happening in Japan, Giant metropolis with neon lights, So many people that live in the city that you simply wont stand out even if you try, Thats exactly what Tokyo is.

  8. @dienudelpfanne600

    So Japan literally fet the US economy by sacrificing their own? Maybe some sort of deal that was made after WW2 for their allegiance with Germany? Interesting

  9. @danny_mtnz

    Look at us from the west flabbergasted when hearing japan had no inflation

  10. @WOTM8

    That's what you get for listening to the US.

  11. @jon-op6xl

    Before kuroda leave, he can make 141, but ueda make it to 152…. wages rise 8%, but in oneday the currency down 4%, what a smart job.

  12. @syproductions456

    Coming from the UK, an economy with basically no inflation sounds great, it means that the money I earn now keeps it's value and I can expect that the work that I do now can be traded like for like for somebody elses work in the future.

  13. @AlexBerman

    Stagnation is fine. Japan is great keep it as is

  14. @marcostigre9349

    How the Japanese Central Bank manage to keep negative rates and roll over the public debt?

  15. @freedomwriter1995

    Central banks like the BOJ always make things worse and never better, especially when they "experiment" with the money supply.

  16. @anmolagrawal5358

    3:33 Wait, what's the "problem" with that? I see that as an absolute positive.
    Clearly it is not that you're buying the exact same product. So that means they evolve with time while you get to purchase them for the same price with the same salary.
    This literally should be the goal if anything.

  17. @karolnowosad9765

    Easy answer how they did it: national debt = 255% of gdp. Your children and grandchildren will thank you a lot

  18. @inf11

    I like how this video skips why 'bubble' happened in first place, when USA were threatening Japan with sanctions and forced it to change monetary policy.

  19. @fishjellos

    American are too scared of fast growing Japan so they pressured Japan and sign the plaza accord which destroyed the bubble.
    now they can't do that with china due to them not being a western lapdog

  20. @Randomvmkd8rkjd0e

    Lets stop talking with each other in numbers. It makes no difference. That phase is over.

  21. @selohcin

    You gotta love how the central bank takes actions to "cool the property sector", thus devaluing the work of all workers in the country just to make the rich richer. Inflation helps only the very rich. It ruins the lives of all other people. Seriously: Look at the graphs! Japan had 0% interest rates AND zero inflation for 30 years! That's an amazing achievement and it only highlights how corrupt western government are.

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