Some similarities between our economy and Japan’s in the 90’s – aging population, currency devaluation, decline in manufacturing, economic policies targeting inflation. But definitely not an expert, so please share your informed opinions!
Are we heading towards “Lost Decades” like Japan?
byu/pro_vagabond instocks
Posted by pro_vagabond
27 Comments
Probably not but who knows? No one does. Can guess though. Maybe.
No
Yes I hope so
OP, are you holding short positions? Will you make money from a market crash?
I´m placing my bets on that you are indeed heading southwards meaning that I will avoid any investment based in the US for quite some time from now.
If you think US with 1.6 fertility rate is anything close to how East Asian countries have it, God help your soul
Absolutely, but why stop at just a lost decade? The world will with utmost certainty spiral into economic oblivion, never to recover. . . Whenever any crisis occurs, Reddit immediately descends into total doomerism; it’s hilarious.
The Japan comparison comes up every cycle, but there are some real structural differences worth thinking through.
Japan’s lost decades were driven by a simultaneous collapse of a massive real estate AND equity bubble, followed by a banking system that refused to recognize bad loans for years. The BoJ was also way too slow to cut rates, and when they finally did, deflation had already taken hold. That’s a really hard trap to escape.
The US has a few advantages Japan didn’t. Immigration keeps demographics more favorable (Japan’s working-age population has been shrinking for decades). The dollar being the global reserve currency gives the Fed policy flexibility that the BoJ never had. And US corporate balance sheets are generally healthier — companies actually restructure and take losses here instead of zombifying like Japanese firms did throughout the 2000s.
That said, the parallels aren’t nothing. Government debt levels are getting into uncomfortable territory, productivity growth outside of tech has been sluggish, and we’re arguably running a version of the same playbook where asset prices get propped up by easy monetary policy while the real economy doesn’t keep pace. The current environment — oil above $100, inflation sticky, VIX above 30, yields climbing — is adding a stagflation dimension that Japan didn’t really face until much later.
Short answer: probably not a full lost decade scenario, but I wouldn’t dismiss the risk of a prolonged period of lower returns and higher volatility compared to what we’ve been used to.
From what I can see not yet, but underlying indicators like lower number of new patents, might point in that direction.
God willing
These posts are buy signals. I’m just waiting for the suicide hotline post to put in all my cash
We will print to oblivion to keep everything propped up. It’s that or bankruptcy and the death of our nation as we know it. If all asset classes collapse in price, pensions, debts, etc can easily become unplayable and the US can quickly turn into hunger games.
Yes,panic sell everything.
Average Reddit reaction after 5% pullback
Let’s consult the crystal ball
would love it so i can buy more
If the US goes through a situation Japan did, the world will experience it lol
The market shrugged off the most severe global pandemic in centuries. You think a temporary energy shortage is going to collapse it? I don’t
yes sadly sell everything before “lost decades”
A 10% correction makes you worry about a lost decade? Do you realize the 2000 highs were only revisited for a month in 2008 before we crashed again and then had to wait until 2013?
If you bought at the peak in 2000, you did not make a profit until 2014.
The “lost decades” happened decades ago.
Imo It’s largely a question of how long will printing money solve our problems, it’s worked for decades, eventually it won’t, when idk
Oh shit, the lost decade talk has started?
MEGA CALLS
Probably, our whole system is fake and relies on constantly diluting the currency
Different situation, politics, culture, homogenous population, etc. I could go on and on. Most importantly, they don’t have a “leader” (if you can call him that), whom is a lying, erratic, racist, criminal low-life.
Consequently, it could be much worse, insofar as our economy is concerned. Nevertheless, despite my misgivings about our country’s situation, I am still POSITIVE that we will get through this current down turn. Insofar as my investments, I still believe they are excellent and similar to what I did during COVID, and the 2008 “Great Recession,” I did not panic, e.g., selling stocks. This might not be the plan for other folks though.
Ours will be so much more tumultuous
no.
japan is an extremely unique circumstance that’s pretty localized to their own history and culture leading them to that point.
carney’s speech at davos made it pretty clear. the US built the system. for as much as shooting in the foot the US does, when you’ve built a state where the world’s talent, capital, and power in concentrated within, it’s hard to move beyond that system.
there’s a reason english is the most spoken language in the world, the dollar is the most used currency. i don’t see a complete departure form that without taking everyone else down
We’re headed to lost civilization