The Bank of Japan Is Ruining Life For Its People. Same As The Fed.

Originally published at: https://peakprosperity.com/the-bank-of-japan-is-ruining-life-for-its-people-same-as-the-fed/

John Maynard Keynes, the famed 20th-century economist of enormous influence, once quipped that, “Markets can remain irrational longer than you can remain solvent.”

Financial markets have always been prone to excesses due to the self-amplifying human herd proclivity for stampeding first toward greed and then back again toward fear.

On top of that, we now have to add the non-economic participant influences, which is a fancy way of saying Central Bank market interference and manipulation activities.

Perhaps the best way to get our minds around it is to look at the excesses of the Japanese stock market, or should I say ““market”” due to its inexplicable behaviors.

Stocks are supposed to be barometers of economic activity. Recessions are not ‘good’ for stock prices, and for easily understandable reasons. When GDP is in recession there’s less economic activity and therefore lower revenues and profits – the two things that drive stock prices higher.

So let’s start here, with Japan’s GDP:

Yikes! That’s a Great Depression! A 32% loss of GSP over a ten-year period is pretty bad. Actually, is downright awful.

Zooming into the current year, the trend is equally bad, with Jul-Sept ’23 a -4% loss, Oct-Dec ’23 a flat 0.1% gain, and the first three months of 2024 being a 2.9% erosion.

Japan downgrades Q1 GDP on construction data corrections

By Reuters

June 30, 2024

TOKYO, July 1 (Reuters) – Japan’s economy shrank more than initially reported in the first quarter, the government said in a rare unscheduled revision to gross domestic product (GDP) data on Monday, darkening prospects for a fragile recovery.

The downward revision is likely to lead to a cut to the Bank of Japan’s growth forecasts in fresh quarterly projections due later this month, and could affect the timing of its next interest rate hike, analysts say.

Japan’s real GDP shrank an annualised 2.9% in January-March, down from an earlier estimate of a 1.8% contraction, the revised data showed.

The real GDP for the October-December period was also revised down to an annualised 0.1% growth versus the previous 0.4% increase, while that for the July-September period was revised down to an annualised 4.0% decline from the previous 3.7% drop.

(Source)

The past nine months were -4.0%, +0.1% and -2.9% (all annualized numbers). Summing that all up means that over the last nine months, Japan’s economy has contracted by -1.7%.

Bizarrely, Japan’s stock market is up 100% over the past 4 years and up a whopping 24% just in 2024 alone, a time during which its economy has been in a recession.

The only way to explain this that makes a bit of sense is by looking at the stunning 50% loss in the purchasing power of the Japanese yen since 2020:

Where it used to take 106 yen to buy a dollar, now it takes 50% more yen, or 158 to buy a single dollar. Everything that Japan exports is now generating 50% more yen. So, yay for Sony!

But everything Japan imports such as food and fuel and raw goods to use in their export-driven economy also cost 50% more, which is very bad for the citizens of Japan.

But the Bank of Japan does not exist to serve the people of Japan, it exists to slavishly serve the needs to he Japanese banking and financial systems. So, it routinely throws the people of Japan under the wheels of the inflationary bus as it works to assure the abstract world of high finance has everything that it needs.

As goes Japan, so goes the rest of the Western world.

To wit, we see the same weird dynamics at play in the US and EU equity ““markets.””

Lots of weird records are being set day after day, including this one which is difficult to explain away:

Things have never been this lopsided or irrationally exuberant.

But now they are. Plan accordingly!

Topping this all off, it looks like the housing market in the US is finally rolling over, and good riddance! Young people deserve the chance if not the right to start households and families and the Fed’s atrocious meddling has stunted and delayed an entire generation. For that alone, the Fed should be disbanded, and the salaries of every key player clawed back for the past 20 years.

In the entire South region, things have never been as out of balance as they are right now, not even including the absolute peak of the infamous Housing bubble of 2006.

Conclusion

“It’s never different this time” are good words to live by when it comes to investing. Is it possible that ‘this time’ stocks can be as lopsided as they’ve ever been, and completely decoupled from actual economic potential and still be a good investment going forward?

History says no.

Who knows, with all the central bank interventions, maybe this time is different?

It’s certainly not the same as before when market forces could pull things hither and yon without being tripped up by activist cubicle dwellers in the NYFed’s Dungeons of Aurora (Illinois) banging on the VIX to thwart every nascent downturn.

But the excesses are now manifold and multiple. Everything in the US stock ““market”” now hinges on just ten stocks, with more than half of that performance itself hinged on the idea, but not yet the reality, of AI’s possibilities. Hey, maybe those dreams pan out, maybe they don’t. After all, aren’t we still waiting on our long-promised ‘killer apps’ for blockchain? Here we are a decade later and where are they?

The worst thing of all, is that much like the suddenly unavoidable decrepitude of Joe Biden at that last debate, many people are starting to realize that their kindly central bankers aren’t actually doing anything close to what the media has been portraying.

They have ruined an entire generation and have badly damaged the entire future.

There’s no possible way for their many excesses to return to sanity. The only way left is forward. That means more printing, more lying, more grifting, more rewards to insiders and Wall Street’s many outfits while a front of economic despair marches steadily northward through the social ranks.

To watch this happening in advance, just keep your eye on Japan. It’s the fractal part that illustrates the whole.

And now, onto the podcast with Paul!


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And then the Euro/Pound/Dollar

So, we know why the Europeans/US are playing “Russian Reulet” with at least 2 bullets in the chambers

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I haven’t watched the video yet but the write up was worth my subscription. We are clearly in unprecedented times with respect to Japan, at least.

For at least several future decades, the population of Japan will continue to fall. There will be more elderly Japanese dying than replacement Japanese children being born. The country is at the vanguard of rapid depopulation. I think as the population declines, there is no way short of rapid advances in productivity (perhaps AI, robotics or something not yet imagined - maybe those elusive Blockchain apps) will Japan ever stop the reduction in GDP. There was a time not so long ago, only a few decades, where it was feared that Japan would be able to buy out America and that their economy might even eclipse America.

I found parts of this video which I watched a few days ago, informative, (20 minutes)

Korea is next. Italy, Spain, China, Taiwan, Germany, and others will follow similar trajectories.

I agree that housing prices are reducing the opportunities for young people to start families and live the American dream. These housing costs must come down otherwise young people will have little opportunity for a future. Importing ‘migrants’ is only making things worse.

This is unprecendented in human history. Now on with the video.

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A reducing population is going to be chaotic on many levels.

But:

  • We know that populations surely cannot increase exponentially forever. Hopefully that is something we are awake to on this site vs taking the more usual alt-media/American-Christian view that populations should keep increasing forever, without thinking about how that might actually work.

  • In its decision to limit immigration, Japan might at least emerge from all this still being Japanese. The west may well delay the chaos of reducing population, but it has a whole different type of chaos coming as its populations turn muslim.

There isn’t a scenario from here where we get to carry on and everything is fine. There will be chaos. It’s a case of choosing which chaos you want. Personally, I’d sign up for the Japanese version over and above what the rest of the west is going for. But that’s just me.

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At [25 minutes ] you post an image of the GDP of Japan, contrasting with Germany and India. The GDP of Japan is declining rapidly. The German GDP is possibly close to a peak as well and will probably show decline in the coming near term. Germany is also having population issues and aging but far worse is the energy poverty and that the country is de-industrializing. You mention Germany stock market increasing while the country deindustrializes at 31’

At [33’] you discuss the irrational exuberance (Alan Greenspan) of the market and our Fed Chairman Powell expecting a rate cut in September. Perhaps the rate cut is to benefit the ruling party and manipulate the elections. Only a few months ago it was said that there would not be any rate cuts this year and certainly not at any time close to the election. Perhaps the election needs the fortification???

Lots of concerning data and by appearances under the surface things are not as they appear. We should have learned by now that if the MSM is extolling something, they are pushing a narrative and it is more often than not deceptive.

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lol - yup!

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ASX all time high here. Focus of the media is how Biden will resign and US civil war threat increasing, apparently fueled by Nazi Trump supporters.

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Going down on the 15th/16th according to Clif_High

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I made a quick search on my local real-estate MLS here in Georgia and I am seeing homes with reduced prices popping up, mostly a drop of a couple thousand dollars here and there. I’m guessing this is to refresh the listings and get them to the top of the search list with the colorful banner saying Reduced. Until recently, most of these homes were selling within days so I’m a bit surprised to see them sit at all. My area has been a growth hotspot here in the state.
Also, I see small tracts of land staying on the market and not selling nearly as quickly. Land prices have not dropped much yet and they tend to remain high despite what home prices do. The difference here is there are actual tracts of land to pick from vs nothing available at all like we had in my area a few months ago. I feel like we have crossed the top of the bubble and are finally beginning to go down the back side of the curve on prices. I can detect that something is going on when I talk to business type people. For example, I talked to one of the tractor dealers and asked how business is going. He told me he has stopped ordering new equipment. His inventory is piling up and doesn’t want more new equipment sitting around and not selling. I wasn’t expecting the guy to say the truth but yet he did…

I think we are here, where the can kicking is starting to show signs of running out. The fed will have to print or the corporate machine will starve and die. I imagine the snowball of job loses and credit crashes will build up from here, maybe even if the fed prints. We are living directly off the printer in a shrinking global economy. Over the next year, I imagine we’ll see deflation in “want” items and inflation in “need” items. Probably time to tighten your belt and hold on, we’re going for the ride.

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TicTok. Clif is pretty certain on this one.

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the weekend and then bam. We get hit with the collapse according to Clif. Have you listened to him on Jean-Claude? He really sounds certain. Also EMP attack?

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In the words of Chairman Powell, the most likely direction for interest rates is down. I suspect everyone knows that means the FED is even now in the process of re-initiating the buying of US Treasuries under one guise or another. This moves the policy from “dominance” to “domination”.

I base this on the definitions of the word dominance and domination. Powell’s words say the FED policy will no longer be a condition of being dominant (meaning the position of being able to use of such power) but rather will be actual domination; meaning the act of dominating something. Below is the online difference between dominance and domination.

The noun “domination” is different from “dominance”. "Dominance means the condition of being dominant”, which basically means “have power or influence over others”, while the noun domination is the "act of dominating somebody or something.

I hope you folks will not allow the FED to gaslight the public about the change in policy by using their choice of the wrong word. The word is “fiscal domination” (of the markets)

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Ok, so it’s clear Potato Joe’s brain is too far mashed for the job. He called President Zelensky - Putin and at his press conference, he said that former President Trump was his competent Vice President. He is a clear and present danger to the Republic and by the extension the world. Perhaps he will be replaced this weekend. Just my speculation.

Expect a new leader to bow down in fealty to. There is no way Dr. Jill can keep his brain warm enough for four more months. Perhaps Joe’s last act will be to pardon Hunter even before conviction. The whole situation is unprecedented.

We need to also predict that the FED will do whatever it can to assist the new leader. This may mean a larger reduction in the interest rate at their next meeting. Perhaps they will even change the date of the meeting to help our new leader.

As Joe called President Trump, his competent Vice President, I’d like to see Trump assume the office when Joe scribbles the crayon on his resignation letter. If Joe is incapable of using a crayon, perhaps a thumbprint will do or a bit of drool on the paper. Unprecedented times for sure.

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He’s been this way for years. They have to keep presenting it as a new decline so the democrats aren’t aware they’ve been fooled the whole time. The question is are they going to waste the crisis? Is this the moment they let some of the financial air out of the bubble and blame it on politics? Is the bubble being popped by China and the Biden crisis is the US’s cover for the chaos? All I know is, Main Street is starting to suffer and it’s becoming obvious to the shoe shine guy.

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The people of Japan know they are getting reamed. Here’s their latest expectations on inflation:

Holy shitballs! 9%?!?

That’s right around the level at which hyperinflationary episodes get kicked off. The expectation of future inflation leads to faster spending now, while you still can, which self-reinforces the entire dynamic and launches inflation into the stratosphere.

At least that’s been true in smaller examples such as Zimbabwe, Argentina, and Venezuela. With a major currency such as the yen, who knows?

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My brother moved to Japan a few month ago. His wife is Japanese. He was talking with some people at his job at NEC (huge electronics manufacturer, among other things) and they were saying how it’d be about 1/5 of their annual salary to fly to the States now. I don’t think he’ll be coming home for Christmas this year, so that’s one minor thing where this has affected me personally.

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I’ll listen to this today

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Re: Has AI already taken over and is now directing us to build data centers for it?

Maybe we created AI when we created the corporation with a non-human focused optimization function (profit) and we’re just now noticing the “artificial” alien intelligence among us.

Public/private partnerships become AI quietly taking over the government.

Indiscriminate resource depletion becomes inter-planetary.

Humans are influenced into doing things counter to their individual best interests.

Its every noticeable impact (debt, resource use, etc.) has to be measured with exponential functions.

I bet we can take that metaphor pretty far…

In that sense, a bumbling leader that crashes “the system” and takes us back to pre-industrial times might be the thing we need to take another run at this civilization thing.

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NHK had a story on BOJ intervention.
Analysts: Japan likely conducted 3 tril. yen unannounced intervention based on the Bank of Japan’s statistical report on its current accounts released Friday”
https://www3.nhk.or.jp/nhkworld/en/news/20240712_30/index.html

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Just saw this, which is interesting. Note how the #1 thing to promote bread and circuses, TVs, are almost 100% more affordable. Says all we need to know, really.

https://x.com/Mark_J_Perry/status/1811872736064475635

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