Japan’s Economic Past is U.S. Future

Written By: The WealthCycles Staff

As WealthCycles readers know, history is a brilliant teacher. As Mike Maloney wrote in his book Guide to Investing In Gold & Silver, “As you will see, debasing the currency to pay for public works, social programs, and war is a pattern that repeats throughout history. It is a pattern that always ends badly.” Japan’s story is evidence, yet again, that basic economic principles cannot be ignored forever. Japan and the United States are on the same path of currency expansion and debasement; Japan is just a few years further down the road.

An Historical Perspective

In 2010 we described Japan’s economic collapse like this:

On December 29, 1989, the Japanese real estate and stock market bubble burst, not with a loud pop but with a soft hiss. At first, the Japanese public barely noticed, thanks to stepped-up government spending on infrastructure and behind-the-scenes bailouts by the Bank of Japan (BoJ) and Japan’s Ministry of Finance (the equivalent of the U.S. Federal Reserve and Treasury Department) to the same inefficient banks and financial institutions that had created the crash.

There is a lot about Japan’s story that will sound familiar. It is a story about rampant speculation, asset bubbles and price fixing run amok.

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testiomials Prior to a collapse, Bass says, will be a qualitative slip—a belief in the collective psyche that the situation is untenable. Bass believes that this phenomenon is already in play and that the countdown clock has already begun ticking...”

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