I have heard a lot of doomsday predictions regarding Japan over the last twenty years. None of them have panned out as yet. This year, we are hearing a lot more as a result of the Japanese Central Bank's intention of 'monetizing' the government's debt and because of the government's high level of debt relative to Japan's GDP. Is any of this stuff sensible investment advice?
The short answer here is no, it is not good investment advice . And the reason the doomsday scenarios are wrong is because they hinge on a faulty model of the monetary system and its implications for inflation.
The standard view is that Japan has increased its government debt so much that the country has no other option than to pursue an inflationary monetary policy to devalue the value of the Yen and precipitate a wa...
As this site is now reader-supported via Patreon, the remainder of this article is only available to subscribers at a specific patronage level. Articles at patronage levels BRONZE, SILVER, and GOLD are denoted by the categories in blue capital letters above the post. Posts categorized DAILY are available to both SILVER and GOLD patrons.
Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.