Japanification is largely economist talk, but it means and affects a number of different things in daily American life.
One is an aging generational order. Here in the US the population is older and more and more adults are waiting to have children, often having smaller families. This is a trend in rich nations - we have seen it before in Japan. However, this is not the only "Japan" related issue we are facing. The US and Europe have faced the similar issues with the EU showing stresses early in (perhaps Oct 2018) but the economy of the United States had largely remained resistant until August 2019.
- Chad Hagan
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How Can You Measure The Japan Effect?
Economic growth in the form of the output gap
Inflation
A short-term cenbank interest rate
Demographic change
Commentary:
Germany’s bond market is now priced for endless stagnation. Its interest rates are negative on everything from overnight deposits to 30-year bonds. But it is striking how depressed bond yields are in countries with only a passing resemblance to Japan. A 30-year American Treasury yields just 2%, for instance. As currently scripted, Japanification is narrowly defined but broadly applied. It is the fear that policymakers have lost for good their ability to gin up the economy. A big question is whether the current situation is just one act in an unfolding drama, or where the story ends. - The Economist
The 'Japanese disease' Since the 1990s, Japan has been struggling with an extremely high public debt ratio and very low and even negative inflation and growth rates. Only in 2016 did Japan’s nominal GDP return to levels seen in 1997. Last year, Japan’s debt-to-GDP ratio stood at 238%, and since 1994, headline inflation has been negative for almost half of the time. This trend has also emerged in the eurozone in recent years. In Greece, the sovereign debt ratio rose to 183% following the European financial crisis, Spain was in a deflationary environment between 2014 and 2016, and Italy had to contend with predominantly negative growth rates between 2008 and 2013. - ING Bank
Cartoon by Luojie, China Daily, China
______
How Can You Measure The Japan Effect?
Economic growth in the form of the output gap
Inflation
A short-term cenbank interest rate
Demographic change
Commentary:
Germany’s bond market is now priced for endless stagnation. Its interest rates are negative on everything from overnight deposits to 30-year bonds. But it is striking how depressed bond yields are in countries with only a passing resemblance to Japan. A 30-year American Treasury yields just 2%, for instance. As currently scripted, Japanification is narrowly defined but broadly applied. It is the fear that policymakers have lost for good their ability to gin up the economy. A big question is whether the current situation is just one act in an unfolding drama, or where the story ends. - The Economist
The 'Japanese disease' Since the 1990s, Japan has been struggling with an extremely high public debt ratio and very low and even negative inflation and growth rates. Only in 2016 did Japan’s nominal GDP return to levels seen in 1997. Last year, Japan’s debt-to-GDP ratio stood at 238%, and since 1994, headline inflation has been negative for almost half of the time. This trend has also emerged in the eurozone in recent years. In Greece, the sovereign debt ratio rose to 183% following the European financial crisis, Spain was in a deflationary environment between 2014 and 2016, and Italy had to contend with predominantly negative growth rates between 2008 and 2013. - ING Bank
Cartoon by Luojie, China Daily, China
