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Saturday, April 6, 2013

Japan's Debt Problem Visualized

There is a great video on the mathematical inevitability of Japan to reach default. With the announcement they will double their monetary base in the next 2 years they are certainly hoping to get inflation. It is a really disjointed way of creating inflation because what happens is they will achieve high inflation in food & energy first and this wont be counted in official statistics (as they are considered volatile prices). This will start to cripple the populations future savings and thus investment potential, but the Japanese are willing to sacrifice their own whilst trying to attract higher returns from foreign investors because at the moment the 1% yield on government bonds is not so attractive. They problem is that they are wayyyy to late in the debt game to inflate their yields. With one quadrillion yen of debt accumulated, I'm sorry to say there is no going back, and no going forward... the debt is just too big, and so they will be going sideways until investors pull-out. I predict this will be in the next 12 months. 

Enjoy the video.



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