We just got back from Tokyo and the prices for everything were crazy low. Ordered a bunch of sushi at a mall sushi place in Kyoto for what it would cost for Chipotle in DC. It was a huge shock when we flew back through SF and paid $13 each for a taco truck burrito in Millbrae.
The Japanese folks I’ve spoken to are pretty grumbly about the weak yen, though.
In the last ~12 months I have been floored how expensive life in the US is now. I was just down two weeks ago, and everything was either the same dollar number as Canada or higher, but it's in US dollars.
I don't know how people are doing it.
Because otherwise the exchange rate has been about where it is now to substantially worse for the rest of the data set.
Personally I believe it is due to the last of the boomers retiring. Economists/analysts are not used to thinking about demographics and they have a blind spot on this ever more important topic.
This is not the case and is actually impossible. Impossible they will maintain them or higher. And impossible we would recover.
The US is headed towards $1T in interest payments alone annually.
$34T in national debt AND $213T in unfunded liabilities. 2/3 of the budget is non-discretionary
The longer they stay elevated the more the average interest rate on debt goes up. For the US and the world since it's the reserve currency. This pisses everyone off.
Rates will go back down to around 2% because the US AND the world cannot sustain an expensive dollar. There's 65T in eurodollar debt (US dollar denominated debt) globally. [1] I've seen higher estimates too.
"Approximately half of all cross-border loans, international debt securities, and trade invoices are denominated in U.S. dollars, while roughly 40 percent of SWIFT messages and 60 percent of global foreign exchange reserves are in dollars." [2]
We aren't going to end up back around 2% because the Fed wants to. It's because we have to. You cannot maintain the world reserve currency at these rates after everyone got drunk off the lower rates for decades. And you cannot have the debt load we have and maintain these rates or higher. There's no easy way out of a debt spiral.
Just my opinion but rates will go lower. Printing will go into hyperdrive. Inflation will rip. There will be more unrest. Personally, I'm holding inflation-hedging assets.
[1] https://www.weforum.org/agenda/2023/01/65-trillion-debt-bank...
[2] https://libertystreeteconomics.newyorkfed.org/2022/07/the-u-...
Historically they are not low at all relative to inflation and considering how highly the government debt to GDP ratio is raising them further would lead to severe issues. Since a surplus or even a balanced federal budget is basically politically (probably financially too) impossible at this point high growth + low rates + predictable moderately high (2-3%) inflation is the only way to keep public debt from spiraling out of control.
> risk a similar situation as the early 80's.
IMHO the early 80s are about as relevant today as the 30s were back then. So a bit but not a lot. The global economy and financial system (and the position US has in it) is extremely different
Yet the Fed is talking about rate drops. We're also seeing rising consumer defaults and more perilous bank debt. And those great job numbers aren't that great since we're seeing higher part-time and low wage jobs than before. I'm not sure we're going to really avoid anything.
Record? I guess you didn’t live through the 1970s, much less post WWI and WWII.
Of course the deflation of the 1930s was even more destructive!
But considering the US gov deficits I would assume more inflation is to come with actual devaluation.
Your money losing half its value in about a year tends to do that.
Import-dependent companies - different story. Export-oriented companies: Yeehaw.
And export oriented companies are making money. But trickle down economics is a myth, so it's not benefitting the workers. The executives are doing nicely so good for them I suppose.
Worth noting that the Yen was much stronger back in 1989. These peaks are not the same.
Mall sushi has always been cheap in japan
It’s too bad China is still hard to get to by plane (Russian airspace being closed really hurts).
Assuming you're flying from eastern US, taking the pacific route to bypass RU airspace instead of the polar route doesn't add that much distance to get to coastal China.
And Chinese airlines can still overfly RU.
If you are going to southern China you wouldn’t be save so much going over far east Russia anyways, I guess.
Also, Chinese airlines can’t overfly Russia on the way to the USA, at least for newly approved flights: https://www.reuters.com/world/chinese-airlines-avoiding-russ...
Just 12*2 weekly round trip flights between the USA and China really sucks. There were a lot more before the pandemic. But it seems like we are going to 35 soon? https://simpleflying.com/us-china-lift-number-weekly-flights.... (Or already?)
https://www.focus-economics.com/country-indicator/japan/inte....
Japanese public education curricula do include "English", but it's largely "English-Japanese document translations" classes than actual English, which is good for research papers and bureaucratic letters, works like any 2000s machine translation in conversations. The majority won't bring that technique out and employ it well to win an Internet pub fight, especially on societal-macro-economical problems, so you likely will not hear anything from actual Japanese people on this topic or anything else.
Much food and natural resources are imported, not to mention anything dollar pegged like smartphones are simply getting more expensive. Seriously, stuffs like iPhone and GPU feel stupidly expensive but when you check the price in dollars, they look acceptable.
Japanese people also don't like talking about wages and not everyone compares what they are making to the dollar. I have heard plenty of colleagues, friends, and family complain. It's more about how the number of diapers in a bag has decreased steadily from 72 to 56 than boy my life is getting ruined by weak yen.
The more prevalent complaints are from fellow mortgage borrowers. Variable rates in Japan have been steady for nearly 30 years, meaning a substantial number of borrowers are watching the central bank's moves like a hawk and are terrified of even any talks of rate increases.
TLDR: We are just not loud complainers (and frankly, if any Japanese person you know is hopefully very lucky, they might be earning just enough to not notice it all)
The problem is a lot more noticeable for foreigners living in Japan temporarily because they don't think of their worth in the local currency. They then generalize their problems to the rest of the population.
When you think of your money in dollars, and you see it going down a lot, it looks like a life or death crisis. But the average person in Japan sees prices go up a bit, which is frustrating, but not to the same degree.
Things are getting more expensive slightly over the years and that is nothing disastrous unless your life was already quite disastrous and made it even worse or you're purely an importer or rely on natural resources to see weak yen ruin your business.
Otherwise, it's mostly life as usual.
If you look at the actual returns they recovered years ago (tho not so long).
Remember, kids, dollar cost averaging is usually the way to go.
The advice is to invest as broadly and globally as possible, which has resulted in very good return during the last 35 years.
Also, nothing "always goes up". Index investing over long periods of time simple gives you the best risk adjusted returns.
Japan has been in an economic stasis for decades, some believe this to be triggered by the 1985 Plaza Accords which devalued the Dollar against the Mark and the Yen.
Germany recovered from that shock by absorbing East Germany and pushing EU integration. Japan did not have this options, but the new multipolar world order might give them an opportunity.
This will probably be to the detriment of Germany and the US, which both probably would like to increase the value of the yen.
But given that the American are not perceived as a reliable partner right now, I do not see something like the Plaza Cords coming again any time soon.
Plaza Accords: https://en.wikipedia.org/wiki/Plaza_Accord
Impact on Yen and Mark: https://www.macrotrends.net/2550/dollar-yen-exchange-rate-hi... https://de.statista.com/statistik/daten/studie/312004/umfrag...
Perhaps do a little research than believe whatever you want to believe?
Just searching for "german economy" would yield the world is saying the opposite.
Japan
GDP: $4.230 trillion GDP Per Capita: $33,950 Expected 2024 Growth: 1.0%
Germany
GDP: $4.4 trillion GDP Per Capita: $52,800 Expected 2024 Growth: 0.2%
So, it seems like they're at least starting to offload their stock holdings.
I was very surprised when I learned that their central bank was purchasing stocks. I'd heard about it first in 2020, but apparently it had been going on before the pandemic.
It makes me wonder if the US stock market crashed hard enough if the Fed would start buying up stocks on the major indexes. Are they even legally allowed to do this? If so, what other assets can the Fed acquire? REITs? What about direct real estate purchases? I wonder if corporate real estate crashed hard enough from remote work if they'd prop it up.
Are you claiming the Fed has directly purchased US stocks? I don't think they have.
I've only ever seen reports of them buying government and mortgage debt: https://www.cnbc.com/2022/12/22/how-the-federal-reserve-affe...
You can argue the purpose of these actions was to prop up the stock market, but I don't think they've ever intervened in as direct a manner as the Bank of Japan has with buying company stocks.
Price of gold in 2024: 9,800 yen/g
Price of gold in 1989: ~$370 USD/oz
Price of gold in 2024: ~2000 USD/oz
The way this is handled is standard inflation adjustment based on things people actually use.
You should choose one of those two, not both.
Except it's not the same yen to yen comparison on account of inflation.
Still, I also prefer global indexes.
Sure, at a given time and place, an index may be better. At other times one or two stocks may be better. But I think the "time in the market beats timing the market, always" is kind of negated by Japan's lost decades.
