Domo –Domo- Domo Arigato Mr. roboto…..
During my time at Harvard. The question by one of my beloved professors was asked. Are we turning Japanese? This was not a reference to race or culture. But to economic similarity. A few years back (nearing 20) Japan was at a point of debt that was in excess to 90% of their respective GDP. The Japanese developed a culture post WWII that took care of the citizen from the cradle to the grave. This proclamation to “care” has arguably turned one of the most powerful economic engines into something of a sputtering debt infested society of intelligent happy people… Right the last few words didn’t make sense to me either. But something has to be said about no worries! But I digress. The point of this conversation is to discuss the current economic environment and the future potential of failure. Yes failure and that in excess of 2008. Scared? Over the past 18-24 months we have seen the market crater then skyrocket, and then stall out. The fear and major discussion point has been the advent of inflation. But what if our focus on inflation has been for not. If inflation is a potential crater to our economy, then the idea of deflation could be our very own Mariana trench! - (deflation is a decrease in the general price level of goods and services) While initially you might like the idea of having currency where 1 dollar is the cost of a happy meal. The bigger concern comes from the cycle of ever lowering prices then profit then labor…. Get the drift? The fear is where is our leadership steering the boat? As a huge fan of history and relevance. Japan may be writing the book as we speak. Below is a super article discussing the political and economic strife facing Japan? Over the next several weeks I will scour the economic globe for the evidence around the future of the economy with regards to deflation, and whether it’s a potential reality.
For now enjoy the Read on. http://www.businessweek.com/news/2010-07-15/my-80-000-says-deflation-will-only-get-worse-william-pesek.html