If not mistaken the Japanese tried back in the 80s to compete in the chip market but faild in the long run.
I just found out that back in the 80s there was this talk in the comerce sector that in 20 years Japan will suplant the USA in ecconomic growth and production, to the point there is a documentary hosted by Jane Seymor about it.
We will see what will happen in the near term in regards to these Huwawei blocking I am of the belief that these blocking manuever is more than business I think its geopolitical so I also believe the USA has some contingency to undermine Chinese domestic production of chips.
Its no secret that China is using its wealth to lure smaller countries in the region to join its geo political sphere of influence like offering assistance in digital infrastructure,communications and state voyeurism.
Yeah I am loolking at you Gloria Aroyo!! and your ZTE buddies!
Economies move in cycles of recessions and booms. Both good and bad investments are made in boom periods. Then the bad investments start going bankrupt and that's called a recession. After bad investments go bankrupt, the money/ resources that were used on them can then be freed up and used on new investments, leading to another boom period. This continues on forever. There's slightly more good investments than bad investments in the long run, thus creating economic growth.
What if you don't allow the bad investments to go bankrupt though? Then you don't have any money for new investments to create another boom period. You just end up stagnant.. forever. In the worst case scenario, the bad investments can continue to accrue losses until you're not just stagnant but completely bust.
Low interest rates encourage borrowing and investing. As all the money supply goes into investments and isn't available to borrow anymore, the available money supply becomes lower which makes it more expensive to borrow money and interest rates become high. High interest rates force the bad investments made during a time period of low interest rates to go bankrupt. The bankruptcy frees up the money used on them for new investments, thus increasing the money supply, making money cheaper to borrow and therefor lowering interest rates. This is a natural market cycle.
However, in today's economies, interest rates aren't determined by the market supply of money. They're price fixed by central banks to reverse the cause and effect; instead of money supply --> interest rates, it becomes interest rates --> money supply. Things going bankrupt and recessions, even though they're necessary, are bad politics though. Everyone knows that politicians in socialist and communist countries with lots of price fixing often end up fixing prices for political benefit instead of economic reality. Similarly, some countries' politicians end up pressuring their central banks to fix interest rates for political benefit instead of economic reality.
That's what Japan did in the early 1990s. That's why, instead of growing and continuing to be an economic peer with the likes of the USA and now China, they've stagnated for nearing 30 years.
