Serious discussion about yen: Short or not?

Discussion in 'The War Room' started by trojansc82, Aug 18, 2015.

  1. trojansc82

    trojansc82 Purple Belt

    Joined:
    Apr 22, 2007
    Messages:
    2,009
    Likes Received:
    0
    Location:
    She-Ca-Gowa
    I wanted to have a discussion about the Japanese yen.

    Do you guys think that the Japanese yen will experience hyperinflation once the people realize that the pensions can no longer be funded?

    Japan is either going to default on its debt, or it is going to print more yen (deflating its value). Either way the yen should shot somewhere towards 300+ per dollar.

    Japan has almost zero immigration to speak of, and their population is slowly turning into an upside-down V. So my question is, how soon until Japan's economy crashes?
     
  2. Jack V Savage

    Jack V Savage Secretary of Keepin' It Real/Nicest Guy on Sherdog

    Joined:
    Oct 30, 2004
    Messages:
    71,560
    Likes Received:
    42,361
    Worrying about hyperinflation in Japan is like worrying about the Nile freezing.
     
  3. esotamoc

    esotamoc Purple Belt

    Joined:
    Apr 23, 2005
    Messages:
    2,200
    Likes Received:
    777
    Exprain?
     
  4. trojansc82

    trojansc82 Purple Belt

    Joined:
    Apr 22, 2007
    Messages:
    2,009
    Likes Received:
    0
    Location:
    She-Ca-Gowa
    So then when Shinzo Abe decides not to allow for massive immigration, do massive numbers of elderly just die in their homes? Do businesses just completely shut down?

    How does a country with less than 1 worker for each retiree fund their liabilities?

    Are you taking the Krugman approach? (i.e. the world is made of unicorns and lollipops, more debt = more happiness)
     
  5. JDragon

    JDragon DOX News Anchor Platinum Member

    Joined:
    Nov 28, 2010
    Messages:
    14,577
    Likes Received:
    18,800
    Location:
    Germany
    [​IMG]

    Japan would love some inflation. It's just not happening. Fear of hyperinflation is rather weird in this context just because of a few months of >2% inflation.
     
  6. Kiddo716

    Kiddo716 Cubic Zirconia Belt

    Joined:
    Sep 3, 2009
    Messages:
    7,265
    Likes Received:
    2,518
    I think that a word that's only three letters long is short. So yes. Short.
     
  7. trojansc82

    trojansc82 Purple Belt

    Joined:
    Apr 22, 2007
    Messages:
    2,009
    Likes Received:
    0
    Location:
    She-Ca-Gowa
    I'm basing my prediction off of several facts:

    1. Japan has a few million people that will retire in the next few years, and very few people will replace them

    2. Japan has little to no immigration. They have an "intern trainee" program, but it's mostly indentured servants from China and Vietnam working for $3 an hour.

    3. The birth rate is below replacement.

    [​IMG]

    It looks like the apex of their productive age population was back in the 1980's. I think we're going to see a major decline in the number of workers in the next 5-10 years.

    If there are no Japanese workers to replace them, who will work the jobs? Japan only accepted 6 refugees last year, and few people are entering their trainee program.

    I think the Japanese economy is going to crash in the next 5-10 years, maybe sooner.
     
  8. woodguyatl

    woodguyatl Brown Belt

    Joined:
    Jan 28, 2014
    Messages:
    3,664
    Likes Received:
    3,058
    I'll leave you to decide whether hyperinflation is likely. In my opinion it is not.

    That said, with respect to shorting the yen in anticipation of major windfall, whether hyperinflation occurs or not, it will be very difficult to predict when. Worries about hyperinflation have been bouncing around since 2010 or earlier. You could find more productive ways to invest your money.
     
  9. Doughbelly

    Doughbelly αlpha-nerdette, action scientist

    Joined:
    Oct 12, 2003
    Messages:
    15,750
    Likes Received:
    5,610
    Location:
    2nd Star to the Right & straight on til morning.
    Shifting cultural practices as more women stay in the workplace while leaving child rearing up to the aged can and will delay collapse by at least another decade or two past what you're thinking. Japan still has relatively low labor force participation rate of women in the full time workforce compared to other similar economies.

    Currently, only 50% of all women participate. And increase to 60% (still modest compared to say, Iceland or Norway) would represent enough productive workers to sustain the economy for quite a bit longer than just 5-10 years.

    Common solution to a lot of the demographic/economic issues facing a lot of these inverted pyramid countries and we're already seeing a lot of women returning to the workforce by incentivization schemes that encourage it.
     
  10. Videer

    Videer Black Belt

    Joined:
    Oct 20, 2006
    Messages:
    5,009
    Likes Received:
    1,016
    Location:
    Sauna Inferno
    Japan will be fine even with the Abenomics boat hitting a bit of rough waters.
     
  11. Jack V Savage

    Jack V Savage Secretary of Keepin' It Real/Nicest Guy on Sherdog

    Joined:
    Oct 30, 2004
    Messages:
    71,560
    Likes Received:
    42,361
    Dumb post.

    My point was just that they've been trying and failing to get higher inflation for a long time, and the well-known demographic issues you refer to have a deflationary effect. Japan's economy has had some real problems, but they are overstated somewhat because of the lack of population growth, which puts a drag on headline growth numbers, but not necessarily on growth in living standards. They had a full decade of poor performance, but that was more than a decade ago (in between then and now, Japan has not struggled as much as the rest of the developed world so it's closed the gap).

    Also, I think you should read Krugman more carefully (you have, of course, wildly misinterpreted), as he's one of the best sources on Japan's economy.
     
  12. trojansc82

    trojansc82 Purple Belt

    Joined:
    Apr 22, 2007
    Messages:
    2,009
    Likes Received:
    0
    Location:
    She-Ca-Gowa
    Krugman was right about the past, but the future won't be a continuation of what occurred before.

    Japan has ZERO net immigration, a declining birth rate, and possibly the largest percentage of 65+ year olds in the world.

    At a certain point Japan is either going to accept massive immigration or their economy will collapse. The collapse will occur when people in the West finally realize that the Japanese government cannot meet its promises to the retirees, who expect to receive their pensions.

    Here is a plot that clarifies my points:

    [​IMG]

    Abe's manipulation of the yen is going to be meaningless if the populations continues to shrink and grey.
     
  13. Cold Front

    Cold Front Double Yellow Card Double Yellow Card

    Joined:
    Jun 3, 2004
    Messages:
    8,481
    Likes Received:
    2,975
    The problem is that your macro-analysis is far too broad to support your small-bore action. One doesn't look at fifty-year trends to see how markets react in the short term. The problem is that a guy can be right in his analysis and still go broke he's off by a decade or so.
     
  14. trojansc82

    trojansc82 Purple Belt

    Joined:
    Apr 22, 2007
    Messages:
    2,009
    Likes Received:
    0
    Location:
    She-Ca-Gowa
    That's why I'm trying to refine my micro-analysis so that I can identify the tipping point.

    There is going to be a point where Japan can no longer fund its liabilities to its retirees. That's when the market melts down.

    South Korea was faced with the same situation, so they decided to reform their immigration policy. Individuals who lived in the country for 5 years could receive permanent residency, and South Koreans could have dual citizenship. Additionally, they have set up government sponsored agencies to help new immigrants with Korean language classes.

    Japan only allows for permanent residency after 10 years, and there is no possibility of getting Japanese citizenship unless you give up your previous citizenship. Shinzo Abe has stated that there is no immigration policy, and that anyone working in the country who is not Japanese should return home.

    So to summarize:
    1. Japan doesn't want immigrants
    2. Japan doesn't want to take the necessary steps to avoid a financial collapse
    3. Japan is ready to commit financial suicide in order to preserve the master race
     
  15. Rod1

    Rod1 Titanium Belt

    Joined:
    Jul 19, 2010
    Messages:
    47,130
    Likes Received:
    33,327
    Location:
    Sonora, Mexico.
    Maybe they could set up a baby buying program, like buying all those female babies that the chinese and indians kill off
     
  16. Cold Front

    Cold Front Double Yellow Card Double Yellow Card

    Joined:
    Jun 3, 2004
    Messages:
    8,481
    Likes Received:
    2,975
    All it takes is for one little thing to be off and your bet is wrong. Could be anything, too.

    1) Japan changes its immigration policy.

    2) Robots take on a larger role in the work force in the future.

    3) Medicine discovers a new regimen which makes sixty-five the new forty.

    Of course I'm exaggerating, but the point is that little things will crush any analysis you come up with. So here's hoping you're wealthy enough to make stupid bets with your money.
     
  17. Great Angus

    Great Angus Blue Belt

    Joined:
    Aug 5, 2015
    Messages:
    742
    Likes Received:
    20
    Location:
    North Kilttown
    So worrying about something that could happen is like worrying about something that could almost likely never happen?
     
  18. Jack V Savage

    Jack V Savage Secretary of Keepin' It Real/Nicest Guy on Sherdog

    Joined:
    Oct 30, 2004
    Messages:
    71,560
    Likes Received:
    42,361
    Neither of the things could happen under normal circumstances (an asteroid strike or nuclear war or something could cause both to happen). Japan has undertaken extraordinary measures to try to increase inflation, and it has failed, and people are worried about hyperinflation. It's madness.
     
  19. Great Angus

    Great Angus Blue Belt

    Joined:
    Aug 5, 2015
    Messages:
    742
    Likes Received:
    20
    Location:
    North Kilttown
    I agree with your response.
     
  20. illclint

    illclint Purple Belt

    Joined:
    Feb 12, 2010
    Messages:
    1,558
    Likes Received:
    1,505

    Might be a case for deflation. Lower population should mean less demand. I think the robots will do the jobs that Japanese won't do.

    However, I think it's a good question, who will fund the entitlement programs. Higher taxes? Or privatization?
     

Share This Page

  1. This site uses cookies to help personalise content, tailor your experience and to keep you logged in if you register.
    By continuing to use this site, you are consenting to our use of cookies.