Harry Dent | Monday, January 28, 2013 >>
I borrow that bug analogy from John Mauldin because, under the circumstances, it’s just so appropriate…
Japan is on a suicide mission. Its central bank has effectively turned itself into a squadron of Kamikaze pilots intent on printing the country into oblivion to preserve the glory of the “great empire” and to ease the pain of the worst bubble burst since the Great Depression.
It’s tied the kitchen sink to its already overburdened back and has jumped into the warm Pacific waters.
Of course, I’m referring to the country’s recent, ridiculous decision to stimulate – again – now joining the ECB and the Fed with commitments to “unlimited bond buying.”
Japan is looking for $1.1 trillion in quantitative easing in 2013.
That’s right. $1.1 TRILLION.
But its bond-buying is different as it is focused on very short-term bonds that quickly mature and whose stimulative effects don’t last. Japan’s policy is designed instead to encourage exports and to create inflation to get consumers to spend now rather than later.
But that raises costs for consumers that are aging and struggling in a “coma economy” that has seen zero growth and inflation for 15 years.
And what does Japan propose for stimulus in 2014?
Every year for as long as it takes…
I have news for Japan. And for the U.S. and Europe for that matter:
All your stimulus and QE plans will NOT work. There comes a point where stimulus can’t stretch an already overstretched economy.
It’s like all the governments in the world have gone mad and are trying to stuff a 300lb gorilla into size zero pink tights and a tutu.
Something’s got to give – and will give likely sooner rather than later. The natural forces of demographics and debt deleveraging, which want to correct the massive imbalances we created through greed and plain old human nature, will rip through those tights before long, exposing the hairy, fat, ugly – aged – legs inside.
Japan has already punished its aging consumers’ retirement portfolios with the lowest interest and investment returns anywhere. Now it wants to raise their cost of living on purpose and lower interest returns even further? How long can you do this before these aging households just commit hari-kari?
And that’s just what the finance minister, Taro Aso, declared… he wished older people would hurry up and die. He made it clear that he does not support end-of-life care.
That is the reality Japan is facing and we in Europe and the U.S. will face in the decades ahead.
The dwindling number of younger consumers is faring even worse than their aging parents. They have much lower wages, more part-time jobs and much less entitlements. The only thing they have going for them is low inflation and mortgage rates. Hence, this policy doesn’t help them either.
There simply has to be a point where citizens in weak countries like Japan and southern Europe revolt against policies that save the banks and financial institutions while hurting the interests of everyday citizens whose wages decline and retirement funds tank? The next stock crash in the U.S. will bring a similar revolt here.
The harsh truth is Japan’s economy is in a coma and the patient is obviously dying. Otherwise, why would the country implement such endless and extreme measures? Why would it go to such lengths to inject more crack-cocaine into an addict who’s already overdosed?
It’s the epitome of massive denial and desperation.
And it’s a clear warning for anyone with money in the system (a.k.a everyone). The perfect storm is gathering. Keep reading so we can help you prepare, survive and prosper.
Ahead of the Curve with Adam O’Dell
I was in Tampa last week meeting with Harry, Rodney and the team. We were doing some long-range planning and discussing the launch of my new trading service, Cycle 9 Alert, which we’re putting the final touches on.