Sunday, November 02, 2008

Will the U.S. Follow Japan?

Will the U.S. Follow Japan into nearly two decades of stagnant growth?

I believe the risks are increasing that the U.S. will act similarly to Japan.

Full-time jobs are hard to find in both the U.S. and Japan. Innovation has become more expensive and productivity gains have continued to slow. The social burdens of caring for an older population keep growing. The high value of both the Yen and Dollar impede economic growth by discouraging manufacturing and imports. Deflation has become a growing threat to both economies. Each generation lacks more ambition than the previous generation. Interest rates are gradually heading towards zero. Fiscal stimulus by both governments have failed to ignite either economy. Spending has slowed dramatically and savings are increasing for both economies as well.

The similarities between the U.S. and Japan is quite scary. I do not see how the U.S. will be able to avoid the same fate as Japan.

I hope I am wrong.

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