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Japan Isn’t Bankrupt
By CULLEN ROCHE, PRAGMATIC CAPITALISM
I’ll keep this short and sweet. I’m not a big fan of the Japanese economy at present or what the policymakers are doing to drive the economy/markets higher. I think they’ve made a mockery of their stock market and that this “wealth effect” is a misguided approach to fixing their woes. But I am equally critical of those who think Japan is on the brink of bankruptcy. Japan’s got big problems – being able to meet its obligations is NOT one of them.
First of all, Japan has basically copied the US monetary design. And anyone who understands the US monetary system knows that the USA can’t just “run out of money”. Even the most simplistic (erroneous) thinking that the US government “prints” money should lead one to understand that a nation with a printing press can’t default on debts denominated in its own currency. I mean, if you had a printing press in your basement would you worry about your credit card bills? This should just be obvious. As Warren Buffett once said:
“The United States is not going to have a debt crisis as long as we keep issuing our debts in our own currency. The only thing we have to worry about is the printing press and inflation.”
Keep reading: PRAGMATIC CAPITALISM, Japan Isn't Bankrupt – PRAGMATIC CAPITALISM.
