Bubble, Bonds, Boils and Troubles Bubble, Bonds, Boils and Troubles The world 's central banks face increasing problems when it comes to planning fiscal policies in today 's climate of financial uncertainties, lower gross domestic production levels, or GDPs, and artificially high bubbles that seem to be artificially upholding inflated stock values. Davidstockmanscontracorner.com recently published a report that examines these issues based on more than 30 years of Bubble Finance policies at the U.S. Federal Reserve Bank and similar pie-in-the-sky analyses of the the Bubble Finance policies of other central banks worldwide. Ever-increasing global debt, bigger government and economic interconnectedness have pushed many governments to the brink of bankruptcy. For example, according to the report, Japan has lost 272,000 of its population while delivering 48 percent yields on 40-year bonds in the first half of 2016. …show more content…
Most analysts predict that Japan will be forced to issue stimulus funds or even inject helicopter money directly into the economy, which would increase the debt even further. That 's just one example of the current problem of central banks accepting overvalued asset prices, or financial bubbles, at face value. Overvalued Stocks and Bonds Skew Central Bank Planning Globally In 40 years, Japan will need to fund entitlements for more retirees than are in its work force, but the government continues to deliver high bond yields that can 't be sustained. The stampede to issue more bonds to stimulate economies isn 't just a Japanese problem as shown by the following situations: Governments are buying debt, which drives prices higher and yields lower. International investors face bidding wars for bonds that are traditional safe havens and universally
The financial crisis of 2007–2008 is considered by many economists the worst financial crisis since the Great Depression of the 1930s. This crisis resulted in the threat of total collapse of large financial institutions, the bailout of banks by national governments, and downturns in stock markets around the world. The crisis led to a series of events including: the 2008–2012 global recessions and the European sovereign-debt crisis. The reasons of this financial crisis are argued by economists. The performance of the Federal Reserve becomes a focal point in this argument.
Japan is facing a de-population crisis. Birth rates have be dropping since the economic boom of the 1970s, and the drop in birth rates is accelerating. Actual population is now around 127 million, but at current rates of decline is expected to drop to 100 million by the middle of this century, and by the start of the next century, to around 40-50 million people. In addition, Japan has the longest life-expectancy in the world, and its “pensioners” are growing as the workers who support them in their later years are declining rapidly. Sixty years ago, there were about eleven workers to support each pensioner; today there are only two. Japan’s current debt load is higher than Greece’s debt, and that could ultimately result in major economic issues. Sakanaka Hidenori, in his Immigration Battle Diary, urges Japan to consider the options available to address the population issue and its economic repercussions. He argues that they can either stay the course and prepare for the changes this will cause, or change immigration policy and prepare for the cultural ramifications of that decision.
Account for the emergence of the ‘bubble economy’ in Japan and the reasons for the country’s slow recovery from it.
Public debt, which comes from securities and bonds issued by the United States Treasury, is responsible for over 60 percent of the debt (“Debt Position and Activity Report” 1). These debts are being held by the public inside and outside the US. Over 25 percent of the debts are held by foreign governments, in which China and Japan accounts for almost half of the sum (“Treasury Bulletin: September 2009” 60).
Moreover, the context in which this book was written demonstrates that Japan is going through the financial affluence as well as the greatest boom since it is during the postwar period, much of the financial affluence had been caused by the consumerism in Japan. The author seem to be biased on this theme, despite the benefits consumerism has had on Japan, Yoshimoto goes ahead to give it a negative
There is perhaps no other political issue in our contemporary society that is more pertinent, pervasive, and encompassing than a nation’s economy. From the first coins used in Greece and the Asia Minor in the 7th century BCE, to the earliest uses of paper money, history has proven time and time again that the control of a region’s economy is absolutely crucial to maintaining social stability and prosperity. Yet, for over a century scholars have continued to speculate why the United States, one of the world’s strongest and most influential countries, has one of the most unstable economies. Although the causes of this economic instability can be attributed to multiple factors, nearly all economists agree that they have a common ancestor: the Federal Reserve Bank – the official central bank of the United States. Throughout the course of this paper, I will attempt to determine whether or not there is a causal relationship between the Federal Reserve Bank’s monetary policies and the decline of the U.S. economy. I will do this through a brief analysis of the history and role of this institution, in addition to the central banking system in general. In turn, I will argue that the reckless and intentional manipulation of the economy by the Federal Reserve Bank, through inflation and the abolishment of the gold standard, has led to the current economic crisis in the United States.
Companies. Retrieved July 4, 2008, from University of Phoenix, MMPBL-501 Web site. University of Phoenix . ( 2008). Economics for Managerial Decision Making
In 1962, Milton Friedman wrote the essay “Should There Be An Independent Central Bank?” Since then, half a century has passed. Nowadays, many countries in the world have their independent central banks. But the discussion about whether central banks should be independent does not end. This paper will try to 1) provide the arguments on both pros and cons whether central banks should be independent; 2) provides evidence about the relationship between central bank independence and inflation in developed countries, developing countries and transition countries.
Even before the creation of the Federal Reserve, banks were used by the public just as we use them today. Deposits were made into savings accounts. Loans were taken out to mortgage a home or finance a new business. Banknotes were issued and spent when the public borrowed from the banks. Borrowers spent these banknotes just as paper money is spent today. These bank notes were valued as money since they were backed by the promise that they would be exchanged on demand for either gold or silver.
The currency exchange rates have fluctuated wildly, yet the Japanese economy has long dogged the danger of an economic crisis due to the excessive cost of the yen against other major currencies in the world. The decline of the cost of yen under the Abe administration has raised the popularity of his economic policy, but it has its disadvantages. For the rise of the consumption tax, the Abe administration and the Bank of Japan is responsible to carefully evaluate both the positive and the negative impacts of the falling yen, and take counteractive actions to avoid an economic disaster.
...r people leaving the workforce. If something doesn’t change, Japan may not even be able to survive.
Economic uncertainty has caused exaggerated criticism of the Federal Reserve. Money and Banking has deepened my understanding of the Federal Reserve and has helped me challenge those criticisms. The U.S. standard of living would drop if people lost faith in the safety of financial institutions. Frederic Mishkin makes the point in the text, The Economics of Money Banking, and Financial Markets (2010) that “Banks and other financial institutions are what make financial markets work. Without them, financial markets would not be able to move funds from people who save to people who have productive investment opportunities.” (p.7). When people lose confidence in the economy this activity freezes or weakens, consequently, asset prices decline, unemployment rises and companies default as was the case of Lehman Brothers in 2008. Money and Banking has taught me that the Federal Reserve is the greatest safeguard to our banking system and therefore, the greatest protector of our wealth. The three most important things I’ve learned in Money and Banking are:
O'Bryan, Scott. 2009. Growth Idea : Purpose and Prosperity in Postwar Japan. University of Hawaii Press, 2009. eBook Collection (EBSCOhost), EBSCOhost (accessed December 4, 2011).
Warwick J. McKibbin, and Andrew Stoeckel. “The Global Financial Crisis: Causes and Consequences.” Lowy Institute for International Policy 2.09 (2009): 1. PDF file.
Japan’s rising yen and the decline of the US dollar, East Asia Forum, 2011. Available at: