Bitman on Nostr: "I AM YOU, TOMORROW..." Based on indications from the Chinese fixed income market, ...
"I AM YOU, TOMORROW..."
Based on indications from the Chinese fixed income market, China is becoming the new Japan.
Japan, after its economic boom in the 1970s and 1980s, peaked in 1989/90. Following the crash of its stock market, the Nikkei, Japan experienced declining economic growth throughout the 1990s, dropping from previously robust levels to near-zero growth rates. This was accompanied by monetary deflation, with interest rates falling close to zero and remaining there for the next 20 years (from 2000 to 2020). This occurred despite massive monetary injections by the Japanese central bank, which spent nearly three decades attempting to inflate the market by purchasing all types of financial assets. Additionally, Japan’s government pursued expansionary fiscal policies, leading to increasing deficits and the highest debt-to-GDP ratio in the developed world.
China, according to market indicators, appears to be heading down a similar path. Its growth peak occurred in 2007/2008, and since then, China’s annualized growth rates have been declining. We may now be entering a phase where growth could approach zero, accompanied by monetary and credit deflation, prompting increasingly aggressive fiscal and monetary stimuli. How long could this last? If historical parallels hold, it could mean at least two more decades in this cycle. Time will tell...
Based on indications from the Chinese fixed income market, China is becoming the new Japan.
Japan, after its economic boom in the 1970s and 1980s, peaked in 1989/90. Following the crash of its stock market, the Nikkei, Japan experienced declining economic growth throughout the 1990s, dropping from previously robust levels to near-zero growth rates. This was accompanied by monetary deflation, with interest rates falling close to zero and remaining there for the next 20 years (from 2000 to 2020). This occurred despite massive monetary injections by the Japanese central bank, which spent nearly three decades attempting to inflate the market by purchasing all types of financial assets. Additionally, Japan’s government pursued expansionary fiscal policies, leading to increasing deficits and the highest debt-to-GDP ratio in the developed world.
China, according to market indicators, appears to be heading down a similar path. Its growth peak occurred in 2007/2008, and since then, China’s annualized growth rates have been declining. We may now be entering a phase where growth could approach zero, accompanied by monetary and credit deflation, prompting increasingly aggressive fiscal and monetary stimuli. How long could this last? If historical parallels hold, it could mean at least two more decades in this cycle. Time will tell...