Japan's Lost Decades: Are We on the Same Path?

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In 1989, Japan experienced a massive economic and financial bubble, with real estate in Tokyo selling for as much as $139,000 per square foot. The bubble burst in the early 1990s, leading to Japan's lost decades of economic stagnation and deflation. The country's GDP has shrunk since 1995, and prices have been flat with bouts of deflation. Japan's situation then and the current situation in the US are not directly comparable, but there are similarities in terms of extreme leverage and irrational exuberance. Japan's experience offers lessons on the consequences of excessive debt and the challenges of economic recovery. The country's declining and aging population, high unemployment rates, and stagnant wages have further contributed to its economic woes. The Bank of Japan has implemented policies to support the economy and banks, including near-zero interest rates and extensive asset purchases. However, Japan's struggle to regain economic and monetary policy normalcy highlights the long-lasting impact of the bubble. The article suggests that it's not too late for the US to manage its finances better and avoid a similar fate, but it requires taking steps to address the increasing dependence on debt and irrational exuberance in financial markets.

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https://uk.investing.com/analysis/japans-lost-decades-are-we-on-the-same-path-200604238