We just got back from Tokyo and the prices for everything were crazy low. Ordered a bunch of sushi at a mall sushi place in Kyoto for what it would cost for Chipotle in DC. It was a huge shock when we flew back through SF and paid $13 each for a taco truck burrito in Millbrae.
The Japanese folks I’ve spoken to are pretty grumbly about the weak yen, though.
In the last ~12 months I have been floored how expensive life in the US is now. I was just down two weeks ago, and everything was either the same dollar number as Canada or higher, but it's in US dollars.
I don't know how people are doing it.
Your money losing half its value in about a year tends to do that.
Import-dependent companies - different story. Export-oriented companies: Yeehaw.
Worth noting that the Yen was much stronger back in 1989. These peaks are not the same.
Mall sushi has always been cheap in japan
It’s too bad China is still hard to get to by plane (Russian airspace being closed really hurts).
Assuming you're flying from eastern US, taking the pacific route to bypass RU airspace instead of the polar route doesn't add that much distance to get to coastal China.
And Chinese airlines can still overfly RU.
https://www.focus-economics.com/country-indicator/japan/inte....
Japan has been in an economic stasis for decades, some believe this to be triggered by the 1985 Plaza Accords which devalued the Dollar against the Mark and the Yen.
Germany recovered from that shock by absorbing East Germany and pushing EU integration. Japan did not have this options, but the new multipolar world order might give them an opportunity.
This will probably be to the detriment of Germany and the US, which both probably would like to increase the value of the yen.
But given that the American are not perceived as a reliable partner right now, I do not see something like the Plaza Cords coming again any time soon.
Plaza Accords: https://en.wikipedia.org/wiki/Plaza_Accord
Impact on Yen and Mark: https://www.macrotrends.net/2550/dollar-yen-exchange-rate-hi... https://de.statista.com/statistik/daten/studie/312004/umfrag...
So, it seems like they're at least starting to offload their stock holdings.
I was very surprised when I learned that their central bank was purchasing stocks. I'd heard about it first in 2020, but apparently it had been going on before the pandemic.
It makes me wonder if the US stock market crashed hard enough if the Fed would start buying up stocks on the major indexes. Are they even legally allowed to do this? If so, what other assets can the Fed acquire? REITs? What about direct real estate purchases? I wonder if corporate real estate crashed hard enough from remote work if they'd prop it up.
Price of gold in 2024: 9,800 yen/g
Price of gold in 1989: ~$370 USD/oz
Price of gold in 2024: ~2000 USD/oz
You should choose one of those two, not both.
Except it's not the same yen to yen comparison on account of inflation.
Still, I also prefer global indexes.
Sure, at a given time and place, an index may be better. At other times one or two stocks may be better. But I think the "time in the market beats timing the market, always" is kind of negated by Japan's lost decades.
Japanese public education curricula do include "English", but it's largely "English-Japanese document translations" classes than actual English, which is good for research papers and bureaucratic letters, works like any 2000s machine translation in conversations. The majority won't bring that technique out and employ it well to win an Internet pub fight, especially on societal-macro-economical problems, so you likely will not hear anything from actual Japanese people on this topic or anything else.
Japanese people also don't like talking about wages and not everyone compares what they are making to the dollar. I have heard plenty of colleagues, friends, and family complain. It's more about how the number of diapers in a bag has decreased steadily from 72 to 56 than boy my life is getting ruined by weak yen.
The more prevalent complaints are from fellow mortgage borrowers. Variable rates in Japan have been steady for nearly 30 years, meaning a substantial number of borrowers are watching the central bank's moves like a hawk and are terrified of even any talks of rate increases.
TLDR: We are just not loud complainers (and frankly, if any Japanese person you know is hopefully very lucky, they might be earning just enough to not notice it all)
Things are getting more expensive slightly over the years and that is nothing disastrous unless your life was already quite disastrous and made it even worse or you're purely an importer or rely on natural resources to see weak yen ruin your business.
Otherwise, it's mostly life as usual.
If you look at the actual returns they recovered years ago (tho not so long).
Remember, kids, dollar cost averaging is usually the way to go.
The advice is to invest as broadly and globally as possible, which has resulted in very good return during the last 35 years.
Also, nothing "always goes up". Index investing over long periods of time simple gives you the best risk adjusted returns.
Japan
GDP: $4.230 trillion GDP Per Capita: $33,950 Expected 2024 Growth: 1.0%
Germany
GDP: $4.4 trillion GDP Per Capita: $52,800 Expected 2024 Growth: 0.2%
Are you claiming the Fed has directly purchased US stocks? I don't think they have.
I've only ever seen reports of them buying government and mortgage debt: https://www.cnbc.com/2022/12/22/how-the-federal-reserve-affe...
You can argue the purpose of these actions was to prop up the stock market, but I don't think they've ever intervened in as direct a manner as the Bank of Japan has with buying company stocks.
The way this is handled is standard inflation adjustment based on things people actually use.
Much food and natural resources are imported, not to mention anything dollar pegged like smartphones are simply getting more expensive. Seriously, stuffs like iPhone and GPU feel stupidly expensive but when you check the price in dollars, they look acceptable.
The problem is a lot more noticeable for foreigners living in Japan temporarily because they don't think of their worth in the local currency. They then generalize their problems to the rest of the population.
When you think of your money in dollars, and you see it going down a lot, it looks like a life or death crisis. But the average person in Japan sees prices go up a bit, which is frustrating, but not to the same degree.
Sorry for overestimating. It was only 10 months. :)
Is this an industry saying?
If you are going to southern China you wouldn’t be save so much going over far east Russia anyways, I guess.
Also, Chinese airlines can’t overfly Russia on the way to the USA, at least for newly approved flights: https://www.reuters.com/world/chinese-airlines-avoiding-russ...
Just 12*2 weekly round trip flights between the USA and China really sucks. There were a lot more before the pandemic. But it seems like we are going to 35 soon? https://simpleflying.com/us-china-lift-number-weekly-flights.... (Or already?)
Uniqlo was cheap as fuck. Now it's gotten so expensive that even median Japanese can't afford it.
Day in and day out, my bowl of Ramen is still 600 JPY. My veggies come from Aomori and my Milk from Hokkaido. It's fine.
I work in a company that has 95% export and my salary is paid in EUR/JPY and USD (don't ask). So I actually benefit quite a bit. But your average Japanese citizen is just not that much affected. (Unless she buys a lot of imported goods).
The biggest complaint from Japanese Japanese (not expats paid in USD) is that food prices have blown up tremendously. It's literally daily headline news. But yeah yeah, the underclass is only complaining about their Apple hardware prices.
[1] https://japannews.yomiuri.co.jp/editorial/yomiuri-editorial/...
Even if you splurge on a foreign luxury product once a year, it can seem like a downgrade in standard of living. Perhaps especially so if your special occasion is impacted and meanwhile you’re not seeing any higher affordability of domestic goods.
I mean, my whole family got a kick out of spending much less than expected for a week while we were in Japan, even though the other 51 weeks this year we will be dealing with US inflation. Psychology around inflation is weird.
And export oriented companies are making money. But trickle down economics is a myth, so it's not benefitting the workers. The executives are doing nicely so good for them I suppose.
https://asia.nikkei.com/Economy/Japan-PM-Kishida-asks-compan...
Record? I guess you didn’t live through the 1970s, much less post WWI and WWII.
Of course the deflation of the 1930s was even more destructive!
> The interesting thing is this is far from over.
What do you think is the cause and why it is far from over? I'm curious, not trying to start an argument
https://www.shadowstats.com/alternate_data/inflation-charts
In fact, 2020s inflation (using historic measure) peaked at over 15% while the 1970s spike peaked below 15% — meaning that this latest inflation sets the record compared to the 1970s.
https://www.federalreservehistory.org/essays/great-inflation
Ignorant incredulity and “back in my day!” aren’t good arguments.
But don't slavishly believe Shadowstat's inflation number either.
But considering the US gov deficits I would assume more inflation is to come with actual devaluation.
You'd think kishida-san would want more credit for his vote buying haha.
Any anchoring off late 2020 is super misleading. Milk at 130yen is not a reasonable price before COVID. Wheat to consumers at gyomu super or Costco has not moved in price, which is reasonable consider it has always cost several multiples over wholesale.
Worst has perhaps been sushi. The selection of 110yen sushi had gotten slightly smaller.
Overall, Japan has a lot less inflation than you'd expect considering the exchange rate.
> Responding to prior criticisms made by economist James Hamilton, John Williams explained in a private phone call that Shadowstats does not actually recalculate BLS data, rather, the Shadowstats CPI merely adds a constant to the officially reported numbers.[25]
>> I’m not going back and recalculating the CPI. All I’m doing is going back to the government’s estimates of what the effect would be and using that as an add factor to the reported statistics
Same article says he charges $175/year/subscription since 2006.
I'd love to get paid that much to do a high school level introductory programming assignment. The business logic is literally a one liner X-D
It used to be that rate going up would make asset price go down but the market got used to it.
Now the rates go down and asset prices go up and the rates go up and asset prices stay the same but rent increases.
Eh, I say just trudge right through it. The economy will adapt, as it always does. In this case I think it would be for the better.
They expect it to go lower because they got used to it over the past decade or so, and the Fed has said they are expecting a rate drop. It's not unrealistic if the people who make up the rates say it will happen. Of course that doesn't make the decison to do so reasonable.
The Fed has already announced back in December that they are planning to cut rates to 4.6% by the end of 2024 (of course that might change). The bond market consensus is somewhere between 4.25% - 4.75% so how is it “entirely unrealistic”?
Govt debt growth needs to slow. Too much money spent by govt is being wasted on undeserved transfer payments, creating do-nothing jobs and has been a huge contributor to inflation.
Real efficiency is falling because of overspending in the public sector. Fewer people making things everyone wants in the private sector and more people with govt jobs digging holes and filling them in creates inflation.
This is not the case and is actually impossible. Impossible they will maintain them or higher. And impossible we would recover.
The US is headed towards $1T in interest payments alone annually.
$34T in national debt AND $213T in unfunded liabilities. 2/3 of the budget is non-discretionary
The longer they stay elevated the more the average interest rate on debt goes up. For the US and the world since it's the reserve currency. This pisses everyone off.
Rates will go back down to around 2% because the US AND the world cannot sustain an expensive dollar. There's 65T in eurodollar debt (US dollar denominated debt) globally. [1] I've seen higher estimates too.
"Approximately half of all cross-border loans, international debt securities, and trade invoices are denominated in U.S. dollars, while roughly 40 percent of SWIFT messages and 60 percent of global foreign exchange reserves are in dollars." [2]
We aren't going to end up back around 2% because the Fed wants to. It's because we have to. You cannot maintain the world reserve currency at these rates after everyone got drunk off the lower rates for decades. And you cannot have the debt load we have and maintain these rates or higher. There's no easy way out of a debt spiral.
Just my opinion but rates will go lower. Printing will go into hyperdrive. Inflation will rip. There will be more unrest. Personally, I'm holding inflation-hedging assets.
[1] https://www.weforum.org/agenda/2023/01/65-trillion-debt-bank...
[2] https://libertystreeteconomics.newyorkfed.org/2022/07/the-u-...
Historically they are not low at all relative to inflation and considering how highly the government debt to GDP ratio is raising them further would lead to severe issues. Since a surplus or even a balanced federal budget is basically politically (probably financially too) impossible at this point high growth + low rates + predictable moderately high (2-3%) inflation is the only way to keep public debt from spiraling out of control.
> risk a similar situation as the early 80's.
IMHO the early 80s are about as relevant today as the 30s were back then. So a bit but not a lot. The global economy and financial system (and the position US has in it) is extremely different
Yet the Fed is talking about rate drops. We're also seeing rising consumer defaults and more perilous bank debt. And those great job numbers aren't that great since we're seeing higher part-time and low wage jobs than before. I'm not sure we're going to really avoid anything.
When you visit there is lots of chaos, like people parking on sidewalks when they aren't supposed to, or driving the wrong way down a street and no one even batting an eye, or obvious brothels advertising out in the open. Like, if the Chinese government can't even control these simple kinds of things, why do you think they are going to try and control much harder cases?
However, as patio11 said (and surely not the first), the optimal amount of fraud for a payment system is non-zero. Profit is higher when convenience is prioritized over security.
Similarly, it seems the optimal amount of crime for a government is not zero either. Everyone breaking the law allows everyone to be dealt with as needed. Sure I keep a low profile, and they probably have a full profile on us already, but it doesn't feel satisfying helping out.
On the other hand, despite my better judgement I let Japan take photos of me, etc. Who knows what they do with them.
Because otherwise the exchange rate has been about where it is now to substantially worse for the rest of the data set.
The dollar amount in CAD was normally higher than the equivalent in USD. For example, next to the bar code on the back of a paperback, it would list the prices as $15 USD or $20 CAD. Many other goods have similar price differences.
Lately in the US it seems like a lot of prices are increasing to the same number value, despite the exchange rate.
I'm 42, so, ah, no.
What I mean is that basically since forever things were cheaper in the US than in Canada.
Gas? 25%-50% cheaper. Cheese (of course) 50% cheaper. Electronics, cars, clothes, hotels, beer, food at restaurants, etc. etc.
Now, everything is more expensive in the US than Canada.
Personally I believe it is due to the last of the boomers retiring. Economists/analysts are not used to thinking about demographics and they have a blind spot on this ever more important topic.
Bottom decile even higher
There is limited real wage growth and it is mostly concentrated at the bottom end.
There might be more jobs that "qualified" candidates. Companies are still being very picky. A lot of the jobs/employment numbers we are seeing are including more part-time or low wage positions than in the past.
The inflation is mostly because of the increase in money supply in my opinion. The economy is fragile enough that the Fed is talking about a rate drop soon despite inflafion.
Worst. Generation. Ever.
~disgruntled X
The tech boom was as much influenced by silicon valley VC money as it was by the technological solutions themselves. AI fits into the same playbook. It's only rational to look at it in the same lens. The only difference is that tech has hit its limits as we are seeing with the layoffs but AI presents itself as a new vehicle to continue with the inflation.
The reason the Fed care about AI in my view is because it's new a conduit for letting loose the money printer. Once AI begins increasing economic output they'll have their missing piece for ZIRP. Without this, opening the floodgates again will be a catastrophic mistake as the inflation won't match the productivity output.
The market is not the same as the economy. We are in fact seeing rising consumer debt defaults across various types. Jobs data is not as good as it seems since there are higher percentage of part-time and low wage jobs in the numbers. Consumer spending is stagnating or down in many sectors. Hiring in consumer discretionary industries like restaurants has stagnated too. I'm not sure the economy looking that good, despite the optimism (inflation even?) in the market.
Japan in comparison is much more law and order from the start, and mostly the opposite. Japanese Police will search your stuff just to look busy, but they are never going to unnecessarily persecute you.
It’s a political issue, well criticised and commented on, that governments intentionally game metrics like inflation, etc to look good on paper for incumbent presidents and heads of state.
Also, the inflation rate is a very inconsistent number, different regions of the US has different rent price increases, different cost of labour increases, different product prices for a lot of goods. How can the nation be entirely ruled by one common inflation rate.
All statistics like this which have to target so many regions, environments, and scenarios, always have to make decisions, that sacrifice some scenario or the other, where the “score” is a very poor indicator
This applies not just to inflation, but other metrics like gdp per capita, employment rate, etc.
There is no need for that condescending tone, especially when the author is talking about their increased cost of living, which prolly hurt their purchasing power.
The reason behind the low consumer sentiment wasn't a flaw in BLS methodology, no one seriously questions any of the stats I mentioned. Rather, it's that the effect of a couple of years of high inflation continued to weigh on consumers. 6 months of low inflation didn't reverse previous price increases, nor did they forget what prices used to be.
And yet, it's fundamental human nature to adapt to circumstances. Consumer sentiment has actually increased substantially in the last 3 months. Source: American consumers are finally cheering up (The Economist - https://archive.is/vJ7gf).
> The rate of improvement is especially striking. The 30% increase since November marks the survey’s biggest rise over any three-month period in more than three decades. The level remains glum by historical standards: about 15% below its average in the five years before the covid-19 pandemic.
In summary, the BLS' methodology to calculate economic indicators is fine. And assuming those indicators continue their trend, it's likely that consumer sentiment will continue to recover.
You also claim that
> Americans have stopped saving and gone so deeply in debt
Except this isn't true? According to surveys conducted by the Federal Reserve (https://www.federalreserve.gov/publications/files/scf23.pdf Page 30), consumer debt has gone down steadily from 2010 to 2022.
At this point, I got to ask - what is your source for facts?
Have they? The personal savings rate is not that much lower than it was between 2000 and ~2019 on average
I did see this a few weeks ago and thought it was interesting - excess saving rates are dropping sharply: https://twitter.com/saxena_puru/status/1747041218004156505
There is another household debt graph that I can't find right now that is going up. I suspect the decline in savings rate is being buoyed somewhat by debt.
And he discussed the used car numbers — such an interesting outlier — as an indicator of supply-side shock.
You can agree or disagree with his Keynesian positions but he’s pretty clear with his thinking and calls out when he was wrong. To the degree macroeconomics can be considered a science, that’s what you want from a scientist, isn’t it?
You’re committing a fallacy of “Appeal to Authority”, even though your comment doesn’t make sense — obviously we need a consistent measure across decades if we want to compare inflation across decades. Comparing two numbers that measure different things is an apples-to-oranges comparison. (Which is what you’re arguing we should do.)
If you use a consistent measure from a 1980s basis, you’ll see that person is correct — as measured using the historic means, we’ve had ~40% inflation in the past few years and the highest rate of inflation in 40 years.
This chart uses the historic measure and bases in 1980.
I'd suggest just referring to the M2 [1]. It is easier to understand, and more available for analysis. Apparently it also gets rid of the stupid "real" price rises that inflation pretends gold is experiencing [2]. It suggests prices should be about 40% higher than pre-pandemic (I checked 2019-11 -> 2023-12) which coincidentally lines up with what justinzollars is reporting.
[0] Well, smoothing in. But the two lines wiggle the same way which suggests we're just using the BLS + an adjustment that is changing in a boring way over time.
[1] https://fred.stlouisfed.org/series/M2SL#0
[2] https://ingoldwetrust.report/chart-m2-gold-ratio/?lang=en
High inflation for consumers, access to low cost of capital for asset holders.
In addition to the erosion of progressive taxation.
Wealth inequality today is growing and is unconscionable, but just to look at the numbers it was far worse in the gilded age (and of course far far worse during slavery). Knowing that is no excuse for not fighting it, but let's not rely on hyperbole to make a point on HN.
> In addition to the erosion of progressive taxation.
I assume you mean that the progressive nature of the tax code is fading away, in which case I agree with you and consider it a terrible problem. In some states like Texas the tax code is actually quite regressive, but overall the whole country gone quite a bit backwards.
Interestingly, California's tax code is both too regressive and too progressive (though both are in principle fixable). Since most people with any wealth hold it in real estate, prob 13 has made homeowners in lucky locations asset rich but at a low tax rate, which is screwing up attempts to improve the housing situation. And I learned it was "too progressive" in 2008: so much of the state's income came from cap gains of rich people and during the real estate crash (leading to stock market woes), state revenues fell just when a surplus was needed. The same thing is happening now, though I expect it to unwind by the end of 2024. That can be fixed as well by changing the tax mix for the top 1% and above, (which is why I put "too progressive" in quotation marks).
I still remember them removing the people who had been out of the job for xx months during the 2008 recession from the 'unemployed' category. 'oh look unemployment is down!'. '...but so is the labor participation rate...'