Name: Japan’s Massive Money Experiment Is Over. Now What?
Uploaded: 2024-03-05T03:30:49.000Z
Duration: 8 min 46 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

Imagine a place where  everything money-related

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the price of your unagi bowl doesn't change

and the interest rate on your home mortgage is closer to zero.

Well, that was the reality here in Japan.

for some of the biggest  experiments in economics.

and Suetaka, who runs a real estate agency,

have experienced a rollercoaster of changes

the Bank of Japan, or the BOJ, raised rates.

So how did Japan decide to manage its economy

so differently from the rest of the world?

And how is this massive shift going to disrupt

Japanese growth hasn't always been this stagnant.

At one point, the economy was growing so fast

that it looked like it was about to overtake the US

Taro Kimura covers the Japanese economy for Bloomberg Economics.

So here he is with a mini history lesson.

economic miracle from the 1960s to early 1970s.

That growth was led by a huge domestic demand

because the middle class households were expanding.

And in the late 1980s, Japan's economy  actually accounted for

At the time, many were flush with cash  and reckless spending was the norm.

By the end of the 1980s, the stock market  was on the up and up,

What was crazier was the real estate price.

For example, the land price of Tokyo's Imperial Palace

the BOJ sharply raised interest rates in 1989,

trying to curb speculation and rein in inflation.

The government also introduced measures  to cool the property sector.

Nikkei stock price index fell to half of its peak value,

Authorities had tried to pump the brakes,

but instead they sent  the economy to a screeching halt.

wage growth and inflation for about three decades.

That means one generation full of people.

learned the concept of inflation  from a macroeconomic textbook.

makes people attached to  a certain product with a certain price.

A small amount of inflation  can help drive economic growth

Most economies target relatively mild inflation of about 2%.

Japan's inflation stayed below that for a long time.

the Bank of Japan followed  the typical playbook for central banks:

but it didn't help lift the country out of deflation.

In 2013, the BOJ decided  to do something drastic again.

It introduced the  Quantitative and Qualitative Easing policy,

and pump it into the market by aggressively  buying Japanese government bonds.

but Japan faced deflation again a couple years later,

so the BOJ went back to its box of tricks.

The main goal was to deter saving and also

In response, the BOJ invented something  called yield curve control.

Yield curve control is an attempt that the BOJ

controls not only short-term, but also the long-term rates

don't have to worry about too much fluctuation in interest rates.

by threatening to buy bonds, without always having to actually buy them.