Name: Japan's Economy Is Collapsing, And Its Far Worse Than You Expect
Uploaded: 2025-09-05T18:02:52.000Z
Duration: 16 min 22 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...

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Japan's economy is collapsing right in front of our eyes.

It is on the verge of 1929 style depression.

In fact, the Japanese economy has been collapsing for the last couple of decades.

And Donald Trump is about to put the last nail in the coffin.

Because if the supreme court is not going to stop Trump's tariffs, then Japan is the first country that will pay a tremendous price for that.

It might seem like I am exaggerating, but I am not.

Because if you look at the facts just like I did, then you will have the exact same view.

If you are ready, give this video a thumbs up and let's get right into it.

Over the last couple of years alone, the Japanese economy has already went through a recession.

What is a recession at the end of the day?

In 2023, they also had three negative GDP growth, but they were not consecutive, so we cannot call them a recession.

In the last couple of quarters, it was barely growing by 0.1 percentage point.

And this has been the state of the Japanese economy since 1995.

In fact, if you look at this graph, then you understand how big the crisis is.

In 2011 and 2012, the Japanese GDP was 6.3 trillion dollars.

So Japan basically lost 20 percent of its GDP over the last 12 to 13 years.

Imagine United States GDP would grow from 30 trillion dollars to 22 trillion dollars in the next couple of years.

In fact, if you compare what is happening to Japan today to 1929 Great Depression of the United States, the United States lost 27 percent of its GDP during that crisis.

So Japan's economic crisis right now is already almost as big as the 1929 Great Depression.

Back in 1990s, Japan represented 18 percent of the global economy.

It was the world's second-largest economy and had so much influence.

That number today has fallen to less than 4 percent.

What makes the entire situation so sad is that back in 1980s, Japan produced almost half of the global semiconductors.

Today, whoever controls the computer chips controls the world because we are on the verge of an AI revolution.

In fact, the most valuable company in the world is Nvidia that designs the chips.

So the question is, why is Japan not rich when Japan was already producing half of the global semiconductors?

That number has decreased to less than 10 percent today, and the entire industry now is controlled by Nvidia, TSMC, and Samsung.

It's not just the United States that is taking advantage out of this.

Samsung is a South Korean company, TSMC is a Taiwanese company, and both Taiwan and South Korea are neighbors of Back in 1980s, 32 out of the 50 largest companies in the world were Japanese companies.

So if you would literally just pick up the list, what are the top 500 companies in the world back in 1980s, you will see Japan, Japan, Japan.

Like literally more than half of all the companies were Japanese.

If you pick up the exact same list today, you will see one Japanese company in that list, and that is Toyota.

And it's not like in the top 10 or the top 20, it is literally probably like number 48.

Three years from now, even Toyota is going to lose its status and Japan won't have a single company in the top 50 largest companies in the world.

Do you see the strategy that is happening with the Japanese economy right in front of our eyes?

If your economy is collapsing and falling down, you might think that they would sit down, come up with a plan and save the economy.

That would be the most logical sense to do for any government or any economist.

But what Japan has done since 1990s is only to destroy their economy by simply borrowing as much money as possible and then misusing that money, which literally just led the country to a debt trap that it cannot or no longer will be able to get out of it.

If you go back to 1970s and 80s, you will see that the amount of the government debt that the Japanese government has been issuing has grown substantially over the years.

Because interest rates on that debt was falling down.

So if the debt is so cheap, why not borrow as much money as you can?

Well, that is the debt trap because if you don't pay off that debt, then the interest rates sooner or later are going to rise and that's when you will have a debt problem.

In fact, if you look at the interest payments, back in 1980s and 90s, interest payments represented a huge portion of the government.

However, as the interest rate kept falling down after that in 1995 and later on, the interest payments on that debt were extremely minimal which allowed the government to prevent itself from a default.

But that did not stop the government from borrowing more and more money.

And that's why the amount of government debt in the market has grown substantially.

And that's why if you look at the debt to GDP ratio of Japan, you would see that since 1990s, that number has exponentially grown and today it at around 216 percent which makes it the largest debt to GDP ratio in the world.

It's even larger than most of the European economies that are also filled with debt.

Of course, the Japanese debt is slightly different from European debt because it is not as exposed to the rest of the world and the global markets as much as the European debt.

And now I want you to look at the government's revenue and expenditure.

And this is where you see the real problem.

So this is the tax revenues of the government.

Since 1990s, the tax revenues has been going down.

So the logical thing would be, if your tax revenues are going down, then you should cut your spending because if your spending continues growing while you are making less money, you are driving yourself into a debt trap.

Imagine somebody who is losing his job or is making less money each year but then he starts overusing his credit cards and his debts keep growing.

That is the most irresponsible thing that somebody would do.

But based on the graph that you see right in front of you, that is exactly what Japan has done.

The government expenditure kept growing tremendously but tax revenues kept falling down.

That huge deficit since 1990s has led the government to make huge interest payments.

Just last year alone, the Japanese government has spent 25 percent of all the government's revenue just to make the interest payments.

Imagine you are making 100 thousand dollars a year and you have so much debt that in order to prevent a default, you have to make your minimum interest payments.

We are not talking about the debt payments, we are talking about the interest payments alone.

And imagine you have to pay 25 thousand dollars a year just to make sure that you are not defaulting on your debt.

That is the situation that the Japanese government is right now, which is why it's a real disaster for any government.

Even the United States is not at that stage, even though the United States has the world's largest debt in the world.

What makes the Japanese debt very different is that most of that debt or at least half of it is being owned by the bank of Japan.

So on one side, it is a real debt, on the other side, because it's owned by the bank of Japan, it does not pose a real threat to the Japanese government.

Because at the end of the day, what is the job of the central bank?

Is to preserve the Japanese economy and ensure that it does not so they will manage it somehow.

But here is where the real problem starts. 5 to 10 percent of the Japanese debt is being owned by foreign investors.

Even though that number is low, the debt is so huge that even that 5 to 10 percent represents a huge debt.

Because if you are a Japanese financial institution, if you are a Japanese bank, if you are a Japanese insurance company, if you are a Japanese some kind of financial institution, then by law, you're obligated to ensure that a portion of your money is being invested in the government bonds of your country.

The same rules apply to the United States.

And that's why if you pull out the financial statements of any bank in the United States, JP Morgan, Chase, Wells Fargo, Citibank, Bank of America, you will see that they own a lot of US government bonds.

If you pull out any bank from England, from the UK, you will see in their financial statements that they own a good portion of their assets in UK government bonds.

If the Japanese government won't be able to continue making their interest payments, what is going to happen to all of these financial institutions?

What's going to happen to the banks in Japan when they won't be receiving interest on their investments, which makes their investments worthless, which will lead the entire financial industry in Japan to collapse?

Why are you making the assumption that the government of Japan won't be able to continue paying the interest on their debt payments?

Well, look at Japan's 30-year government bonds.

Over the last year alone, they have increased from less than 2 percent, from about 9.1 percent to 3.3 percent.

With each percentage point that the rates on government bonds are rising, it is increasing the cost of refinancing the debt, which means that the government will have spend a bigger share of their revenue to maintain the debt.

So last year, when the interest rates were below 2 percent, the government has already spent a quarter of its entire revenue to maintain the debt.

Now, if that number grows to 4 percent, suddenly, maybe the government will have to spend half of the entire revenue on maintaining its debt.

And if you listen very carefully to what the chairman of the federal reserve said at Jackson hall, he made it clear that the era of low interest rates is over.