We are not in as bad a shape as japan, but you are right.
The stock markets around the world have been propped up by central banks since the financial crisis.
The FED stepped in with a few trillion in QE to save wall street. The ECB implemented their own QE. BoJ also in japan. And even china has stepped in to prop up it's stock market although their stock market is much younger, smaller and less systematically important.
And so the world goes round and round. Historically, printing money and artificially propping up assets doesn't end well, but if everyone is doing it, maybe it'll work out?
I did read that if you stripped out demographics, Japan was one of the best performing economies on GDP growth per (working) capita and productivity.
I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes. If my theory is right, in 10-15 years after the baby boom generation demography will level out again and we will be back to higher growth.
”I often think the big challenge of economics now is perhaps not managing overall growth but managing sort of "decline" overall with demographic changes.”
You are a quick thinker my friend. If you figure out how capitalism can work on a shrinking or even steady state economy you will get the Nobel price. No kidding.
Doesn't the need for continuous growth come from the interest charged on newly created money? We always have to grow to be able to afford the ever growing amount of money we owe.
With a non debt based currency, capitalism could do just fine in a shrinking economy no?
I'm not an economist by a long shot, but I would like to propose an alternative model: Whenever a bank gives out a loan, it not just creates the money that is given to the debtor. It also creates the money that will have to be paid as interest, and gives that money to the government. That could be the government's primary income stream, instead of taxes. And it guarantees that there is always enough money in the system to pay all outstanding debts.
(Looking forward to more knowledgable people pointing out the inherent flaws in this idea.)
The stock markets around the world have been propped up by central banks since the financial crisis.
The FED stepped in with a few trillion in QE to save wall street. The ECB implemented their own QE. BoJ also in japan. And even china has stepped in to prop up it's stock market although their stock market is much younger, smaller and less systematically important.
And so the world goes round and round. Historically, printing money and artificially propping up assets doesn't end well, but if everyone is doing it, maybe it'll work out?