The Economic Crisis We Learned Nothing From

Video Description

To learn for free on Brilliant, go to http://www.brilliant.org/howhistoryworks. Brilliant’s also given our viewers 20% off an annual Premium subscription, which gives you unlimited daily access to everything on Brilliant. ----- Sign up for my FREE newsletter! - https://www.compoundeddaily.com/ ------ #history #economics #japanesehistory Link To Our Other Channel: https://www.youtube.com/c/HowMoneyWorks Video Created By: Svibe Multimedia Studio Editor: Cardan Media Gatherer: Andrea Rivas Footage Courtesy of: Getty Images Music Provided By: Epidemic Sound 📩 Business Inquiries ➡️ [email protected] ------ On the 29th of December 1989 the Nikkei (Japan's primary stock index) closed at a record high of 38,915… (After accounting for inflation) it would never again reach this level… At this time, Japan was quickly becoming the preeminent economic force in the world. Its highly innovative companies were churning out world class technology, investors were doubling (or even tripling their money) every other year, and all of this was creating some of the highest incomes anywhere on the planet. But! Even during these good times there were problems bubbling away under the surface. A long period of easy money and low interest rates grew a roster of underperforming and inefficient businesses, speculation ran rampant as people were expecting the technology of the day to continue dominating into the future, Companies and households loaded up on debt, Market returns and loose lending standards like 50 year mortgages fueled a real estate bubble that made innovation centers like Tokyo and Kyoto some the most expensive places on the planet all of these vulnerabilities were then tested by a radical shakeup in global trade relations, an aging population and… oh no… i've done it again… you’re all going to start to think I am mixing up these tapes just to make some kind of statement… lets just… there we go… Japan never recovered from the crash that followed. For the past 35 years the country has stagnated by almost every conceivable metric, its innovation is lacklustre, incomes haven’t budged, and the real estate that caused all of these problems? Some of those homes are now worth just ONE PERCENT of what they were during (what are now known) as the bubble years. So you might be thinking… hang on… a lot of these economic warnings sound very familiar today… I know where this is going… This is going to be another video talking about how we haven’t learned anything from history right? Wrong… “Japan’s lost decades” may have been the crisis we refused to learn from, BUT there are some big big differences between then and now that almost render this comparison completely irrelevant… The only problem is, those big differences… probably aren’t in our favour…