Comparing Our Economy to the 90′s in Japan
Many people would like to make the easy comparison to the Great Depression of the 1930′s in America when they are discussing the recession today in the United States, but in a lot of ways, this comparison is not especially apt, because what we are experiencing is a bursted bubble, rather than a deflation of every aspect of our culture. If you would like to see into a magic mirror, and know your economic future in the United States, surprisingly, there is another country that offers a better insight into the future of this crisis.
Japan in the 1990′s experienced a very similar real estate burst, followed by a very similar domino effect of banks and small businesses, buyers’ confidence, and layoffs. If we want to know what the magic mirror holds for the United States, we should turn our eyes to the East, where Japan’s decade long recovery may foretell what will become of our crisis, and our personal welfare.
What are the contrasts betwixt our two fortunes in these crises, though, and do we have any chance of a deflation cycle that lasts less than 10 years? A major difference between the United States today, and Japan in the 1990′s, is that in Japan the federal system responded to its banking problem much more slowly, whereas in the United States a certain degree of transparency and quick reaction time has left us with more hope than our Asian counterparts.
In the United States, because we are vigilant readers and thinkers, because we vote and write to our representatives, we can affect change ourselves. We can help our country heal from this recession, in a way that was impossible in Japan 20 years ago. We should react, and do what we can to be informed voters.
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