Dateline: Kuala Lumpur, Malaysia
Here in Kuala Lumpur’s Pavilion Mall, there is a area called “Tokyo City” which offers a wide assortment of Japanese style food and products imported from Japan.
The “anchor” tenant of this mini-mall is a store that sells everything for 5 Malaysian ringgit (US$1.56). Talking to one of the people who helped lure the store in setting up shop here, he said the concept is very much like a dollar store in North America, or like a 100 yen store in Japan.
“100 yen”, I said. We’ll see how long that lasts.
Shorting the Japanese yen has been a popular trade for some time now. It’s no great secret; CNBC has discussed it on the air, and we know how forward-thinking they are.
Everyone from fund guru Kyle Bass to Mark Cuban are using this trade to position their debt to fall as the yen tumbles.
The idea is that Japan, with the world’s highest debt-to-GDP ratio and fast-running printing presses under so-called Abenomics, will see their currency fall by as much as 70%.
Since I was last in Tokyo in 2011, the value of the yen against the similarly indebted US dollar has declined some 25%.
Members of The Nomad Society, our private club, have access to my friend Tres Knippa’s strategies on how every day investors can use the short yen trade to profit from a declining Japanese currency by holding gold.
Tres even has the mortgages on his rental properties denominated in Japanese yen. If you’re interested in learning the trade, check out all of the benefits of Membership now.
However, beyond just a disastrous currency experiment, the smart money is sounding alarm bells about the biggest economic crash since Lehman Brothers coming out of Japan.
The guys at Zero Hedge call what’s going on “Japan’s Greatest Misery” in 33 years.
The mainstream media, as usual, has been cheering on Japan’s decision to print, print, print its way out of the economic doldrums, saying there is no other option.
The media has become nothing more than a bunch of useful idiots for the Keynesian economic policies that are the true cause of the world’s economic malaise.
And they’ve totally missed the boat on the damaging effects of Japan’s economic policies.
The guys on Wall Street have been similarly supportive of Japan’s Abenomics. As stimulated Japanese yen made their way into the US stock markets, Wall Street got rich while touting that creating lots of Japanese money out of thin air would be great for every man, woman, and child from Tokyo to Osaka.
The bankers claimed that stimulating the economy with easy money would be just fine because Japan was on the verge of an export-led recovery that would clean up the mess.
That’s how modern finance works to banksters and government thugs: create a big mess that goes against the order of everything logical on the hopes that something bigger will come along and clean up the mess.
It’s like the down-and-out gambler who steals from his boss, confident that he can double his take at the tables.
Or the “investor” earning $50,000 a year, who buys five houses in California, taking out huge mortgages in the process, sure that the rising tide of the market will cover up any sins of fiscal irresponsibility. (Wait a second… we’ve heard that story before.)
Only this time, Japan’s infamous “J curve” is missing, thanks to unprecedented trade deficits starting this year.
That’s because everyone in the funny money camp forgot just how their policies hurt the everyday Japanese citizen.
You see, as Abenomics began in 2012 and the yen started to plunge, the Japanese government saw to it that imports were more expensive. It was all part of the plan.
The government figured their cheaper exports would fly off the shelves and bail them out of the hole they created. But it didn’t work.
Economists were “very surprised” and openly admitted that they may need to try something new and actually challenge the assertions their economic textbooks make.
Gee, ya think?
These are the people running the global financial system. The bankers who take your money are nothing more than a bunch of empty suits parading around reciting something from a textbook. They fail to realize that the world doesn’t operate by a textbook.
Just like bureaucrats and politicians don’t understand this because they’ve never run a business, bankers don’t know this because they’ve never had to be accountable for their actions.
I reported last year how the US financial system played in role in what Japan is doing to its economy, and now the results are coming home to roost.
Today, Japan is on the verge of a full-blown recession, with wages down, disposable income down, and production deficits.
Now Goldman Sachs, one of the cheerleaders behind Abenomics, is putting out a report projecting -6.5% GDP growth in Japan.
Yep… negative six and a half percent.
That’s down from a fictitious 6% growth in the first quarter of this year, representing a double digit plunge in GDP.
Plot those numbers on a graph and you’ve got the biggest economic crash since Lehman Brothers on your hands. One further wrong move and levels could dip below where they were in the pandemonium of 2009.
This is the latest example of politicians and bankers claiming an easy fix to complicated problems. The Japanese economy is going down the toilet thanks to the latest round of stiffs who can’t see the world beyond their Ivy League educations and swanky, back-scratching cocktail parties.
It’s over for Japan. Demographic research has shown that for some time, and this madness from central bankers eager to do each other a favor for their own benefit is hastening the nail in the coffin.
There is an opportunity to profit here, as I mentioned above. I suspect it’s well worth the small investment to join our community of savvy international investors and learn how to protect yourself and profit.
However, this latest economic indicator spells doom for those involved. And the repercussions will be far-reaching, even for those who have taken some cover.