Business & Finance Investing & Financial Markets

The Japanese Yen: The Next Currency Set to Fail

The future of Japan - and at this point it's shaping up as quite the sad future - sits alone on a stump in a picturesque valley on the southern island of Shikoku.
It's a scarecrow.
Not the skinny broomstick scarecrows populating backyard gardens across America.
It's a hand-stitched figure that looks almost lifelike in her pants and rain boots, a pink anorak and a sun hat.
Tsukimi Ayano stitched this scarecrow, one of about 150 she has fashioned and scattered around her hometown of Nagoro.
The village now numbers just 35 living residents, and the scarecrows are a reminder of all who have passed or left as the city slowly slips into Japanese history.
The town and its scarecrows have become Japan's version of a looking glass, and the Japanese know this.
They can see the future and they realize that, because of social and economic dogma, they're on the path to collapse, just as Nagoro is on the path to extinction as a village.
And as callous at it sounds, there's money to be made in Japan's economic collapse.
Japan's growing problem is two pronged: 1.
It has poor demographics.
Japan is the most rapidly aging country in the world because of atrociously low birth rates and a xenophobic mindset toward mass immigration that would allow migrants to repopulate the country - albeit without Japanese bloodlines.
By 2060, the country's current population of nearly 130 million will be below 90 million - and 40% of those people will have topped 65 years.
By 2110, less than 43 million Japanese will likely populate the nation, and an even greater percentage will be retirees.
That's a significant dilemma because...
2.
Japan has an unwavering and flawed belief in Keynesian economics.
Keynesianism is the oxymoronic belief that a country can, through the government, tax, spend, devalue the currency and inflate its way to prosperity.
It's precisely why the West is so sick today.
Too much public debt over the last many decades has been accumulated in an effort to keep Western citizens happy and middle class.
The fiscal situations that now exist in America and Western Europe prove that Keynesianism is largely a discredited economic model.
But in the context of a population declining as fast as Japan's, the economic philosophy is the equivalent of putting an obese person on a high-calorie diet.
Because of its longstanding faith in the fallacy of Keynesian ideology, Japan is already in trouble economically.
It's home to a debt load that is the highest in the world at more than 225% of GDP, more than double the troubled debt load here at home.
Consider what happens to a population that is A) shrinking, while B) additional debts are piled on to stimulate the economy, which is exactly what Japan is doing with its last-gasp economic policies.
The fewer and fewer Japanese will be less and less able to support the economic growth - and the taxes - needed to repay the larger and larger governmental debts.
And that's especially true when you consider how many of those people are retirees, no longer generating a paycheck or spending to the degree that younger workers do.
That's why Japan is in critical condition at this point.
The Fading Yen There's talk in Japan that leaders, realizing the quandary their country faces, are now considering allowing mass immigration - though whether that actually happens is debatable.
But even that won't save the country from the gaping fiscal problems it now has because of decades of Keynesian ideology.
Japan a fresh start, which it won't have.
Instead, through a massive currency-printing campaign, the yen will be further weakened in a desperate effort to generate any kind of growth it can.
No sustained growth is possible, though, for a litany of reasons, such as: Older people are not spending heavily on the consumer items and services that grow the economy; too much tax revenue now must be funneled into debt repayment; and Japan's once-vaunted savings rate has plunged to near-U.
S.
levels.
Ultimately, Japan is going to face an existential crisis wrapped up in a fiscal, financial and economic crisis.
And as part of that, the Japanese yen the world knows today will change forever.
On the way to that point, the yen, now in the range of 119 to the dollar, will plunge through 200 or 300 to the dollar, meaning anyone who shorts the yen against the dollar in the medium- to long-term is going to make a small fortune on the fading of Japan.
There's money to be made on the yen's collapse.

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