It may seem like the Federal Reserve’s recent rate cuts should have led to lower borrowing costs. But instead, interest rates have risen. Today’s letter explains why this counterintuitive dynamic is happening and what it means for the future.
We start with the story of Japan’s economic stagnation, tracing the roots of its “Lost Decade” back to an asset bubble in the 1980s. We explain how the Bank of Japan’s unprecedented interventions shaped three decades of economic malaise.
That’s one potential outcome for the US, as it follows Japan’s lead today with huge deficits, massive debt levels, and constant central bank intervention.
That fate isn’t set in stone. A turnaround is possible with smarter policies—reducing unnecessary spending, encouraging economic growth through innovation, and cutting harmful regulations.
But the stakes are high.
Which is why we finish with the reason real assets still make so much sense, and discuss one particular company we believe is poised to do extremely well, whatever happens next.
You can read the letter here.
Japan’s Lost Decade… or Three On November 24, 1997, Shohei Nozawa, the CEO of Yamaichi Securities, stood before a crowded press conference in Tokyo. As cameras flashed, he bowed deeply in shame, apologizing to the Japanese public for his firm’s collapse. Once a pillar of Japan’s financial industry, Yamaichi’s sudden failure was not merely a…
