What does it mean towards the US and the World
In: Economics
Honestly I think it’s great. Japan has been stuck in an economic rut of stagflation for a long time.
Japan gave away money interest free. People would take the loans amd just buy Treasury bonds and stuff that would pay them interest, effectively printing money. They suddenly imposed a 0.25% interest rate and now no one would take the loan. Without all that demand, the US bonds would be worth less, and those have been in trouble for a while. If no one buys bonds, the government would have to buy them off, but issuing bonds is how they get their money, so they would be fucked. Is going to be an interesting week.
Global economy is of course a very complicated business. Whats happening in Japan has similarity with the crash of 1987 (Black Monday)
The value of a stock ( a company share of the profits) represent the “strength and value” of that company. This relationship allows stock to be traded, bought and sold, but most importantly to be used to get capital and business loans from international sources (often government themselves in the case very big and important industries)
A market crash tells investor that **company stock is overvalued.** This creates a domino effect on the market pushing general stock value further down. Banks will fear loaning money, investor will hide their assets, creditor will push for repayment, and so on.
This can spread from country to country as world economy is closed linked together creating a “global market crash” for the economy of country not ready (or unable) to inject money and calm in their own banking/economy.
[https://en.wikipedia.org/wiki/Black_Monday_(1987)](https://en.wikipedia.org/wiki/Black_Monday_(1987)) << this can explain it way better, but not eli5 😉
What will happen to the yen? Or does it not affect the yen? Going to travel to Japan in October and really wondering if the yen will be affected.
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