Japanification of global yields - Daniel Gauci

As a country, Japan has always been ahead of the curve in terms of development, especially since the end of World War II. Its innovative culture and drive towards all that is technological has ensured that Japan as a country stands out as an avant-garde country. One such unwelcome innovation is the era of negative yielding debt, in the tune of trillions of US dollars. The situation where lenders pay borrowers, for the privilege of providing them with credit twists the fundamental wisdom of credit.   

Japanification for the investment world, is the idea, that an economy could endure a prolonged period of low growth and expansion accompanied by low levels of inflation. In the second half of the 20th century, Japan’s growth was remarkable and sustained. This came to an abrupt end in what is now referred to as the lost decade of the 1990s. In this period the Japanese GDP contracted from $5.33 trillion to $4.36 trillion, while real wages (adjusted to inflation), have never returned to their previous levels.

What led to this downfall was a set of unique yet correlated economic events, with the most prominent being the Plaza Accord, in which major economic powers agreed to depreciate...