The Myth of Japan's Lost Decades

The Myth of Japan's Lost Decades
- Highlight Loc. 356-67  | Added on Sunday, October 16, 2011, 04:21 PM

It is critically important to understand that if a country does not continually destroy real savings and real capital through credit creation and inflation, it does not need to continually save and accumulate new funds for investment. The idea of seeking more and more savings for investment purposes each year in most countries is prevalent only because the current stock of monetary savings and capital is continually being diminished by credit creation and inflation (this aside from the physical capital which is destroyed via malinvestment). When credit is not diminished in this way, it remains intact, and its value increases through time as prices fall. In this way, the same capital can fund more investments through time, and new and additional capital is not constantly needed to replace previous capital.