Back during the latter half of the 1980s, what many called an existential threat to America’s future seemed at hand—the financial juggernaut that Japan had then become. For a spell, Japanese investors and interests were seemingly buying up America, something decried by major public and private figures alike (among them the late, great Paul Harvey, who warned that Japan was buying America “with our money”).
These days, we have seen a somewhat similar ascendance of China, now fairly widely viewed as the main threat to the United States of today. Unlike Japan—where the “threat” was almost entirely of financial hegemony, that vanquished nation of World War 2 having no expansionary or military designs anywhere—China’s ambitions come as a package deal. Not only does the Chinese regime seek to reestablish the lost glory of an empire (at least in its part of the world) financially and as the main economic powerhouse, but it clearly is bent on doing so by force if need be.
One of the many ironies here is that both of these threats were essentially made in America.
The threat Japan allegedly represented three decades ago is long gone. That of the Chinese regime lingers. And there is an unappreciated chance that its fate could one of these days be the same as Japan’s back when.
Regarding Japan, its last hurrah was actually specifically engineered by a group led by then-U.S. Treasury Secretary James Baker in 1985. In what was called The Plaza Accord, Baker and his counterparts from Japan, Germany, France, and the United Kingdom agreed to a scheme that would see a massive depreciation of the U.S. dollar. The result for Japan was a rapidly-rising yen and, suddenly, the country was swimming in money; money it used to invest in America and elsewhere. For a while, this also resulted in Japan being the single-largest buyer of U.S. Treasury obligations.
That was an intended consequence, until it came back to bite the United States in the form of the stock market crash in October 1987. That crash was chiefly caused by Japan holding out for MUCH higher interest rates for months before they would participate in Treasury auctions. The resulting surge in interest rates through most of 1987 finally knocked the pins from under Wall Street.
Other results included massive real estate, equity, and other bubbles in Japan, as the whole world wanted to invest in its surge in momentum. We know what happened next, “the rest of the story,” as Harvey would say. Japan’s stock market peaked in 1989 and has not since approached its high of just under 40,000 on the Nikkei Dow. Real estate started losing its air a couple years later.
Japan pulled in its horns. Much of what had been bought elsewhere over the several years duration of this artificial gravy train by everyone from the government to Japanese banks to private investors, was sold. Japan quickly went from King of the Hill to a country with not enough fingers to stick in all the sudden leaks.
Today, Japan at least retains the advantage under these circumstances of being one of the more culturally homogenous nations on the planet. Thus, there has been sufficient social acceptance as it lives with its present-day fate after those heady days: an aged, ossified economy, that merely exists but—as both a practical and financial matter—is fairly insular.
As everyone was part-enthralled and part-worried over Japan in those days, such has been the world’s similarly starry-eyed amazement (and desire to take part, no matter the moral inconsistencies in this case) at the modern-day “growth” of China; yet few understand that the dominoes there have already started falling. There are a number of differences between China and Japan, of course: but the math is still the same.
In the coming continuation of this discussion, I’ll talk about how and why modern-day China got its start chiefly as a mercantilist colony of largely American corporations and interests. Plus, how—once created—this latest western-manufactured “monster” sought to use the capital, know-how, and more, that it was either given or stole to become the superpower of the future.
And finally, I’ll describe in detail how the Chinese regime’s global influence is already peaking, what may happen next, and how much more dangerous this has rendered the world and the global balance of power.
Read part II here.
Read part III here.
Read part IV here.
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.