Learning from the Past

So are we learning from the past? One good reason to study the past is to learn from past mistakes and hopefully never make them again. Unfortunately, history has shown that many people seem incapable of learning from the past as many incidents/event outcomes happen again and again. However, this trend is thankfully not set in stone.


In the late 1980's, banking laws in Japan were relaxed and soon the nation was running on a sort of "credit binge" that makes our nation look careful. The stock market shot off to unbelievable heights and property prices skyrocketed. (The article I'm reading tells me that "the land on which the Imperial Palace sat in the center of Tokyo was worth more than the whole of California"). Then, like what happened to us, the bubble of happiness and prosperity just sort of popped. Then, the world's second largest economy entered what was later called "a lost decade". Hopefully, that won't happen to us.

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In a way, we learned from Japan's mistake. We definitely didn't heed the warning signs that led to this collapse, but we had a faster and probably better response to the crisis. Japan long delayed using public money to recapitalize the banks and the U.S. started just within a year of the start of the economic crisis. Once people start to feel safer and have their basic needs covered (which can be one potential reason to invest in health care / etc.), then they will be more likely to go out and spend money/stimulate the economy. Though we are still only in the first phase of the crisis, it will be interesting to see how this difference plays out.