Cash Hoarding and Deflation Go Hand-in-Hand

Originally published by CNBC on June 24, 2018 Read the original article.

The desire to hoard cash is a classic trait of a deflationary psychology.

And, in Japan, this has been evident for quite some time. EWI has been keeping subscribers ahead of this trend.

For example, the September 2016 Elliott Wave Financial Forecast remarked:

Earlier this year we reported on a run on safes in Japan, where negative interest rates have forced savers to hoard cash at home.

So EWI analysts are not surprised by a June 24 CNBC story that discusses Japan’s stagnant mutual fund industry and the desire of many Japanese to store away cash instead of investing in mutual funds. Here’s an excerpt:

Japan’s stagnant mutual fund industry is hunting for revitalization amid an aging, shrinking population and unmotivated retail investors who prefer to sit on cash.

If the industry’s problems are not addressed, it will lead to a severe slowdown in the availability of fresh capital, according to the Japan International Asset Management Center Promotion (JIAM), an organization that is working with Japan’s government on the drive to revive the sector.

“We need to upgrade our investment capabilities in Japan, otherwise … we cannot support our aging society,” JIAM’s representative director Keiichi Aritomo, told CNBC. He pointed to an example: The returns from pension funds will not be sufficient to support Japan’s retirees unless there’s real change, he said.

A high savings rate in the country — a result of a risk averse population — is exacerbating the issue.

You can read the entire article by following the link below:

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