Market Upside Down: How to Invest Profitably in a Shrinking Economy

2. Japan: The Setting Sun

The Japanese believed in their divine destiny as children of the Sun Goddess. Like the sun that rises in the East, it was the natural order of things.

A few years after the end of the Civil War, the enfeebled Tokugawa shogunate’s fiefdoms collapsed and the Japanese were united in 1868 under the restored imperial rule of the Meiji dynasty. Like the newly independent America, Japan prospered and modernized its economy by adopting technologies from Europe including railway and communications, banking, and modern weaponry from rifles to cannons, and especially warships.

In 1895, Japan’s victory over feudal Qing Dynasty’s China, during the conflict to gain control of Korea, completed its transformation from an agrarian economy ...