The concept of "Nihonjuron," the theory of Japanese uniqueness, was used to rationalize extreme asset valuations that defied Western financial logic. This cultural narrative created a national blind spot, allowing investors to believe that traditional fundamentals didn't apply to Japan's seemingly superior economic system.

A surge in highly speculative assets may not indicate a strong economy. It can be a sign that people feel so far behind financially that they're placing huge bets, believing in an "only up" market out of desperation rather than confidence.

Public and political fear of Japanese economic takeover reached its zenith in the early 1990s, with books like Michael Crichton's "Rising Sun." Ironically, this coincided with the bursting of Japan's asset bubble, highlighting a critical lag between economic reality and popular discourse.

Bubbles are created when assets like startup equity are valued astronomically, creating immense perceived wealth. However, this "wealth" is not money until it's sold. A crash occurs when events force mass liquidation, revealing a scarcity of actual money to buy the assets.

Unlike waiting for a natural collapse, the Bank of Japan's new governor in 1990 took deliberate action to end the speculative mania. By aggressively raising interest rates multiple times, he intentionally engineered the bubble's deflation, showing that central banks can be active agents in ending market excesses.

The 1920s bubble was uniquely driven by the new concept of retail leverage. Financial institutions transported the nascent idea of buying cars on credit to the stock market, allowing individuals to buy stocks with as little as 10% down, creating unprecedented and fragile speculation.

During the 1980s bubble, Japanese firms engaged in "Zytec," using profits from financial speculation to boost reported earnings. This created a circular feedback loop: rising share prices increased their ability to raise cheap capital for more speculation, which in turn fueled share prices even higher, detaching them from operational reality.

At the bubble's peak, the market valued intangible, narrative-driven companies like eToys more than profitable, asset-heavy businesses like Toys R Us. Physical stores and cash-generating operations were seen not as assets but as an "albatross" weighing down stock prices in the new economy.

During its boom, Japan's industrial policy and close bank-firm relationships were admired as strengths. After the bubble burst, these same traits were immediately relabeled as crony capitalism and systemic flaws, showing how quickly dominant narratives about national economic models can invert.