9/26/2015

Either will be a thorny road

Our government has issued 152 trillion yen last year, that is, approx. 1.27 trillion USD, of which 70% was bought by BOJ. Isn't it the monetization of the national bond?

This drastic QE continued by the present cabinet was told to cause mild inflation and to get out of the deflation. It has not been achieved. Only asset bubble seems to go on.

If they stop this QE at some moment, it will be the time the national bond won't be bought in the market, resulting in the slump of the national bond.

If they go on this QE, there will be the hyperinflation causing destruction of the economy in Japan.

Either way is a thorny road for us.

5 comments:

  1. Not for your politicians! They have opened their personal accounts overseas and purchased big homes overseas. When your economy collapses they will profit. And then point their fingers at and blame the new politicians!

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    Replies
    1. There could be such politicians anywhere. In addition to such a problem, there seems to be problems inherent to the present economic system, I guess. In Japan, the bureaucracy should be responsible for this issue as well. Prime minister Abe says they would increase the GDP from 500 to 600 trillion JPY. But he won't mention how to do that. I am afraid we should get ready for the thorny road.

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  2. Shin, Same situation in US I think. Your major problem is demographic. Low birth rate and fast aging population leads to slow or no growth. Consumption by older people is always declining so need more young people who start families and build households. Only way out I think.
    161, Dennis W0JX

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    1. Dennis,

      It might be the right answer to this problem. Our government will hold the objective to support child-rearing. But it seems too late for now. the debt is too enormous for us to pay back. Since over 80% of the bond is owned by the people, crisis won't come reality very soon. But who knows? I am sure we should get through default or heavy asset tax at some point. I think we should reflect what has brought such a serious problem and how to prevent that for the next generation. The idea of ever lasting growth is not practical. We should, I believe, look for the 3rd way to go. See you soon.

      Shin

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  3. There can be no solution to this, only an outcome.

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