National debt is not the people's debt - The country is not a company - Breakdown of government bond holdings that still do not penetrate public opinion.
2024-01-09
Category:Japan
「国債等関係諸資料」令和5年6月末国債保有内訳 Photo by 財務省 (licenced by 財務省 )
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National debt is not a national debt.
The image at the beginning shows the breakdown of Japanese government bond holdings. I sometimes see people say that national debt is the nation's debt or that it is the same as corporate debt, but national debt is the government's debt, not the people's debt. Even if a country is compared to a company, companies do not borrow money from their employees. Debt comes from outside the company, and in this case, it involves purchasing Japanese government bonds from overseas. If most of the debt is overseas, it is natural that the company will default if it cannot be repaid. Purchases of Japanese government bonds from overseas account for 7.3%.
The Japanese government has assets equivalent to its liabilities.
If you really want to say that it is the same as a company, would you say that purchases in Japan are borrowed and borrowed within the company or within the group company? Yoichi Takahashi considers the Bank of Japan to be the same as a subsidiary of the government, and explains that it is the same in terms of consolidation, regardless of whether interest is charged. The Bank of Japan holds 53.2% of Japanese government bonds. He is well known for introducing BS to show that the country holds government assets equivalent to the government's debts (excluding the holdings of the Bank of Japan). The total amount of government assets ranks first in the world, exceeding both the United States and China. Below is the balance sheet (BS) of Japan.
「国の財務書類」令和3年度 財務省 (licenced under 財務省)
Japanese government bonds are debt denominated in yen.
Furthermore, Japanese government bonds are mainly traded in yen, which means that there is no change in value based on foreign currencies. In the case of foreign currency transactions, if the value of your home currency plummets, the face value of your debt will rise accordingly. Suppose your country's currency drops to half its value. Alternatively, if the foreign currency used when trading government bonds doubles, the debt will also double, but since the transaction is in Japanese yen, there will be no effect at all. In an extreme case, former Prime Minister Aso said that repayment would be possible by increasing the number of yen bids. In this case, there will be inflation and the value of the yen will fall, but the theory is that the debt can be repaid because it is the face value of the yen. This was actually said by Taro Aso, a former Prime Minister and former Minister of Finance.
Japan, the world's largest creditor country
Secondly, the Japanese government is also the world's No. 1 creditor country. In other words, they have foreign bonds and foreign assets. The fact that we are currently talking about national debt as a problem is actually making a fuss about only the debt part, and in fact, Japan has the most foreign assets in the world. This assumes that the government bonds are denominated in yen as mentioned earlier, and if more yen is printed, the value of the yen will fall and the yen will become weaker. If you do this, overseas assets purchased in dollars or euros will increase in value when converted to yen, so the difference will be a large income. Even with the current depreciation of the yen, a large profit margin was generated due to the increase in the valuation of overseas assets.
Print more yen up to 2% inflation rate
Representative Sanae Takaichi has advocated the ``Japanese Economic Resilience Plan,'' which calls for a temporary freeze on primary balance (PB) regulations and calls for industrial investment through the issuance of government bonds. She says that even if inflation were caused by printing more yen, it would not have a big impact if the inflation rate was less than 2%. Currently, the yen is depreciating due to the difference in interest rates due to the Fed's interest rate hikes, but the original goal is to induce a depreciation of the yen through the issuance of government bonds and increase the number of bonds, strengthen international competitiveness, and increase wages and tax revenues through rising prices. If the manufacturing industry returns to Japan due to the weak yen, GDP and tax revenue will increase, and government debt can be reduced. For now, this is just the effect of a weaker yen due to interest rate differences, but we are already seeing significant results.
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Public opinion without examining Abenomics - there is no point in criticizing it based on contradictory premises.
There are some surveys and opinions in public opinion that Abenomics has ruined Japan, but is that true? First of all, what is Abenomics? Were you asking people who answered the same question as in the poll, or were you asking people you didn't know? I wonder if asking someone I don't know will give me the results I expected. First, let's review the three arrows of Abenomics.
Three arrows of Abenomics
Bold monetary policyFlexible fiscal policyGrowth strategy to stimulate private investment
Monetary policy is still ongoing, but former Prime Minister Abe has said that the consumption tax increase was decided in advance and was carried out at a time when it could not be postponed, so he was unable to fire a second arrow. In other words, Abenomics is actually the first arrow in a variety of environments. In other words, I would understand if there was an evaluation of the fact that it did not advance to the second stage, but I have doubts about evaluating Abenomics itself.
Next, I will list some of the achievements of Abenomics.
Main achievements of Abenomics
The total national and local tax revenue will reach a record high of 107 trillion yen in fiscal 2019, up from 78.7 trillion yen in fiscal 2012. The stock price, which was around 8,000 yen, rose to over 24,000 yen under the Abe administration. Public pension investment profits increased by 57.6 trillion yen in seven and a half years. The effective job opening ratio was 83 job openings for every 100 people in 2012, and 164 job openings for every 100 people in 2019. Business operators improved their treatment due to the labor shortage. The minimum hourly wage rose from 749 yen in 2012 to 901 yen in 2019. The rate of children from single-parent households going on to university increased significantly from 23.9% to 41.9%.
Sanaenomics (Japanese Economic Resilience Plan) will be published. Representative Sanae Takaichi announced a policy to carry on Abenomics during the last presidential election.
Sanaenomics three arrows
Financial easingFlexible fiscal stimulus in times of emergencyBold crisis management investment/growth investment
What they have in common is that monetary easing policy will continue, and if the Takauchi Cabinet is elected, the government will implement aggressive fiscal policy.
The fact that the Japanese government's balance sheet was introduced for the first time in 1995 means that the Japanese government did not have the concept of strategic investment, which companies take for granted. How can you invest without a balance sheet or cash flow statement? It was only a matter of being able to compare the income and expenditure for a single year, or the previous year. The term "primary balance" has come to be used like crazy. At that time, Japan believed that deregulation would revive the economy, and the government repeatedly took the approach of relaxing regulations through legal revisions.
As a result, the Japanese government was unable to rebuild the national economy or make strategic investments for economic growth after the collapse of the bubble, which was an unprecedented economic crisis. More than 30 years have passed since we stubbornly closed the doors. Then, companies moved their manufacturing sectors to emerging countries, and GDP and tax revenues mainly went to neighboring countries such as China, creating a dual wage structure of dispatched labor in order to prevent an increase in the number of unemployed people in Japan. . The economic disparity that arose from this process is said to be one of the causes of the current declining birthrate.
So, has Abenomics ruined Japan? Would that also mean denying Sanaenomics? Or will we continue to turn down investments from the government as we have been doing, paying close attention to the primary balance under the guidance of the Ministry of Finance and listening to the beautiful words of fiscal consolidation? The point of contention should be to gather opinions on whether or not bold fiscal spending by the government is necessary. In any case, regardless of whether the policy is better or not, there are parts where it seems like the point at issue is not policy at all, but just an extension of a personal attack, which is unfortunate.
30 years lost as a result of passive fiscal policy
In other words, those who claim that government debt is bad have the completely opposite idea. What ruined Japan after the bursting of the bubble was rather the primary balance discipline, the inability to focus on single-year income and expenditures and to make long-term investments. Japan tightened its finances in the most critical economic situation. If it is the same as a company, when the company is in crisis, the company's safe is closed like a shell, and for the past 30 years, the company has been operating in a state of poverty and not being able to make long-term investments. This is the so-called curse of PB by the Ministry of Finance.
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The political reform outline of 1989 has become a mere shell - What is Prime Minister Kishida's formulation of
One faction after another announced that they would be disbanded, and Prime Minister Kishida also mentioned the dissolution of the Kochi-kai. Looking at the Political Reform Outline drawn up in 1989, we can see that it does little to address the current party ticket issue. This is an outline adopted by the Liberal Democratic Party in the wake of the Recruit Incident. Prime Minister Kishida has said that he will formulate "new rules," but what is the position of the political reform outline that his own party has drawn up in the past? You can read the full text of the outline by clicking on the link, but here we will describe the table of contents and main points.
Excerpt of the Political Reform Outline
Revising and strengthening the Code of Conduct and the Political Ethics Review Board
Enactment of law to disclose assets of members of the Diet to establish political ethics
Strengthening the ban on donations to ceremonial occasions, etc.
Regulations on business card advertisements, New Year's cards, etc.
Strengthening regulations on posters, etc.
Reducing personnel and office costs
Stock trading regulations
Restraint of parties and new regulations
Concentration of donations to political parties and support for member activities
Expansion of public aid to members of the Diet and examination of political party laws focusing on state subsidies
Fundamental reform of the electoral system
Reduction of total constants
Correcting disparities
Fundamental reform of the electoral district system
Exercising the uniqueness of the House of Councilors
Reform of the current proportional representation system
Reducing the total number of constants and correcting the imbalance in the allocation of constants
Enhancing deliberations and easy-to-understand parliamentary management
Respect for majority rule
Achieving efficient parliamentary management
Determination to remove and eliminate the harmful effects of factions
Transition to a modern national party
Reflections of tribal members
Improving the number of winnings system and ensuring that rewards and punishments are mandatory
New rules for determining candidates
Establishment of decentralizationMay 23, 1989 Political Reform Outline
Has anything been achieved in this? Looking at the recent party ticket issue, it appears that it has largely faded away, but Prime Minister Kishida recently announced that he is considering disbanding the Kochi-kai. Mr. Nikai's Shijo-kai has announced that it will be disbanded, and the Seiwa-kai, which started it, will also be disbanded. Was it because of the faction itself? In short, it was probably a matter of not reporting political funds. Looking at public opinion to date, it appears that the majority opinion was that the existence of factions themselves was not a problem as a forum for policy discussion, and the prosecutor's investigation also focused on undocumented issues.
Prime Minister Kishida has said that he will create new party rules while dissolving factions, but first he will create check items from this political reform outline and evaluate each item in stages to see what has been achieved and to what extent. Why not consider it? Instead, they will consider "new rules."
The negative reason for the creation of factions is related to the structure of the parliamentary cabinet system. Personnel decisions within the party are all about internal party theory, and almost everything is shaped by interpersonal relationships. Your treatment will change depending on which trend you go with. Since the prime minister is the leader of the largest ruling party, the choice of leader is based on internal party theory and is determined by votes from party members based on their factions. On the other hand, if we adopt a dual representation system, no matter how many theories we create within the party, the top positions are decided by the people, so there is little point. It is said that in the United States, which has a presidential system, there are almost no cliques like there are in Japan.
It is said that one of the reasons why Japan has adopted a parliamentary cabinet system is to limit the authority of the top government. The reason is that they do not have much authority in the sense of reflecting on past wars after defeat. For this reason, Japanese politics takes a very long time to make decisions. In that sense, it can be said that the system is very vulnerable to emergencies. In a dual representation system, the people choose the top person, so the quality of their votes is different from that of other members of the Diet. Furthermore, the number of votes that would be obtained based on the assumption that all citizens would participate in the vote would be vastly different. Members of the Diet are simply elected in the regions in which they run for office. For this reason, the president is given greater authority than the prime minister, who is elected by members of the parliament. This authority also exerts great power in emergencies.
Interpretation of Former Prime Minister Abe's Preamble to the Constitution - It is necessary to revise the preamble at the same time as the revision of Article 9 of the Constitution. The following is the preamble to the Constitution of Japan. Former Prime Minister Abe, who appeared on TV as acting secretary general of the LDP in 2005, was talking about the interpretation of the preamble to the Constitution. The preamble to the Constitution is a declaration of peacekeeping on the premise that it has no military power, and it is premised that it will be supported by other countries.
How Japan enjoyed peace during the post-war Cold War, and how to maintain peace in the midst of the rise of China and the runaway of North Korea, should be discussed separately. ..
Preamble to the Constitution of Japan
The Japanese people act through their representatives in a legitimately elected parliament, ensuring the achievements of harmony with the nations and the abundance of freedom throughout our country for our descendants, the government. Decided to prevent the tragedy of war from happening again by the act of, proclaiming that sovereignty exists in the people here, and finalizing this constitution. In the first place, national affairs are based on the solemn trust of the people, whose authority comes from the people, whose power is exercised by the representatives of the people, and whose welfare is enjoyed by the people. This is a universal principle of mankind, and this Constitution is based on this principle. We exclude any constitutions, statutes and imperial rescripts that violate this.
The people wish for lasting peace and are deeply aware of the noble ideals that govern human relations, and trust in the justice and faith of the peace-loving nations. We decided to keep our safety and survival. We want to occupy a prestigious position in the international community, which strives to maintain peace and forever remove tyranny and servitude, oppression and narrowness from the earth. We affirm that the people of the world have the right to live in peace, free from fear and deficiency.
We must not concentrate on our own nation and ignore others, and the law of political morality is universal and follows this law. I believe that it is the responsibility of each country to maintain its sovereignty and to establish equal relations with other countries.
The Japanese people pledge to do their utmost to achieve their noble ideals and goals in the honor of the nation.
[Interpretation of former Prime Minister Abe] We have decided to maintain our security and survival by trusting the justice and faith of peace-loving nations. → Leave it to other countries and decide to do nothing (Abe interpretation)
We want to occupy a prestigious position in the international community, which strives to maintain peace and forever remove tyranny and servitude, oppression and narrowness from the earth. → Let's get compliments from the international community that we are working on instead of asking for something (Abe interpretation)
It is a frank opinion that seems to be the former Prime Minister Abe. Many Japanese still think that Japan's peace has been protected by Article 9 of the Constitution, but the interpretation that it was protected by the United States rather than by Article 9 of the Constitution is more realistic. prize.
On the flip side, if the United States does not protect Japan, Japan's peace will be completely destroyed.
The debate on the revision of Article 9 of the Constitution is overheating, but it seems necessary to discuss revising the preamble itself on the premise that it does not have force in the first place.
Public opinion without examining Abenomics - there is no point in criticizing it based on contradictory premises.
There are some surveys and opinions in public opinion that Abenomics has ruined Japan, but is that true? First of all, what is Abenomics? Were you asking people who answered the same question as in the poll, or were you asking people you didn't know? I wonder if asking someone I don't know will give me the results I expected. First, let's review the three arrows of Abenomics.
Three arrows of Abenomics
Bold monetary policyFlexible fiscal policyGrowth strategy to stimulate private investment
Monetary policy is still ongoing, but former Prime Minister Abe has said that the consumption tax increase was decided in advance and was carried out at a time when it could not be postponed, so he was unable to fire a second arrow. In other words, Abenomics is actually the first arrow in a variety of environments. In other words, I would understand if there was an evaluation of the fact that it did not advance to the second stage, but I have doubts about evaluating Abenomics itself.
Next, I will list some of the achievements of Abenomics.
Main achievements of Abenomics
The total national and local tax revenue will reach a record high of 107 trillion yen in fiscal 2019, up from 78.7 trillion yen in fiscal 2012. The stock price, which was around 8,000 yen, rose to over 24,000 yen under the Abe administration. Public pension investment profits increased by 57.6 trillion yen in seven and a half years. The effective job opening ratio was 83 job openings for every 100 people in 2012, and 164 job openings for every 100 people in 2019. Business operators improved their treatment due to the labor shortage. The minimum hourly wage rose from 749 yen in 2012 to 901 yen in 2019. The rate of children from single-parent households going on to university increased significantly from 23.9% to 41.9%.
Sanaenomics (Japanese Economic Resilience Plan) will be published. Representative Sanae Takaichi announced a policy to carry on Abenomics during the last presidential election.
Sanaenomics three arrows
Financial easingFlexible fiscal stimulus in times of emergencyBold crisis management investment/growth investment
What they have in common is that monetary easing policy will continue, and if the Takauchi Cabinet is elected, the government will implement aggressive fiscal policy.
The fact that the Japanese government's balance sheet was introduced for the first time in 1995 means that the Japanese government did not have the concept of strategic investment, which companies take for granted. How can you invest without a balance sheet or cash flow statement? It was only a matter of being able to compare the income and expenditure for a single year, or the previous year. The term "primary balance" has come to be used like crazy. At that time, Japan believed that deregulation would revive the economy, and the government repeatedly took the approach of relaxing regulations through legal revisions.
As a result, the Japanese government was unable to rebuild the national economy or make strategic investments for economic growth after the collapse of the bubble, which was an unprecedented economic crisis. More than 30 years have passed since we stubbornly closed the doors. Then, companies moved their manufacturing sectors to emerging countries, and GDP and tax revenues mainly went to neighboring countries such as China, creating a dual wage structure of dispatched labor in order to prevent an increase in the number of unemployed people in Japan. . The economic disparity that arose from this process is said to be one of the causes of the current declining birthrate.
So, has Abenomics ruined Japan? Would that also mean denying Sanaenomics? Or will we continue to turn down investments from the government as we have been doing, paying close attention to the primary balance under the guidance of the Ministry of Finance and listening to the beautiful words of fiscal consolidation? The point of contention should be to gather opinions on whether or not bold fiscal spending by the government is necessary. In any case, regardless of whether the policy is better or not, there are parts where it seems like the point at issue is not policy at all, but just an extension of a personal attack, which is unfortunate.
Trump was impressed by former Prime Minister Abe's presentation skills during his visit to Trump Tower - Strong friendship between Japan and the US leaders.
Former Prime Minister Abe visited Trump Tower
South Korea with different objectives as usual
Specific explanation of Japan's contribution
Abe's presentation that impressed Trump
A strong friendship that only businessmen can understand
The impression is that the relationship between former Prime Minister Abe and former President Trump was that of businessmen. It is often thought that businessmen are in a relationship where they take advantage of others based on utilitarianism, but that is not the case in this case. Before Trump won the presidential election and took office as president, former Prime Minister Abe visited Trump Tower.
South Korean Foreign Minister Kang Kyung-wha tried to do the same thing in the next presidential election, but it appeared that South Korea was desperately trying to outdo Japan. Former Prime Minister Abe's objectives are completely different. Abe is said to have personally given the presentation at Trump Tower.
Mr. Trump did not have much knowledge about Japan, viewed the deficit on the U.S. side in Japan-U.S. trade as a problem, and questioned the cost sharing of the Seventh Fleet under the Japan-U.S. Security Treaty. Mr. Abe appealed to Mr. Trump about Japan's position on that question. He explained how much Japan contributes to the American economy, and how Japan contributes to the stability of the Asian region, both in terms of location and cost burden for the Seventh Fleet.
Mr. Trump was a businessman, and Mr. Abe considered himself a salesman for Japan. Mr. Trump must have watched countless business meetings and internal presentations, but he was taken aback by Mr. Abe's proposal, calling it "great." This included the QUAD concept. When Trump later visited Japan, Abe locked him in a separate room and gave the presentation himself again.
There are many politicians and national leaders who have nothing to do with business, but Mr. Trump and Mr. Abe appear to have been formed through mutual understanding between businessmen. Business is about carefully calculating the other party's position, the other party's economy, and the development of both parties, making plans, sharing them, and implementing them. It is only natural that we should respect both parties who have sincerely faced this issue and put it into practice.
After the tragic death of former Prime Minister Abe, Japan will carry out Abe's will and amend its constitution - calling for the unity of the Liberal Democratic Party.
Election activities, security issues
One SP for each former prime minister?
Other former prime ministers who have not been seen since leaving office
Mr. Abe continued his activities with light security
Restrict Korean sovereignty
What Abe wanted to achieve
Former Prime Minister Abe was killed by a bullet, and it has been difficult for him to sort out his feelings, but it seems that public opinion is starting to sort itself out somehow. The current situation is targeting the Nara Prefectural Police in the area where former Prime Minister Abe gave a speech. Naturally, if the police had questioned the perpetrator beforehand, or there was a gap of several seconds before the second shot was fired, I myself wonder why the SP could not have arrested him during that time. I also thought about it.
However, when we piece together information that has been reported, it appears that in Japan, after the prime minister retires, there will be one SP. It is speculated that the Nara Prefectural Police, who were in charge of the election speech that day, were providing security for normal campaign activities. And if you look at the video, you can see it in a 360-degree open state. It would be difficult to provide security in a 360-degree open space. If it is at least 180 degrees, it is limited to the front, left and right, but even then it seems impossible to completely defend with one SP and regular prefectural police.
In other words, does this mean that former Prime Minister Abe went to support candidates in the House of Councilors election in an environment where he could not defend himself even if someone killed him if he had that intention? Therein lies the essence of the problem. Normally in Japan, after a prime minister resigns, he is rarely seen, and his political activities are rarely reported in the media. I don't know if the reason is that security is getting thinner at each level, but that's what happened to successive prime ministers. Considering the danger to myself, that might be the normal thing to do. But Abe was different.
Former Prime Minister Abe's reason for resigning as Prime Minister was due to worsening of his chronic ulcerative colitis, but after getting better with medication, he began energetically supporting Liberal Democratic Party members for the future of Japan. He even created a YouTube channel and will be cheering for Liberal Democratic Party candidates in the House of Councilors election. This is despite the fact that they are only given the security mentioned above. Considering this, it can be said that Mr. Abe continued to enthusiastically engage in political activities even though his life was in danger.
I don't know where public opinion will conclude this issue, but my honest feeling is that this is a direct attack on Japan's democracy and an incident that has destroyed the spiritual pillars of the Japanese right. We cannot retreat even one millimeter against this attack. Former Prime Minister Abe is a politician. His earnest wish was to amend the Constitution. If we are to mourn his death, he must accomplish this.