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.
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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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[related article]
Abe's state funeral reminded him of the greatness of the deceased - the breakaway from the post - war regime has truly begun.
People who have remained at the center of conversation
This is the end of the anti-Abe faction
Escape from the post-war regime
Former Prime Minister Abe's state funeral was held on the 27th. Looking back on this issue now, I was convinced today that this was also former Prime Minister Abe. At the same time, I felt sad, wondering if I was really saying goodbye to former Prime Minister Abe.
After Mr. Abe was shot, there was an uproar over whether or not to hold a state funeral, but the tone of the crazy people who opposed a state funeral was exactly the same as the one that was being waged during Mr. Abe's time as prime minister. Ta. Ironically, it may be thanks to the ridiculous anti-Abe people that even after Mr. Abe's murder, we still had the opportunity to support former Prime Minister Abe until today. However, what were their achievements?
Personally, if I think about former Prime Minister Abe's most important accomplishment, it is that he brought all of the Japanese people to the entrance or exit of the task of breaking away from the post-war regime.
He was probably the first Japanese prime minister to firmly declare that the Japan-Korea issue is over. What was the meaning of the joint visits to Pearl Harbor and Hiroshima with Mr. Obama? What prompted the reorganization and proposed the Quad framework for the purpose of the U.S. Seventh Fleet's existence is already a shift to a new Asia-Pacific regime. What does UN reform mean? The United Nations is the postwar regime itself. He even took on the challenge of making that change.
What the Japanese people have regained is their pride as Japanese people rather than the economy. That's thanks to Shinzo Abe.
Notes, condolence telegrams, and messages of condolence from leaders of various countries regarding the death of former Prime Minister Abe (added sequentially)
We will only post articles by current and past heads of state, prime ministers, etc. I will omit things at the Ministry of Foreign Affairs level. Since condolences also include posts on SNS, they will be written as "notebook," "condolence telegram," and "condolence message."
President Biden [United States of America] (bookkeeper)"It's a loss, not just to my family and the people of Japan, but to the world. A man of peace and decency, you will be missed." li>
Former President Trump [United States] (condolences)``His assassination is unforgivable. It's not just an atrocity, it's a tremendous loss to the entire world.'' ``He was a great leader. "A tough negotiator." "He has worked tirelessly for peace, freedom, and the irreplaceable bond between the United States and Japan." "I hope that we will pay a swift and heavy price for robbing the Earth of a great being. I wish.”
President Putin [Russia] (condolence telegram)“Respected Yoko AbeRespected Akie AbeYour son and husband Shinzo Abe We would like to express our deepest condolences on the passing of Mr. An outstanding politician who led the Japanese government for a long period of time at the hands of criminals and left many achievements in the development of good neighborly relations between Russia and Japan. I had regular contact with Shinzo, where his great personal and professional qualities were in full bloom.My memories of this remarkable man are the same as his. will remain forever in the hearts of everyone who knew him.With respect, Vladimir Putin"
President Tsai Ing-wen [Taiwan] (colored paper notes)“Taiwan’s eternal good friend, your contribution to Taiwan-Japan friendship and to democracy, freedom, human rights, and peace around the world. Thank you.”
Queen Elizabeth [Commonwealth] (condolence address to His Majesty the Emperor)“Our family is deeply saddened by the sudden and painful passing of former Prime Minister Shinzo Abe. It was clear that he loved him and wanted to strengthen his ties with Britain even closer than ever before. My deepest sympathies and sympathies go out to his family and to everyone in Japan."
Prime Minister Boris Johnson [United Kingdom] (Condolences)“Very sad news about former Prime Minister Shinzo Abe.The global leadership he demonstrated during these unprecedented times is... He will be remembered by many. Our thoughts are with former Prime Minister Shinzo Abe's family, friends and the people of Japan. Britain stands with you at this dark and sad time."
President Xi Jinping [China] (Condolences, Condolences)“On behalf of the Chinese government and the Chinese people, and in my own name, I would like to express my condolences to the untimely death of former Prime Minister Shinzo Abe. We express our ``deepest condolences'' and extend our condolences to Prime Minister Abe's bereaved family. "I once reached an important agreement with him on building Sino-Japanese relations that meet the requirements of a new era. I deeply regret his sudden death." "I will continue to work with the Prime Minister. We would like to continue to develop good neighborly relations and friendly cooperation between Japan and China in accordance with the principles established in the four Japan-China political documents.''
Prime Minister Modi [India] (Condolences)“I am shocked and saddened beyond words by the tragic passing of one of my closest friends. "He was a world-class statesman and an outstanding leader." "We met again on a recent visit to Japan and discussed many issues. He was as witty and insightful as always. I never expected it to happen.'' ``To express our deep respect to Mr. Abe, the nation will mourn on the 9th.''
President Phuc [Vietnam] (Book)“We deeply mourn Mr. Shinzo Abe, a leader of international renown and a great and dear friend of Vietnam.”
Former President Duterte [Philippines] (Condolences)``I feel extremely regretful and deeply saddened to learn of the untimely death of my dear friend, former Prime Minister Shinzo Abe.'' I join the people of Japan in mourning the death of former Prime Minister Shinzo Abe and condemn this senseless act of violence." "Former Prime Minister Abe was not only the first foreign leader to visit the Philippines after my presidential election, but he also visited Davao City. He was also the only foreign leader to visit my home in Japan.'' ``I will always feel that former Prime Minister Abe is close to my heart, and I will cherish the time we spent together.''
Prime Minister Lee Hsien Loong [Singapore] (condolences)``I just had lunch with Mr. Abe in Tokyo in May.'' ``I am deeply shocked and saddened.'' .”
Prime Minister Prayut Chan-o-cha [Kingdom of Thailand] (condolences)``He was talented, intelligent, and experienced,'' ``He played an important role in promoting friendly relations between the two countries,'' ``For many years, Over the years, he has worked to strengthen the relationship between Japan and the Association of Southeast Asian Nations (ASEAN).''
President Joko Widodo [Indonesia] (Condolences)“We offer our deepest condolences to the deceased former Prime Minister Abe.”
Prime Minister Hun Sen [Cambodia] (condolences)``I am deeply shocked and deeply saddened'' ``Mr. Abe was an outstanding figure who contributed to peace, stability and prosperity in the region. Politician.''
President Yun Seok-Yeol [South Korea] (condolence telegram)“I would like to express my condolences to the bereaved family and the Japanese people for the loss of a respected politician who was the longest-serving prime minister in the history of Japanese constitutional history. I would like to express my condolences.'' → What does it mean to be respected? This sparks huge criticism within South Korea.
``Forever good friend of Taiwan
Thank you for your friendship with Taiwan and your contributions to democracy, freedom, human rights, and peace around the world.
Tsai Ing-wen 2022/7/11”
(Colored paper written at the time of condolence) pic.twitter.com/VZFcnd9hfQ? Taiwan in Japan 台北駐日経済文化代表処 (@Taiwan_in_Japan) July 11, 2022
Which country did Japan invade? - Japan invaded European - controlled areas - Asian liberation and colonial policy.
When considering the aspects of Japan's war of aggression, first of all, the Korean Peninsula was made an independent state by the Treaty of Shimonoseki and was annexed by the Treaty of Annexation, so it is not included in the invasion. Taiwan was also formally ceded under the Treaty of Shimonoseki, so it was not included in the invasion. Southeast Asian countries are already Western colonies and do not have administrative powers. To be honest, Japan invaded Britain, the Netherlands, France, Portugal, and the United States. Would you call this an invasion of Asia? Viewed in this way, if China had dared to invade, it would have been China that was barely maintaining its administrative power.
Now, regarding what Japan's purpose was, if we say that Japan is no different from Western colonies in terms of increasing its national power through colonial rule, the reality is different. Japan did not adopt racist policies and developed laws, and eventually Southeast Asian countries grew to the point where they were able to fight against whites and protect their own countries on their own. War operations are meaningless unless they are linked to national interests. So these things are always related to Japan's national interests.
Historically speaking, Japan was isolated from the rest of the world until the Meiji Restoration. It took only 27 years from the establishment of the new government to its victory over the Qing Dynasty, which was said to be a world power. It would be 37 years until Japan again defeated Russia, which was said to be a world power. Next, it was in 1919 that Japan won World War I and became a permanent member of the League of Nations, so Japan isolated itself from developing countries that had never seen a steam engine, and only 51 In 2019, I will be sitting on a chair at the table at the center of the world. Japan proposed the ''Racism Discrimination Elimination Bill.''
There is probably no one who has not seen the vast area called Asia on a map. On top of that, over a long period of 400 years, the white maritime nation colonized Asian countries one after another. Japan is an island nation floating on the farthest east coast. Japan's opening to the world was related to this movement of white people. The colonization of the vast area of Asia was already approaching Japan.
Japan's Restoration and opening of the country, as well as the energy of the industrial revolution and modernization, were explosively generated during these global movements. If one country or one ethnic group in such a vast region of Asia, where so many ethnic groups live, were to unite and confront the white countries, the white people would never come to such a farthest island nation. It would be a good thing if there was even one country that could stop the invasion of white people, but unfortunately there was not a single country in Asia like that.
The main focus of Japan's colonial policy in Asia is to build a collective security system for people of color in Asia and to spread the results of Japan's Restoration to Asia. This is clearly stated in the Greater East Asia Joint Declaration, which is signed by the participating leaders from each country. If we look at history from a myopic perspective, we will not be able to understand this era.This may seem obvious, but no matter how many times you hear about former comfort women or visit coal mine sites, you will never understand this era.
Yasuhiro Nakasone called the Japanese archipelago an unsinkable aircraft carrier - Japan's topography gave the US military an advantage.
Former Prime Minister Yasuhiro Nakasone referred to former President Ronald Reagan as an "unsinkable aircraft carrier." This is a metaphor for the strategic significance of Japan's topography and the presence of U.S. forces within the Cold War structure. Japan once fought a fierce war with the United States, but after the war it became a democratic nation. Conflict between the United States and the Soviet Union had already begun during World War II. It is said that the United States participated in the war in part to secure its voice within the framework of the postwar world. Both the Korean War and the Vietnam War occurred amid conflicts between the United States and the Soviet Union. The United States did not want Soviet power to reach the southern tip of the Korean peninsula. It is said that an agreement on the 38th parallel was reached as a secret agreement at the Yalta Conference. In this context, Japan became a base for the US military to defend East Asia.
Japan is actually a neighboring country to the United States in the sense that there are no countries separating them geographically. It takes about 3 hours to get to Guam by air. The Japanese archipelago has a unique topography, stretching from north to south, bordering Russia to the north, Kyushu to the Korean Peninsula, China, and the islands south of Okinawa to Taiwan. For the United States, the terrain that covered the Japanese continent was attractive for the defense of Asia, and this was completely consistent with Japan's understanding of national defense. Conversely, it may be said that if the US-Soviet Cold War had not occurred, Japan-US relations would not have been able to recover to this extent. After the collapse of the Soviet Union, China rose to prominence and Asia's defense lines moved significantly south. As expected, the Japanese archipelago occupies an important position in this band as well. Currently, they are working together within the framework of Quad. Japan also plays an important role in the Taiwan Strait issue, and in this way, the Japan-US relationship has developed amid changes in the environment surrounding Asia.
There was a Korean leftist presidential candidate who said that the Korean peninsula was divided by the occupation forces (GHQ), but in essence, South Korea is a country born within the Cold War structure. There was no way to stop the Cold War structure, neither in Japan nor, of course, in South Korea. I can't believe my ears when I hear statements that deny this very upbringing. In fact, if South Korea had not come under GHQ's trusteeship, it would have simply been unified with North Korea. A democratic country forms the basis of South Korea's national ideology, and even if we lament the separation from North Korea, which has a completely different social system, nothing will be achieved by blaming others. . What can we independently do for the world? That always seems to be missing.
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.