Toshio Masuda

Toshio Matsuda, Commentator & Intl Economist

Straight from the Shoulder No.788

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"Straight from the shoulder " by Toshio Masuda December 12, 2012
( Free of charge to the people I met)
Since August 15, 1971

August 15, 1971 is the anniversary of Armistice Day, when Japan was defeated in World War II and, at the same time, is also the anniversary of the Nixon Shock, where the exchange between the U.S. dollar and gold was banned.
Thinking forward from that time in the 21st century, August 15, 1971 is the anniversary of the defeat of imperialism that ran with territorial expansion and the domination of Japan in Asia in looking for resources, and at the same time, it is also the anniversary of the first step of the Japanese economy in reaching a period of ever-increasing growth with the economies of victorious nations.
Because of the sudden abolishment of the American dollar and gold exchange, the standards of the global economy were drastically changed from the gold standard to the dollar standard.
This was a change from the gold standard of value, which among other metals has a high specific gravity, is rare, beautiful, and has come to be considered incredibly valuable by mankind since ancient times, to a dollar standard, which, when compared to the Japanese bill, looks cheap, like the kind of toy money with which children use to play house. In other words, gold, whose production cannot be freely increased and whose world value substitute is not limited, has been replaced by the dollar, which, like toilet paper, can be reprinted unlimitedly.
Until August 15, 1971, the foundation of the value of the world’s economy was a currency whose value was linked to gold, but, after the Nixon Shock, it changed to a dollar that, rather than being rare, could be reprinted any number of times.
Until August 15, 1971, the FRB, America’s central bank, did not issue any more dollars than they had gold holdings for, but afterwards, the issuance of dollars without collateral continued in order to pay for U.S. government debts.
In exchange for government IOU’s (government bonds), the FRB just sends a mere ‘figure’, not cash, into the Treasury Department’s account. The government (Treasury Department) runs the economy by circulating the notes (promissory notes that include the payment date) of the figure that was sent to them in the marketplace through public/private financial institutions. If there were no notes as collateral, there would be no guarantee of payment. America’s economy today has a ‘potentially bankrupt note’ at its base. America is inducting the world into an era of irresponsible currency with slogans like ‘deregulation’ and ‘market liberalization’.
Like the Federal Reserve Bank, before it only printed dollars within the range of gold that was held by America (established in 1913), the Bank of Japan, the central bank of Japan, has not eased monetary conditions more than the amount of currency copies or purchased government bonds. The dollar, an ‘irresponsible currency’, is at the center of international currency. Due to the ‘motives of the Bank of Japan’ that have been enforced since the Meiji Period, there is a principle of ‘responsibly currency’. However, with the birth of Abe’s Liberal Democratic Party cabinet in the December 16, 2012 lower house election results, Japan’s monetary policy will greatly change to an unsecured, large-scale monetary policy similar to the FRB. The resulting yen, which is a responsible currency, will become an irresponsible currency like the dollar. Now, because of this magic period where ‘irresponsible=responsible”, the correct answer may be found in the monetary policy of the Abe Cabinet.
Who changed the difference between ‘fiction’ and ‘reality’ into a profit through the world’s ‘belief that what is not there actually exists’? I know so much that I know too much.

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