Toshio Matsuda, Commentator & Intl Economist
Straight from the Shoulder
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(This issue is submitted to a Washington D.C., Seattle, and Zurich think-tank as the English edition of “Straight from Shoulder”.)

"Straight from the shoulder " by Toshio Masuda-Samurai Lecturer
October, 2021
( Free of charge to the people I met)
To know Japan is to buy Japan!

The total sovereign debt of Japan currently stands at about $12.0 trillion: 240% of the country’s GDP and double the rate of that of the USA.
Japan’s annual fiscal balance has always been negative, amounting to over
$500 billion and lacking capacity to redeem its bonds.

The status of the Bank of Japan is totally different from that of the FRB (Federal Reserve Bank of the USA). The Japanese government holds 55% share in the Bank of Japan, while the US government does not own a single share in the FRB.

The Bank of Japan is listed at Jasdaq on Tokyo’s Stock Exchange, which means it is independent of the government, just as the FRB is. Yet the government, with its 55% share in the Bank of Japan, does actually control the bank as its major shareholder.

There is no debt ceiling in Japan as the government may indirectly order the Bank of Japan to repay the government bonds on demand, so as to prevent any possibility of default!

The structure of Japan’s economy is deflationary by nature, since the supply has always exceeded the demand. Meanwhile the FRB has been struggling with inflation - mostly in vain. Therefore the FRB should temper the easing of money policy, or raise interest rate in the future in order to avoid hyperinflation, while Japan may go on for the easing of money supply policy with unlimited public investments and no debt limit.

In recent times New York Dow, Nasdaq and S&P 500 have all marked their highest averages many times over, while Nikkei remains stubbornly around 10,000 yen below its historical high of 38,975 yen.

There is enough room for money to play Japan’s market, while there is no room to pay NY markets that are flush with money.
Left to its own devices, which way do you think money would go: the US or Japan?
Nikkei’s 38,975 Yen can already be seen on the horizon.


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Written by Toshio Masuda