On May 8, Japan’s Ministry of Finance provided an update and breakdown of the country’s national debt through the end of March 2015. And thanks to the accelerated rate in which the current Prime Minister Shinzo Abe has printed yen through quantitative easing, that debt has now reached an all-time high and the first in the world to cross over a quadrillion.
Japan’s stagnation has lasted now for more than 20 years, with their economy relying solely upon quantitative easing programs and near zero interest rates that have boosted exports and stock markets, but has killed wages, and real growth. And over the past four years the currency has seen a decline versus the dollar from a high of 77 in the middle of 2012, to its current rate of 119.5 in 2015.
Japan’s economy came out of a recession in the fourth quarter of last year, but its recovery remains fragile on sluggish household and business spending.
Economists said the data put more pressure on the central bank to expand its monetary policy as falling oil prices keep inflation subdued.
But analysts do not expect the BOJ to add to last year October’s stimulus plans until the second half of this year, because officials had been anticipating the cooling inflation.
Other data, such as household spending falling 2.9% in February from a year ago while retail sales were down 1.8%, also highlighted the struggle policymakers face in steering the economy towards a recovery. – BBC
For the West, Japan has always been the barometer for their own plans of quantitative easing, and the use of debt to attempt to stimulate an economy. But in all cases, increasing the money supply has simply made equity markets artificially higher, while at the same time causing an increase to price inflation that has destroyed the middle class, and made the wealth disparity between the 1% and the rest of the people exponential.
It remains staggering to imagine a nation’s financial situation tied to a number as massive as a quadrillion, which in relation to the dollar is $8,814,704,602,510 for an economy that has an annual GDP of $4,900,100,000,000, and a debt to gdp ratio of 180%. And when compared to Europe’s worst member Greece, who’s debt to gdp ratio is 195%, it is not out the question to declare them both insolvent and unsustainable, with the potential of a collapse from either economy sufficient enough to trigger a global meltdown.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.