AMPONTAN

Japan from the inside out

Ichigen koji (171)

Posted by ampontan on Friday, September 14, 2012

一言居士
– A person who has something to say about everything

The general budget requests for next year’s budget have already exceeded JPY 100 trillion. That’s an abnormal situation: A facile tax increase and a facile increase in expenditures. This has now become a trend that was easily predicted. Who will be able to stop this?

– Takenaka Heizo, former jack-of-all-ministers in the Koizumi administratoin

2 Responses to “Ichigen koji (171)”

  1. rab said

    In government accounting, any kind of cash out is counted as expenditure. So, lending to some entity, investment in securities and repayment of government bonds are all expenditures. About 30% of that JPY 100 trillion is repayment of government bonds issued 10 years ago during Koizumi administration when Mr. Takenaka was the minister of government fiscal policy.

    But what is wrong with fiscal deficit? The last time when all the nations in the world tried to balance the budget triggered the great depression. We learned and avoided depression since then. It is regrettable that young people do not learn from history.
    ———-
    r: Thanks for the note.

    But what is wrong with fiscal deficit? The last time when all the nations in the world tried to balance the budget triggered the great depression.

    I think a lot of people would disagree with your idea about what caused a depression, and would be surprised that someone could be casual about spending twice as much as you bring in. Do you not see how that makes money worth that much less?

    From 2001 to 2007, the Japanese budget deficit was reduced from 20+ trillion to 7 trillion, with Mr. Takenaka in charge during most of those years. It is now more than 45 trillion. How has the economy been during the past four years?

    -A.

  2. nigelboy said

    “How has the economy been during the past four years?”

    Deflationary.

    The Japanese banks and financial institutions are holding record number of cash savings from depositors because people aren’t spending. The excess cash held by these institutions are utilized to buy JGB. JBG is needed to fund the deficiency in tax revenue to pay out pensions and social services. In essence, the central government, banks, and citizens are basically passing around prepaid cards without using them.

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