politics

Lower house OKs record ¥107.6 tril budget for FY2022

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 government remains dependent on borrowing to finance its expenditures

No it doesn't. Not when the central bank can buy the debt whenever it wants with no consequences and the govt has a monopoly to print the currency, which happens to be a leading global safe haven. How obvious is that?!?!?

fueling fears of a further deterioration of Japan's fiscal health, the worst....

If it's so bad, then where are the strains on the system? Name one. You can't make an assertion like that without any qualification. But it is Kyodo, so.....

0 ( +5 / -5 )

As long as Japan has a large current account surplus printing money works, as there is always more demand to buy yen than to sell it.

It remains to be seen if a country falling behind economically, with a huge demand for energy imports and with a declining population can maintain this surplus.

I doubt it.

0 ( +3 / -3 )

national defense costs

for what? We are not at war, and the 7th strongest army in the whole world?

i figured out our households total tax for everything plus pension. It is 50% of our earnings. More government spending will make that even higher.

5 ( +8 / -3 )

The Japanese Yen depreciated almost 10% against the USD in the last year despite having virtually no inflation while US inflation has been breaking records. So, no, you can't keep having the Bank of Japan keep buying government debt with no consequences.

6 ( +8 / -2 )

The Japanese Yen depreciated almost 10% against the USD...

That's mostly due to the US's tightening of monetary policy while Japan keeps its loose. Nothing to do with Japan's government spending.

0 ( +6 / -6 )

That's mostly due to the US's tightening of monetary policy while Japan keeps its loose. Nothing to do with Japan's government spending.

Sure, that is a contributing factor, so is the higher oil prices that hit Japan a lot more than US. But I wouldn't go so far as to say endless government spending has nothing to do at all. At least part of the reason that the monetary policy in Japan is loose is that the government needs to keep borrowing at low rates to keep fueling its debt cycle.

4 ( +5 / -1 )

 At least part of the reason that the monetary policy in Japan is loose is that the government needs to keep borrowing at low rates to keep fueling its debt cycle.

Overwhelmingly, Japan's loose policy is because the BOJ's priority is keeping the monetary stimulus flowing to spur growth as the pandemic drags on, and with very low inflation, it has plenty of scope to do that (unlike many other countries).

Anyway, the govt has no need to borrow its own money. It and the BOJ are the monopoly issuers, so why the need to "borrow" it? Even if it did, the BOJ has been buying nearly half the bonds, so rates there don't matter. (The coupon proceeds on those are returned to the coffers of the Finance Ministry, which most people seem to view as "government debt." Crazy.)

The private entities are paid by a push of a button at the ministry that marks up holders' accounts electronically, aka, issuing yen. That "money" (electronic yen credits) is injected into the economy similar to how stimulus money does. That money can never run out, unless politicians would perversely want it to.

Japan's being doing this for the last couple of decades, and none of the doomsday predictions have come close to happening. In most cases, the opposite has occurred.

3 ( +6 / -3 )

In specialized military sites Japan armed forced is even ranked 4th.

A country where it

’s welfare is declining and with a stagnant economy for sure doesn’t need to beef up it’s military spending.

But in the end this is what you get when people vote to politicians with a revisionist goal.

0 ( +3 / -3 )

Japan's being doing this for the last couple of decades, and none of the doomsday predictions have come close to happening. In most cases, the opposite has occurred.

Spot on, JeffLee.

1 ( +4 / -3 )

Jeff Lee, if it is that easy why does the government collect any tax at all?

Just cancel income tax, consumption tax, juuminzei, health tax etc and print away!

Whoopee!

0 ( +4 / -4 )

“for what? We are not at war, and the 7th strongest army in the whole world?”

No, we are not at war. But if your neighbors have been not that friendly to you, building up their armies, lobbing their missiles towards our direction once in while and testing our territorial waters now and then, what would you do? Be nice to them? Or prepare for the worst and expect the best? You can’t build an army, let alone one that can fight, overnight.

2 ( +7 / -5 )

happyhere

why does the government collect any tax at all?

Because taxes are needed for income redistribution, controlling inflation and absorbing excess liquidity that hasn't already been soaked up by bond purchases or other means.

Tax revenue in Japan is not used to "pay" for anything. The above budget will be nothing more than numbers on spreadsheets, serving as targets for how much yen issuance ("money printing") the govt plans to do.

"fake economy...."

Yep, the third biggest in the world that makes Toyotas and Hondas and supplies the world with nearly half its industrial robots, to name just a couple of things. A list of the key products this little island country produces for the world is a very long one.

-1 ( +4 / -5 )

But if your neighbors have been not that friendly to you

ever wondered why? Raping during WW2? Supporting US sanctions against China? Stupid arguments over rocks in the sea? Nuclear armed US ships and bases on Japanese soil?

basically, my point is that printing more money and debt will just destroy the retirement of hardworking Japanese and leave the younger generation in mass debt.

we should join the Belt and Road and have access to 60% of the worlds trade market. Sell don’t borrow.

-5 ( +0 / -5 )

@JeffLee

Because taxes are needed for income redistribution, controlling inflation and absorbing excess liquidity that hasn't already been soaked up by bond purchases or other means.

"Income resdistribution"? To whom? Not to the population as salaries has been stagnant for 3 decades, the inequalities are spreading, gig economy becomes the norm, heck, even soup kitchen is becoming a thing, etc, etc.

"Controlling inflation"? Like the (elusive) 2% inflation that the government and BOJ have been targeting for pretty much a decade?

"Absorbing excess liquitidy"? What excess liquidity? The (tax-)money stuffed down the throats of Dentsu and Japan Inc? Besides, if the point is to "print money as needed" , you shouldn't have any excess money anyway.

1 ( +4 / -3 )

Why not allow older people to stay in work if they want to? Stop scrapping people at 62. Let them earn their own money and defer their pension?

-2 ( +0 / -2 )

we should join the Belt and Road and have access to 60% of the worlds trade market.

And bow down before Uncle Xi???

1 ( +2 / -1 )

The next sales tax increase is coming......soon....In a few more years.LOL probably inching up to 20%+

-4 ( +0 / -4 )

Tom San

we should join the Belt and Road and have access to 60% of the worlds trade market.

And bow down before Uncle Xi???

Japan's being doing that for a good long while now.

Please check who is Japan's leading trade partner and report back.

-2 ( +1 / -3 )

@LDTM,

Great comments.

Scary indeed.

Just servicing the debt is getting on to the likes of a pretty wealthy country's GDP.

-1 ( +0 / -1 )

@LDTM

You mean the bit about 24.34 trillion yen in debt-servicing costs, which is about a quarter of the budget?

No worries, Jeff Lee explained above that the government is paying it to itself...or was it to the Bank of Japan who pays it to the government? Whatever, who cares.

Nothing can go wrong because it never has. Lol

0 ( +2 / -2 )

Nothing can go wrong because it never has. Lol

That’s a good summary of the argument.

As inflation rages to rates not seen in 40 years, one wonders how much longer those making such assertions will stick to their guns, in the impending aftermath of the crazy policies they said were going to be possible to get away with this time in history.

Meanwhile the Japanese currency is horribly weak, gold has hit all time highs versus the yen, and Japan wages are getting overtaken by other places. All that currency weakness and the local stock market is still nowhere near all time highs, unlike foreign peers.

The logic of “nothing has gone wrong yet” was stupid to begin with, but it’s also plainly wrong to suggest that nothing is going wrong and that BOJ actions and gross overspending by the inept government have nothing to do with the problems.

0 ( +1 / -1 )

fueling fears of a further deterioration of Japan's fiscal health

It’s not a fear, it’s a total certainty.

Having lots of debt is one thing, but these clowns are spending record amounts without having revenues to pay for it. There is no free lunch.

-1 ( +1 / -2 )

Japan's being doing that for a good long while now.

Please check who is Japan's leading trade partner and report back.

You miss the point, obviously.

1 ( +1 / -0 )

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