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Weak yen forces Japan to shrink historic military spending plan

53 Comments
By Nobuhiro Kubo, Takaya Yamaguchi and Tim Kelly

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53 Comments
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imagine if countries invested all the money they spend on the military for things like infrastructure, healthcare and not charging their citizens all those taxes to float the military.

Everybody would benefit.

Your enemies would certainly benefit. How do people live their lives blithely assuming your prosperous nation would not become a target of attack by one of several authoritarian nations looking to expand? You don't ignore the crime in your society. You install door locks and use them, lock your car, put valuables in a safe, etc. But when it comes to your nation you behave as if nobody covets that beautiful infrastructure you bought with your tax dollars.

-1 ( +0 / -1 )

I think the horriffic US inflation 

Lol. Compared to where? Of all the developed nations only Japan has had lower inflation than the US. This bout of inflation comes from the huge supply chain disruptions caused by the global Covid-19 pandemic layered by energy market and supply disruptions created by Russia's invasion of Ukraine and the west's sanctions on Russia. Countries like Turkiye have 65% annual inflation and that is lower than it was last year. UK has had double digit inflation. The German GDP will shrink this year in part due to the aforementioned energy market disruptions.

This is a temporary situation. The underlying economic fundamentals, meaning money supply growth, velocity of money, trans Pacific trade volumes and the like all suggest a return to the pre-pandemic deflationary pressures in two to three years.

-2 ( +0 / -2 )

Great!!!..

Invest more in your own people...

0 ( +0 / -0 )

Imagine if countries invested all the money they spend on the military for things like infrastructure, healthcare and not charging their citizens all those taxes to float the military.

Everybody would benefit.

3 ( +3 / -0 )

The plan is to import more immigrants but will they actually come to Japan where they will be refused and abused?

My guess is no…

-4 ( +2 / -6 )

I’m loving the weak yen!

And yes, Japan became rich on exports.

That game is the one to go for!

-7 ( +1 / -8 )

Those hoping for increase in the interest rates, please remember that the current driver of inflation in Europe and US is mainly the interest rates.

Where did you get that?

Inflation is not caused by high interest rates. Interest rates were rock bottom and the we got inflation. After calling it “transitory” for a while, central banks finally stopped printing money and started to lift interest rates so as to slow economic activity broadly.

Arguably the money printing caused the inflation - indeed Japan’s policy makers explicitly declared that they want to have price instability of 2% per annum, and now that they have it… they haven’t stopped printing money even, because the government is insolvent without that, presumably. Otherwise they’d have done it already, like other central banks that made mistakes.

Japan is facing 10% inflation alread, hit the economy with 2% rates and the amount of lost jobs would be staggering.

wel the economy is being hit by inflation instead. Pick your poison, Japan’s policy makers have been permitted to put Japan in a terrible situation.

People never win in an inflationary situation.

Indeed :(

3 ( +3 / -0 )

Japan should start making stuff at home.

3 ( +4 / -1 )

Japanese elites are spinning narrative before the total collapse. You don't need a Taiwan crisis to destroy Japan. The LDP elites and their American puppets are stupidly doing it to Japan, so the country will be cheap to be sold for BlackRock, Chinese, Southeast Asians, Americans and many others.

Perhaps, we will see the International Settlements of Japan where the concept of sovereignty will end for Japan. This is what Kishida proposes!

https://asia.nikkei.com/Business/Finance/Japan-to-launch-special-investment-zones-where-only-English-is-needed

-8 ( +0 / -8 )

The weak yen also helps exporters and the tourism industry. There are always 2 sides to exchange rate fluctuations, but the complainers always look at only one. If we had "endaka" again, they would complain about that.

2 ( +4 / -2 )

Present Japan where has many weaks such as low food self-sufficiency or depending daily necessities on import from China or many fragile superannuated nuclear plants at seacoast facing neighbouring "enemy countries".

But far-rights regime and its believers are crazy for only expanding armaments under the name of "deterrence" as same as prewar totalitarianism regime could think nothing besides armaments.

"historic military spending plan" only victimize people's daily life and health and the lives gradually.

-3 ( +3 / -6 )

No one is talking about demography...

Japan population has started to drop.

Despite the country’s aging population, the labor force had increased by more than half a million people between 2000 and 2020.

Employment rates in Japan show that the workforce will steadily shrink by one-fifth in the next 20 years. Many years of declining birth rates in Japan and subsequently aging population mean that about 12 million people will become too old to work by 2040.

Do you think Japan will see its output to support its currency to maintain or will drop, especially against the USA ?

No, it will drop since there is no technological nor raw material resources advantages.

0 ( +2 / -2 )

A somewhat comical story, with the weak yen stopping the Colonel Blimp types getting their toys.

Every Japanese person knows the best way to confront an invading army is to throw natto at them. While this has gone up in price, it is still one of the more affordable dinner options in the supermarket.

2 ( +2 / -0 )

The Military Industrial Complex won't be happy I guess!?

On the contrary. This is an opportunity for the domestic industry to produce and sell cheap weapons. It is not a time to be a buyer, it is the time to be a seller.

0 ( +1 / -1 )

Japanese people that I've spoken to who are worried about the weak yen have expressed in a vague sense that it will weaken Japan's power as a nation without understanding how, or providing an example.

This is as pure an example as you can get.

-1 ( +1 / -2 )

Never been a better time than right now to invest on Japanese manufacturing again.

exactly manufacturing jobs in Japan have become cheaper compared to other countries due to the yens fall, cheaper goods means more exports. Japan was built on exports, not cheap imports . Japan was doing just fine when the yen way 250yen/$. you see it now Japanese are buying more Japanese made goods as they become cheaper while foreign goods rise in price.

5 ( +6 / -1 )

@Yubaru

“You actually think this is "foreign reporting"?

Um, yes, because it is published by Thompson-Reuters, a British news agency, and is sent in English to client news bureaus throughout the world for an international readership.

6 ( +7 / -1 )

Those hoping for increase in the interest rates, please remember that the current driver of inflation in Europe and US is mainly the interest rates. Japan is facing 10% inflation alread, hit the economy with 2% rates and the amount of lost jobs would be staggering.

People never win in an inflationary situation.

3 ( +4 / -1 )

A strong currency is always best.

The solution to Japan’s issues with its strong currency previously should have been to adapt to it.

The solution to having a weak currency, is not to adapt to it. The solution to a weak currency is to change policies to make for a strong currency.

Alas. Hoping for better policy makers to take control sometime, but not confident about it.

6 ( +9 / -3 )

Japan spending on Defense is basically pushed by the US to buy its expensive weapons. That is why China is being sold as an enemy aggressor. The best way to sell is through fear.

6 ( +9 / -3 )

Oh they thought harm would only come to the people and Jgov would get past unscathed?

How considerate.

They did nothing. Absolutely jacksh*t nothing. And now they act surprised that it didnt go as planned.

-3 ( +4 / -7 )

elephant200Today  06:36 am JST

Things will only get worse as Japan is relying on printing Yen to stay afloat. The falling of their currency is only good for tourism but nothing else.

i have to disagree. This also help all the exporters Japanese goods become cheaper to buy, and can secure jobs if those jobs are in Japan.As profits are returned to Japan instead of getting 103 yen to the dollar they can get 150 yen to the dollar or if its pounds instead of 125 yen for a pound they can get 184 yen for the very same pound. Japans exports have always had a good reputation and the only down side is the oil,gas and steel imports, but then again we should use this to move away from oil. If the US are repatriating manufacturing jobs then maybe Japan could also do that too. As more profits are repatriated, some tax revenues may increase too. And frankly we do t have to buy weapons from the USA. If that’s the only thing we buy from the USA I think the benefits out way negative by buying a few missiles and jets from the US. We bought the F4 the F15 when the yen was weaker. And if we do a deal to produce some of those parts/weapons under license in Japan that’s also a good thing. Anyway we don’t need to buy everything at once, and as we take on military projects with Allie’s that’s also got to be good for the long term in terms of defence. when the yen was stronger 105 yen to the dollar, people were complaining then, and they’re still complaining. And they’ll still complain if the yen was 50 yen to the dollar.

-2 ( +4 / -6 )

Like all of Kishidas plans, it left us normal people wondering where was this money supposed to come from?

Theyve done nothing to change the economy or its outlook, but they were expecting to be able to double budgets, give handouts, and tax cuts?

Suck it up, admit the economy is jacked, abenomics was a buzzword that isn’t working, admit that overly insular focused domestic companies are a limited benefit and make the required changes.

4 ( +9 / -5 )

The best defense is a strong economy - it has always been this way. Impoverished kingdoms were conquered, wealthy kingdoms expanded. If Kishida and gang want a stronger military, they need to support a stronger economy so they can pay for it. Instead they are taxing us to death, wasting money on cronies and pretending they are still the big kids on the block. Disgusting.

12 ( +14 / -2 )

I surely hope this doesn't mean Japan will scimp out on any aid to Ukraine now.

Zelensky needs all the help he can get atm. Europe and the US have become less willing as time goes by.

It doesn't bode well for any support to Japan in the Pacific theater, should this powder keg ignite.

I doubt many will be happy to loan military aid to Japan due to massive GDP debt.

-9 ( +3 / -12 )

This is all so very Japanese. Stick stubbornly to a failed process until it is WAY too late to do anything positive about it, then just try and pray it away like Kishida’s doing?

-8 ( +14 / -22 )

The Military Industrial Complex won't be happy I guess!?

They always get their money. Just you wait. If the whole middle east thing falls through, just like Ukraine, i fully expect some kind of incident to happen around Taiwan and China.

0 ( +6 / -6 )

Who cares. The US armed forces are the only thing threatening China in this area, if that is even the right word. Perhaps provoking would be more appropriate.

I dont know why Japan wastes money on this kind of thing, one of the key reasons the Japanese economic miracle happened was the fact that military spending was not a thing.

Even if the government stops military spending its not like the world police are going to suddenly up and leave. Japan is the only thing between China and US territory, and they need to he here to have China surrounded.

-5 ( +4 / -9 )

 But how did they ever think that it would drop down to Y108 with the amount of inflation going on in the US and around the world due to pandemic spending.

I think the horriffic US inflation was what made them think that the dollar would fall (from ~130 yen to ~108) and that the yen would rise. As bad as inflation has been in Japan, it's worse still in the US, which should cause the US dollar to drop, but because the US is raising interest rates to fight inflation, the dollar is going up against the yen, in which there is little incentive to invest as the BoJ insists on ultra-low interest rates.

If you can earn 5% on your savings in US dollars, you're still ahead even in inflation is 4%. In Japan, if inflation is also 4%, you can't protect yourself by buying interest-bearing bonds because the bonds pay less than 1%, a fraction of the value that inflation is taking from you. In past years the yen was a safe haven as inflation hadn't been destroying its value all through the early 2000s. Now, during inflationary times, the conclusion for investors is to sell your yen for a currency that lets you protect yourself better.

12 ( +12 / -0 )

@Roy It is okay, you can say that to yourself if it makes you feel any better. But the reality is you can use any "measuring stick" you want but still get disappointed. This country has no future.

-11 ( +6 / -17 )

How Sad!

The Military Industrial Complex won't be happy I guess!?

0 ( +7 / -7 )

Some folk remember when it was $US 1 = ¥250.

Those folk also recall it strengthening to 130 in the following three years.

5 ( +8 / -3 )

Whose fault is it the Japanese yen is so weak? These old Japanese men running the monetary policies ae stuck in their ways and change slower than a snail moves. If they would raise the interest rates, even to 2 percent which would still be way below all other developed nations whose rates are over 5 percent, and their economies are not collapsing would do wonders boosting the yen's rate back up. If they ever do raise the interest rates up it could be way too late for this economy, because food prices are climbing like a monkey on a tree and to bring them down even if the yen rate gets a boost will take time.

3 ( +9 / -6 )

Bon voyage. Where are you heading off to?

A place where regular employees don't line up to buy 10% discounted obentos.

-8 ( +19 / -27 )

That is, If they can get past the fact that immigration will be needed to help it grow

That’s the part the Japanese government will never agree to, they still believe this is 1985 for some reason, you can’t get someone to reason if they still believe in the value and use of the Fax machine in 2023

-10 ( +10 / -20 )

[Tokyo assumed an exchange rate of 108 yen to the dollar - a rate last traded at in summer 2021 - when it began formulating purchase plans in December,]

But the yen was in the 131 - 138 range in December.

Well, yes, that's what the article is trying to say: They wrongly assumed the yen would return to that 108-ish level by now.

I'll admit, I too thought that the yen was at Y108 when they started planning this massive purchase of miltary hardware. But reading it more closely you are right. But how did they ever think that it would drop down to Y108 with the amount of inflation going on in the US and around the world due to pandemic spending. That was pure folly and the should fire whomever proposed that.

11 ( +13 / -2 )

By early November, the currency dipped to 151 to the dollar. 

That's nothing.

Some folk remember when it was $US 1 = ¥250.

No need to panic.

-1 ( +10 / -11 )

Never been a better time than now to leave Japan.

-15 ( +18 / -33 )

Tokyo assumed an exchange rate of 108 yen to the dollar - a rate last traded at in summer 2021 - when it began formulating purchase plans in December,

But the yen was in the 131 - 138 range in December.

8 ( +9 / -1 )

Foreign reporting on Japan like this is refreshing. 

You actually think this is "foreign reporting"?

 Journalists at Western news organizations do a lot more than obediently write down what government and corporate officials tell them what they should write down, as Japanese journalists usually do.

This is a fluff article. 2/3rds of it written by JAPANESE writers. Have no idea if they are actually journalists or not.

3 ( +11 / -8 )

lol. Make that a 50% increase in real defense spending at best, as long as the yen doesn't weaken further. Factor in inflation and it's a bunch of hot air and funding sources have not even been identified.

Tokyo assumed an exchange rate of 108 yen to the dollar

4 ( +8 / -4 )

”BuT a WeEK YeN is GoOd foR thE EcONoMY”, a bunch of idiots would write.

Except that Japan isn’t China, raw materials are imported, processed and then exported. Yes, a week currency is good for the exports but only in a country which doesn’t need to buy raw material.

The Yen is collapsing and it feels like the prime minister is holding the candle hoping to pass it to somebody else before the wax starts falling off.

11 ( +24 / -13 )

Foreign reporting on Japan like this is refreshing. We get to see the grit behind the official announcements. Journalists at Western news organizations do a lot more than obediently write down what government and corporate officials tell them what they should write down, as Japanese journalists usually do.

12 ( +29 / -17 )

Things will only get worse as Japan is relying on printing Yen to stay afloat. The falling of their currency is only good for tourism but nothing else. Actually Japan's own defense capability is sliding, they need to pay protection money to pay the bill of foreign occupying forces.

-7 ( +21 / -28 )

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