Hideo Tamura of The Sankei Shimbun newspaper has claimed that the US and European countries are pushing Japan virtually to taking a policy which would eventually make deflation in Japan further continue.
Specifically they think that the plan Prime Minister Shinzo Abe has worked out to increase the consumption tax rate from 5% to 8% next spring should contribute to continuation of the deflation in Japan though PM Abe officially declared that one of his political goals is to stop the deflation and lead the Japanese economy to a right track of moderate inflation.
The background of this situation is that in these years nominal GDP has not increased in Japan, but financial assets held by Japanese households have increased drastically, for example, by $3 trillion between 1998 and 2013. In addition, external financial assets of Japan has increased by $4 trillion over the same period. Even after the Lehman Shock, financial assets held by Japanese households have increased by $1 trillion and external financial assets of Japan has increased $1.7 trillion.
This means that Japanese households and businesses under deflation domestically have make big deposits in banks and so on which in turn have provided this huge amount of money for the global financial markets, including Wall Street and the City.
As an amount of increase in money FRB has provided is $1.5 trillion, the money Japan has provided for the international markets is playing a major role. Or without this money from Japan, financial institutions in the US and Europe cannot function well.
Besides it is just paper money FRB issues, but what Japan delivers is real money supported by labor, industry and business activities of Japanese people and enterprises. The international financial Mafia needed a huge influx of money from Japan. They want the Japanese Government to take a policy favorable for their business in stock markets and bonds markets.
The expected tax rate increase in Japan is thought to work as a strong factor for continuation of deflation in Japan. So, IMF highly influenced by the financial sectors in the US and Europe is urging Japan on raising taxes.
On the other hand, PM Shinzo Abe requested the Bank of Japan to provide more money for the Japanese society and financial market. So, since the start of the Abe Cabinet last December, the Bank of Japan has been purchasing Japanese government bonds in far larger quantity than before from banks and other financial institutes in Japan. For this purpose PM Abe changed the Governor of the Bank of Japan from theoretically conservative Shirakawa to a pragmatic ex-high ranking officer of the Ministry of Finance Kuroda who is very positive in combating 15-year-long deflation of Japan. But PM Abe and BOJ Governor Kuroda are both very intent on the tax-rate increase.
To be widely supported by Japanese voters, the Abe Cabinet must address the 15-year long deflation of Japan which is a big cause of 15-year-long stagnation of Japanese GDP and salary levels of Japanese workers in addition to the big deficit balance of the government budget. But to be strongly supported and liked by US and European principal players in the financial sector and politics, PM Abe has to realize the long-awaited consumption tax-rate increase.
The brown chart indicates financial assets held by Japanese household along the left-hand axis in units of trillion yen. The blue curve is external financial assets of Japan along the right-hand axis in units of $ trillion.
The net external asset balance as of the end of 2012:
No.1 JAPAN $3 trillion (296.3 trillion yen)
No.2 China $.15 trillion (150.3 trillion yen)
No.3 Germany $1.2 trillion (121.9 trillion yen)
(http://www.globalpost.com/dispatch/news/kyodo-news-international/130527/japans-net-external-assets-at-record-296-tril-yen-at-2)
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National Diet (Parliament) Building in Winter, Tokyo
