In his Dec. 11 letter, “Debt clock cannot be ignored,” Paul Bennett writes that Japan’s “national debt clock” should be mentioned more often in the media and the Japanese people warned about how dire the situation is. He warns that Japan could follow in Greece’s footsteps. However, such a comparison neglects important facts and is actually very misleading.
Most of Greece’s government debt is owed to other countries and is in euros. More than 90 percent of Japanese government debt is owed to Japanese financial institutions — not to foreign countries — and is in yen, issued by the Bank of Japan.
Bennett says Japan’s debt breaks down to over ¥7 million per citizen. But the fact that Japanese government debt is owed to Japan’s citizens makes these citizens creditors, not debtors!
Japan’s economy is in “deflation,” meaning that there are not enough investors who want to borrow the money saved up in the banks. Banks need to invest these savings to earn interest, so they keep buying Japanese government bonds, thus keeping interest rates low. Also, Japan is the world’s largest “creditor” nation with net foreign assets totaling some ¥240 trillion.
Japan is the country that is the farthest from defaulting on its government debt. The situation is not as dire as Bennett thinks it is.
The opinions expressed in this letter to the editor are the writer’s own and do not necessarily reflect the policies of The Japan Times.
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