The day when the national debt exceeds the total personal financial assets

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As the elderly population increases, they will use their financial assets such as savings to live, and Japan's overall savings will decrease. If the national debt balance continues to increase, there will eventually be a time when the balance of national debt will surpass the national savings balance. Before the earthquake, this was predicted to happen within the next 5 to 10 years.

If the government bonds cannot be absorbed with domestic funds alone, the only option is to ask foreign countries to buy them. For foreign investors, the government bonds of a country whose national and local debt balance is approaching 200% of GDP are high risk. They will probably think that they cannot be purchased at a low interest rate of just under 1%. In that case, interest rates will have to be raised in order to attract purchases of government bonds.

Even before the disaster, there were warning signs, but the situation became such that reconstruction funds in the tens of trillions of yen were needed. First of all, this money would be raised through government bonds.

It is certain that the time for a reversal will come sooner than later.

Furthermore, there are concerns remove background image that Japan's growth strategy will lose its direction. The main axis of Japan's growth strategy was to capture foreign demand by targeting rapidly growing emerging countries. One was the export of infrastructure such as nuclear power plants and railways. Another was attracting tourists from overseas. However, the nuclear accident has shattered the "myth of safety and security" in both cases. If things continue as they are, a "bad interest rate rise" will occur, with interest rates rising despite the low growth rate. And a "depressing crisis" (Ueno) will emerge in which rising interest rates will further cool the economy.

Furthermore, we cannot deny the possibility of a "hot crisis" being triggered. For example, the Bank of Japan directly underwriting government bonds, something that Ueno said "must never be done."

If the Bank of Japan were to succumb to government pressure and begin underwriting government bonds directly, it would raise the prospect that the budget deficit would spiral out of control and the value of the currency would fall. This would then trigger capital flight as domestic investors move their funds to foreign currencies such as the dollar or euro. This could lead to selling of stocks, the yen, and government bonds, and interest rates could rise even more sharply.

If Japan's finances go bankrupt and it becomes like Greece, the yen will depreciate sharply, and it may be possible to use this as leverage to draw up a growth strategy, but will the people be able to tolerate the pain of a nation going bankrupt? In order to resolve this crisis, the budget deficit must be reduced, which would mean that taxes would be raised and social security would be cut.

The risks don't end there. Nagahama points out that the biggest risk is that "talented human resources will leave for overseas" in anticipation of such a situation. This is a case where not only production bases but also human resources will be hollowed out. The source of wealth itself will disappear from Japan.