Finance does not mean banks or securities firms; it means national strategy itself. Japan failed to recognize that the “Turntable of Civilization” had come its way and instead allowed bureaucrats, the media, business federations, and banks to sink into egoism, producing the so-called “lost 20 years.” Excessive dependence on government bonds, chronic yen appreciation, falling stock prices, and massive short-selling by foreign capital stripped Japan of its national wealth and left one in seven citizens in poverty. True financial strategy must be carried out by the state as a matter of national interest and global responsibility, not by the central bank alone.

Finance Is Not About Banks or Securities Firms, but About National Strategy
2010-07-24

When I speak of finance, I do not mean banks or securities companies.
I mean finance as national strategy, finance as a nation-building policy in the national interest, finance as the economic form of hegemony in which Japan stands alongside, or complements, the United States.
More than twenty years ago, the order came to Japan, and the role it was truly expected to fulfill was that of a super–economic power ensuring that the world would grow in greater stability and prosperity for the next 170 years.

Yet the core of this nation—bureaucrats, the mass media, Keidanren, and the banks—failed to realize that the “Turntable of Civilization” had come to Japan.

Or rather, the state of our intellect had not advanced a single step beyond the will left to us by Ryūnosuke Akutagawa, the greatest intellect Japan produced in the past 185 years, who took his own life while leaving behind the message that Japan, even in his time, could not overcome egoism.
“The world around me is ugly, and I myself am ugly as well.
To live while facing this is unbearable.”
That condition of our intellect had not changed at all.

The result of this was “Japan’s Lost 20 Years,” born from the fact that the elites—who stand at the center of the nation and who must never allow it to go astray, who must constantly refine their intellect each day for that very purpose—became nothing but masses of egoism and led the country in the wrong direction.

So what, then, has finance in such a country—our present condition—actually been doing?
Of the 175 trillion yen that gathered in the banks, they did not even understand how to manage it, and from the mega-banks down to regional banks they did nothing but buy government bonds.
Even if this defended the nation from collapse at the level of government bonds, covering it with domestic assets would have been sufficient at around 80 percent.
As a result, 95 percent of domestic funds—personal assets—came to be held in government bonds, making Japan a singular anomaly in the world, and each time trouble arose, the yen appreciated as a so-called “safe haven.”

Because Japan had advanced solely as an industrial and technological nation, its natural consequence was an export-driven economy.
Anticipating that corporate profits would decline under a strong yen, the embodiment of the greed of twentieth-century capitalism—foreign capital, though domestic forces must also be included—launched ferocious short selling, driving stocks lower.
As a result, over the past twenty-five years, the Nikkei Average has not recovered at all to the level it reached a quarter century ago.

Financial institutions in particular—life insurers and banks—had long held enormous volumes of stock in Japan’s world-class corporations through cross-shareholding and other means.
This had undeniably produced the strength and stability of the Japanese economy.
But under these disastrous conditions, holding stocks that never rise becomes nothing but a risk asset.
The “red demons of Zurich” can drive prices down by 20 percent in an extremely short time.

Even after one year, prices do not return to previous levels, and losses of 10 percent or even 30 percent are commonplace.
Even if one earns an average dividend of 2 percent, nothing can be salvaged.
Holding stocks becomes nothing but an annual balance-sheet risk under U.S.-style accounting standards.
There is no choice but to sell.
Because the volume sold is enormous, stock prices fall again.
Since 70 percent of the Tokyo Stock Exchange is now foreign capital, this is like manna from heaven for them: even the shares of world-class Japanese corporations can be acquired at prices far below those of twenty-five years ago.

Such stupidity is being repeated endlessly.
If this is not called the finance of colossal fools, what else should it be called?
This is the present reality, created by the result of twenty years in which the elite—no more than 10 percent at most, guaranteed annual incomes of over ten million yen—forgot their obligation as elites.
That obligation is that elites must not think of themselves, but must serve the remaining 90 percent who support their lives—that is, the nation itself.
They must constantly refine their intellect so that the country does not go astray and so that national wealth is not lost.
This duty was forgotten for twenty years, and now one in seven people lives in poverty.

Have my readers not finally understood how recklessly foolish our nation has been over these twenty-five years?

National strategy for the advancement of national interest, the protection of national wealth, the complementing of the United States, and the exercise of hegemonic responsibility as a super–economic power to save the impoverished half of the world is, needless to say, not something the Bank of Japan should carry out.
It is what the state itself—its government, which should originally be the greatest collective intellect of the nation—must do.
The frivolous, clownish mass media of today are, of course, utterly irrelevant.

The present Governor of the Bank of Japan—he is one of my classmates—clearly knows that this is not his role.
It is written on his face.
“I am merely a salaried employee who once worked at the Bank of Japan, but I will do everything I can within my limited capacity.”
No—no matter who is Governor, it is the same.
This is not the task of the Governor of the Bank of Japan.
It is the task of the government, as an act of national strategy.

(274) John Lennon – Help Me to Help Myself – YouTube