An appraisal of Sankei Shimbun editor Hide’o Tamura as the most accurate analyst of Japan’s economy, highlighting his critique of austerity, consumption tax hikes, and his defense of negative interest rates as a national strength.

February 16, 2016

Recently, I have come to feel that the following commentator continues to write the most accurate analyses of the Japanese economy.

The following is from the Sunday Economic Lecture on page 7 of yesterday’s Sankei Shimbun, written by Editorial Board Member Hide’o Tamura, titled “The Government Should Deploy a Combined Strategy to Shift Away from Austerity.”

Emphasis in the text is mine.

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With global stock markets unstable due to China risk and falling oil prices, bond prices—expected to retain particularly stable value—have surged, resulting in negative yields.

Japanese government bonds are internationally recognized as safe, high-quality financial assets, and negative-yield government bonds can even be described as a “source of national pride.”

In attempting to justify consumption tax increases, the exaggerations and falsehoods of fiscal bureaucrats, certain media outlets, and economists—who have overstated government debt and stirred fears of a government bond collapse—have been inadvertently exposed.

The benefits of negative interest rates first accrue to the government. For fiscal year 2016, interest payments on Japanese government bonds are projected at 9.9 trillion yen, assuming a long-term interest rate of 1.6 percent. A mere one-percent reduction in rates would save approximately 1 trillion yen.

With negative interest rates, bonds are sold above face value, generating issuance profits for the government. It is beneficial in every respect.

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Despite unprecedented monetary easing, the primary cause of weak demand lies in austerity measures such as consumption tax hikes.

The Abe Shinzo administration should not miss the opportunity presented by negative interest rate policy and should boldly implement a combined strategy, including freezing the austerity path that encompasses further consumption tax increases.