A while ago, a TV program humorously depicting a life lived on 10,000 yen a month became popular. People likely empathized with and liked the challenging lifestyle of those living in poverty. Looking back, that was a life of poverty unfolding in a prosperous Japan during a time of a strong yen. In today’s impoverished Japan, with its weak yen, living on 10,000 yen a month is practically impossible, and even if someone attempted it, it’s unlikely to garner any empathy or positive sentiment.

I read “The 40-Year Secret History of the Yen-Dollar War” (by Takeshi Kawanami, published by Nikkei Business Publications). The author is the Washington bureau chief of the Nikkei Shimbun. The book clearly explains, based on historical context, why the yen became the weakest currency.

The reason for the weak yen is the widening interest rate differential between Japan and the US, which could be corrected if the Bank of Japan raised interest rates. However, the Bank of Japan cannot easily raise interest rates. According to the book, this is because the Japanese economy lacks the strength to withstand rising interest rates. The underlying problem is fiscal policy. Japan’s outstanding government debt exceeds 1,100 trillion yen, and a 1% increase in interest rates would increase the interest payment burden by more than 10 trillion yen. If interest rates were raised to 2%, the same as the inflation rate, the burden would exceed 20 trillion yen. The current government does not have the capacity to bear such a burden.

The book states that “the consequences of neglecting excessive debt and ultra-low interest rates have created a ‘weak Japan,’ making it impossible to raise interest rates and leading to an unstoppable depreciation of the yen.”

Large corporations are achieving record profits due to the weak yen, but this is a result of earnings from overseas business. The money earned flows back overseas, making it difficult to reflect in Japanese employment and wages. Therefore, for most Japanese people, a weak yen is not a benefit, but rather a burden.

Living in poverty is difficult. That’s true whether you’re in a rich or poor country. However, in a rich country, there are countless opportunities to escape poverty, and with enough effort, anything is possible. In a poor country, opportunities are scarce, a sense of stagnation intensifies, and efforts seem futile. This difference is significant. (Kei Kitajima)

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