Is The Yen Getting Weaker?
Japanese Yen given the current high debt to GDP ratio of Japan
Japan was the global leader in accumulating debt, and over the next few years, Japan has monetized several trillion dollars of government debt. Japanese government debt now stands at more than 266% of GDP, and this debt results in the largest fiscal deficits with the highest of any developed nation. It is debt that will never become extinguished. However, if the Japanese government keeps selling their debt in the future, the Japanese GDP and the Japanese Yen will decrease more and more, and the Japanese Yen will become worthless.
Also, because of the COVID-19 from 2019, the bank decided to change the debt to unlimited. In that case, the debt of Japanese debt becomes a wretched cycle. Which means more debts. And the Japanese Yen becomes worthless. For example, today it is 1 US dollar to 145 Japanese Yen, and in the future, it may become 1 US dollar to 100 Japanese Yen.
However, there are some other factors which affect the Japanese Yen from the high debt to GDP ratio of Japan.
First of all, due to the social situation, war is a big factor which affects the high debt. In the past of few months, Present Putin said if Japanese government want to sanction Russia, Russia will sanction it back.
There are many benefits between two countries, and if one country decides to sanction another country, the value of the Japanese Yen will become worthless. And the Japanese government will have to increase their debt to benefit their currency in the world. In that case, the pressure from Japanese citizens must be increased. And maybe one day Japanese citizens will be angry about the Japanese Yen becoming worthless. Second one is the Global Financial Crisis between 2007 and 2008. It impacted all of the world even if some primary countries such as US, China, Russia, and etc. In that case, Japan definitely cannot escape from the Global Financial Crisis.
Because of that, the debt for Japanese government was increased. Finally, natural disasters also impact Japanese Yen given the current high debt to GDP ratio.
In 2011, there was an Earthquake in the Tōhoku, and it caused many people died with a huge economics lost. Also, in 2019, the COVID-19 virus appeared to the world. And it affected Japanese economics a lot. As a result, the Japanese government increased their debt to help Japanese people to pass through those natural disasters. Natural disasters are uncontrollable, so it’s a normal effect for the Japanese economics.
Written by Yinzheng Wang
