Wednesday, March 2, 2011

Finance Ministry, BOJ Plans to Shrink Economy Loom Large

If the populace doesn't wake up to this threat, Japan's future is in danger. The next worry is that they'll use the excuse of suddenly rising food prices to hike interest rates. It's quite likely that the small companies and mom-and-pop shops suffering under the deflationary spiral will suffer more when rates are hiked. The Finance Ministry and the central bank are walking Japan to the brink.

Japan is trapped in a deflationary spiral that has left many of our fellow Japanese without jobs or struggling to stay afloat. Small businesses and mom-and-pop shops are struggling with finances every day and looking bankruptcy in the eye.

However, the government, the Finance Ministry and the Bank of Japan ignore the lives of the Japanese people and worry only about finances. The central bank gives no thought to the welfare of the people and leaves the country on a deflationary course. The central bank ignores the importance of employment.

While all of Japan suffers from deflation, the rest of the world is being hit by rising food prices. Countries are moving to control the price hikes. In the midst of this, there's a danger that Japan will raise interest rates. If the Bank of Japan does this, it's going to unleash some major problems. Small companies and mom-and-pop shops will be trapped in a nightmare if some prices start to creep up while their businesses are trapped in a deflationary depression. The government needs to execute policies that counter rampant deflation. If Japan can't overcome the deflationary depression, it has no future.