The following is the continuation of the previous chapter.
The Japanese banks have fully supported the international financial markets.
In most of the same period, the Bank of Japan for easing other dimension relaxation paid 373 trillion yen of funds into domestic financial institutions, but in fact the equivalent of one third of them flowed into major international financial markets such as New York and London.
The Federal Reserve Board, (FRB) turned the interest rate hike after stopping the quantitative easing policy issuing a large amount of dollar funds in the fall of 2014.
The rise in dollar interest rates encourages the return of funds from emerging and developing countries to the United States.
It is the easing of the BOJ to relieve the impact on the world accompanying FRB's tightening of monetary policy, and the Japanese bank is responsible for financing.
Loans are coextensive with debt.
The largest borrower from international financial markets is China, according to Chinese statistics the external debt increase amounted to 1,048.4 billion dollars.
Japanese bank's direct loan increase to China is only $ 30 billion, but money has no color.
China has fully raised funds from Japan through international markets.
Anyway, why are Japanese financial institutions outward as well?
According to the Bank of Japan statistics, domestic banks' domestic loan growth for the same period is 61 trillion yen, which is only half of the external loan increase indicated by BIS statistics.
Mega Bank's loan office says, ‘There is no domestic funds demand’, but there is no demand because the domestic economy is exposed to deflation pressure.
The main cause of deflation is in austerity finance, and consumption tax increase tax is the most austerity.
Abenomics initially boosted domestic demand by increasing fiscal expenditure in conjunction with monetary easing, but in 2014 the government raised the consumption tax rate from 5% at once to 8%.
Tax increase of 3% corresponds to 8 trillion yen of household consumption every year.
The Abe administration has further drastically reduced fiscal expenditure.
As the firm maintains this austerity financial line even after the tax increase, household consumption levels continue to stagnate.
As a result, Japan's inflation rate has been around zero percent and still cannot escape from deflation.
Financial institutions can not earn money domestically because the result of combining the deflationary pressure caused by the consumption tax increase tax and the BOJ's different dimension easing policy.
It is only necessary to focus on overseas loans, but it will limit domestic small and medium enterprise capital investment, bring down a wage increase and a vicious circle of deflation.
It is hard to say that different dimension relaxation is for domestic reasons.
Meanwhile, the international money market is rough with the aftermath of the US - China trade war.
Especially, concern over the Chinese economy, which is made up of a heterogeneous financial system based on inflowing dollar funds, is increasing.
The Trump's US administration's sanction tariff on China will surely reduce the trade surplus against the US, the main source of foreign currency of China, so the fundamental of the financial system will be compromised.
The Shanghai stock market fell on a monotonous basis, and in the foreign exchange market a large amount of RMB selling continues.
Trump President further strengthen the trade sanctions against China, because they were instructed to prepare to apply high tariffs on imported goods all from China, Xi Jinping President of China is increasingly forced into a corner.
Mr. Xi Jinping was eagerly aware of Japan's financial cooperation with China.
At this visit, Prime Minister Abe responded to a 3 trillion-yen currency swap agreement.
The currency swap is a matter of connecting local currencies between the two countries at the time of the currency crisis, and China also ties with South Korea.
However, Korean won and the RMB are both local currencies, so it is difficult to exchange with the dollar in international financial markets, so the effectiveness of the Korea-South Korea Agreement is limited.
In that respect, yen is a genuine international currency that can be changed to dollars anytime, anywhere.
China suffering from foreign currency difficulties whispered the sweet word of ‘Japan-China friendship’ and invited Japan to the currency swap agreement.
Not only political circles and government officials.
Nippon Keidanren lean forward to cooperate with China on both technology and money, and major financial institutions such as Nomura Securities will also run an investment fund in collaboration with China.
* I was concerned about the fact that Mr. Nakanishi, who was appointed Chairman of the Keidanren, held a conference jointly with Ian Bremer 's mystery, but if reading this paper, their meeting should not be unknown with the intention of China and should hit a place or the mark. *
The Abe administration promises to increase the consumption tax from October next year.
Deflationary pressures are strengthening, domestic funds demand stagnation is certain, excess surplus flows to China.
For whom are on earth, the tax increase?
