Getting caught up in urban legends like "Toyota is the representative of exporting companies" or "the performance of exporting companies improves when the yen depreciates" and continuing financial easing is no longer advisable.
At this rate, Japan might end up becoming the world's ATM.
In Japan, the urban legend that "the performance of exporting companies improves when the yen depreciates" is still prevalent.
The same goes for the urban legend that "Toyota is the representative of exporting companies."
Some people still believe that exporting companies like Toyota export automobiles and products produced in "Japanese factories."
So they think that if the yen weakens, exports will increase, the economy will improve, and they will be happier.
Indeed, Japanese automakers export automobiles produced domestically.
However, in reality, they produce more than four times as many automobiles overseas as they export from domestically produced ones.
Japanese automakers have become multinational corporations with their headquarters in Japan, rather than just exporting companies.
Hence, the number of automobiles produced by overseas subsidiaries far exceeds those exported.
Japanese automakers are multinational corporations that produce more than twice the number of domestically produced automobiles in their overseas subsidiaries.
So the main source of income for automakers is dividends from overseas subsidiaries.
The weaker the yen gets, the more the dividend income in yen terms increases, and profits improve.
Naturally, this contributes to tax revenue, and stock prices rise, benefiting investors, but it doesn't benefit the workers much.
Ultimately, no matter how long financial easing continues, the "Japanese multinational corporations mistaken for exporting companies" simply use ultra-low interest rates to raise funds and engage in M&A and capital investment overseas.
Money doesn't flow into Japan, it only flows out, hollowing out of Japanese industry.
When you think about it, Japan's shrinking market due to its declining birthrate and aging population isn't attractive, so that's understandable.
So it's about time to stop getting caught up in urban legends like "Toyota is the representative of exporting companies" or "the performance of exporting companies improves when the yen depreciates" and to stop continuing financial easing.
Knowing that the yen depreciation and ultra-low interest rates will continue, Japan's wealthy are investing their 200 trillion yen in financial assets in high-interest dollar deposits, US bonds, and stable and high-dividend US stocks.
That's why the yen depreciation is accelerating.
Since the Japanese government, which proclaims "freedom and democracy" and "the rule of law," can never enforce authoritarian policies to stop the insatiable desires of the wealthy, Japan's unconventional monetary easing is probably a paradise for the wealthy.
Even if only money flows out from Japan, which continues financial easing, to the US and Europe, tightening their financial policies, it's even worse that foreigners are buying up Japanese assets using the weak yen.
If things continue like this, not only will Japan become an ATM for the United States but also for the world, and the Japanese might end up becoming servants to foreigners.
