The downward trend of the Japanese economy is still very obvious, especially in the past half year. The Japanese economy has completely entered the recession zone, with negative growth in output for consecutive months. In the first quarter of this year, it decreased by 2.0% compared to the previous quarter. What is more critical is that while the economy is declining, Japan can still maintain high inflation, which is really due to the depreciation of the yen, except for the factor of pump in international commodity prices.

The import prices of basic necessities will definitely experience a pump against the backdrop of a significant depreciation of the yen. This portion of pump has not been used to pay the actual wages of the Japanese people, nor has it become the actual profits of Japanese companies, but has been eaten up by the Exchange Rate difference.
This kind of Inflation is not the inflation caused by the desired production expansion in Japan, because the extra money paid by the Japanese is not used for economic production, which is of no help to economic recovery, but instead increases production costs and suppresses domestic demand. For ordinary people, it is more harmful than beneficial, especially with a significant increase in food prices compared to the same period last year. Some time ago, the Japanese basically stopped buying whole cabbages, paying attention to buying only what they need. They buy half or a quarter at a time, because cabbages are too expensive, and buying a whole one is too painful. As of the first quarter, the average household consumption in Japan, calculated for two people, costs 290,000 yen and 14,000 RMB per month. In terms of income, in March, after deducting the inflation factor, real wages in Japan decreased by 2.5%, continuing to decline for 14 consecutive months.
Because of this, actual household spending in Japan in 2023 decreased by 3.2% year-on-year, which means that the actual money in hand cannot keep up with the increase in prices. This development trend even promoted the development of Japan's special services industry.
Japan's biggest problem now is facing a situation where the income does not cover the expenses. The accumulated entire savings will definitely gradually weaken in this repeated consumption war, but this process will be relatively long. The specific duration depends on how thick Japan's current entire savings are. So let's take a look at how much inventory Japan's macroeconomy still has.
First of all, Japan has a huge amount of overseas assets, with a scale of more than 3 trillion US dollars, ranking first in the world. Among them, the forex reserves that can be quickly liquidated can reach 1.17 trillion US dollars, which is even higher than the entire GDP of the Netherlands and Saudi Arabia. I don't know if everyone can understand what kind of concept this is? Although a large part of this is in US Treasury bonds, which is basically frozen and cannot be moved, the portion that the Bank of Japan can directly use now exceeds 100 billion US dollars, which is still a significant wealth. In addition, Japan also has 700 to 800 tons of gold reserves, and there are also many marketable securities.
Just looking at this part of the available assets, it is still beyond the reach of ordinary countries. It is something that other developing countries, except for us, dare not even think about. It is definitely not comparable to countries like Thailand in 1997.
Therefore, before this wealth is depleted, Japan should have a lot of confidence in the financial market. It is worth mentioning that Japan still holds trillions of US Treasury bonds. Although everyone bets that they dare not touch them, it is a kind of deterrence to have such a large number. Basically, it can be regarded as a financial weapon. Whether Japan dares not move at all is purely speculative. Even financial giants still have concerns and dare not risk their entire fortune to bet that Japan will not touch US Treasury bonds. After all, if Japan wants to fight desperately, any non-national financial organization or consortium will be unable to withstand it. The Japanese economy is really not something that a few giants can provoke. Therefore, from this perspective, Japan still has a thick blood in the short term, and the situation of rushing to share the yen is unlikely to happen. The risk of a big dump in the yen's exchange rate in the short term is actually not high.
It seems a bit strange to talk about it here. Since everyone can see the relatively heavy entire savings in Japan, why do a group of vultures always circle around the Japanese yen, occasionally coming up to probe, repeatedly causing fluctuations in the Japanese yen Exchange Rate? Don't they know that this piece of meat is not easy to come by? Ah, isn't this because the aging scent of the Japanese yen is too strong, so everyone gathers around to smell it. Since Japan's economy fell into a quagmire, especially after quantitative easing became the long-term theme of the Japanese economy, a large amount of money printing has become a regular operation of Japanese fiscal policy. Not to mention where all this money has turned into government debt or flowed, but in this environment of abnormal loose paper currency flooding, if you still say that the yen can remain strong and maintain its original value, then you really don't take economics seriously.
So the long-term outlook for the Japanese yen is definitely rapid depreciation. In other words, this is basically playing with open cards. With the premise that the yen is certain to fall, if you were a financial giant, would you be willing to miss this short positions feast? In addition to Japan's long-term maintenance of a 0 interest rate or even a negative interest rate, borrowing money to short has almost no cost, which means that the long-term bearish view on the yen is basically a Consensus in the industry. Once a real gap is torn open, it is easy to trigger a situation where everyone rushes to take a share of the yen.
So, as long as there are opportunities in the international financial sector that are slightly unfavorable to the Exchange Rate of the Japanese yen, the giants cannot help but revolve around the Japanese yen. For example, this time the Fed raised interest rates for a long time even if they failed this time, they will come to test the Japanese yen if they have the opportunity next time. It is almost unavoidable for the Japanese yen to be repeatedly shorted, so the long-term situation of the Japanese yen is like an old giant python that cannot walk. Although it resists desperately, one tail can still sweep away a large number of vultures, but the vultures still surround it and constantly test it. The key is that everyone can see its rapid aging and the trend of continuous blood loss. As for why the Japanese economy is constantly bleeding, we have talked about it for many times due to historical reasons, and Kaka, who came for the first time, can also look back. The future trend is actually less optimistic when compared with history.
Just now we talked about how Japan's thick entire savings were accumulated. Japan's industrial economy is quite different from Europe and America. The massive forex gold, which is the foundation of Japan's manufacturing, does not grow out of the Japanese land. It was obtained through the diligent Japanese people during the Showa era, who engaged in foreign trade through advantageous industries and maintained a trade surplus for many years. This means that only by continuously making money from overseas through advantageous industries can Japan replenish its economic strength.
However, Japan's trade deficit reached 9.29 trillion yen last year. In just the past April, the trade deficit reached 462.5 billion yen. All of this is a deficit, meaning that Japan's current situation has maintained a long period of imports exceeding exports. To put it in simple terms, it's like running a losing business. Let's explain a little here, it's not appropriate to compare Japan with the special case of the United States, which has a perennial trade deficit. The United States can exchange the world's goods with just one dollar, without relying on its own production and exports, which Japan can't match. So Japan's perennial trade deficit is a real and substantial loss, and the household will be gradually drained.