“In Japan, the infernal mechanics of inflation, which causes prices and wages to skyrocket together, doesn’t seem to have any control”

HASother places, other customs. While French refinery operators, whose average salary is well over €3,000, fight – with a good chance of winning – for a substantial increase in response to rising prices, on the other side of the world it is out of the question to think about that In Japan, there is no debate about super-profits and very moderate inflation. It should reach 3% in 2022, a record in forty years, and fall to 2% in 2023, according to estimates by the Bank of Japan. Because, curiously, in this country, although prices rise, wages do not move.

In an interview in financial timesOn Tuesday, October 11, the Prime Minister, Fumio Kishida, again begs companies to increase their workforce, and hopes that the situation will help him. “By approving price increases, we hope that companies have room to increase wages”, he explains. And to add, as a good Ford or Keynes emulator: “In the past, salaries were seen as a cost factor, but in the future, companies need to invest in their employees, for the growth of the economy and their businesses. »

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At the moment, it is not heard. Large companies have their heads -and above all their business- elsewhere, far away from Japan, and small and medium-sized companies (SMEs), which employ 70% of employees, cannot increase their prices due to lack of consumption . They are absorbing the current rises in the cost of energy and raw materials, which reduce their margins and prevent them from making a gesture in favor of their staff.

That is the whole Japanese mystery. The infernal mechanics of inflation, which causes prices and wages to skyrocket together, doesn’t seem to have any control there. The central bank itself does not believe in it and maintains, unique in the world, its policy of negative rates, when all its Western counterparts raise them to curb the rise in prices. Even better, with every economic cold snap, the country launches a new recovery plan. The “whatever it takes” on an industrial scale.

Closed and mercantilist country

It has been going on for forty years. Result: with a staggering debt, which far exceeds 7,500 million dollars (7,720 million euros), or 250% of its gross domestic product, Japan is the most indebted country in the world after Venezuela.

Any other nation would have gone bankrupt. However, the country’s secret weapon lies in the holding of this debt by Japanese households, at least by the banks to which they have entrusted their savings. More than 85% of this debt is purely Japanese, half of which is held directly in Bank of Japan accounts.

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