BOJ must adopt monetary policy of boosting household income

Japan Press Service Co., Ltd. is the only news agency providing information of progressive, democratic movements in Japan

BOJ must adopt monetary policy of boosting household income
Akahata editorial (excerpts)

The Bank of Japan on January 18 decided to maintain its target interest rate at 0.25 percent.

Before the BOJ made this decision, officials of the Abe Cabinet and the ruling parties had repeatedly made threatening remarks against an increase in the interest rate.

Their remarks showed the lack of confidence in economic prospects despite the fact that they have been boasting about their "structural reform" policies by saying that the current phase of economic expansion has become the longest in the postwar history.

Recovery of private consumption, which accounts for 60 percent of GDP, is the key to a stable development of the Japanese economy. The government, however, has hampered economic development by carrying out "structural reform" policies that benefit large corporations.

Due to the monetary relaxation policy implemented since the 1990s, a total of three trillion yen of interest income has been siphoned from the household economy.

Major banks have enjoyed benefits from this monetary policy by taking deposits with almost no interest paid. The large corporations that have borrowed money at low interest rates have also profited. Interest incomes that the general public could have earned have been transferred to major banks and large corporations.

The government as well as the BOJ points to "weak household expenditure" as the reason for putting off an increase in the interest rate. This argument totally contradicts reality. In fact, the longer the ultra-low interest rate policy continues, the less the household economy can spend.

The money that overflowed under the monetary policy has flowed into money games such as speculative investments in stocks and real estate. Useless in recovering the real economy, this policy has given rise to alchemy as symbolized by scandals involving Livedoor (an IT company) and the Murakami Fund.

The Japanese Communist Party is calling for a change in monetary policy from promoting money games to supporting the household economy with an appropriate deposit interest rate.
- Akahata, January 19, 2007