False rumor, prejudice, blind spots 7;   Danced currency 2

4 金本位制

We look back on the situation that a crack hand by which Finance Minister Takahashi saved Japan will invite destruction before long.


Why was the gold standard stopped?

The gold standard is to promise to exchange money which country publishes with gold.

Therefore, because the country couldn’t supply money excessively, the currency was trusted.

However, unless production or acquisition of gold increase, the country cannot supply additionally money.

It invites deflation, and then economic recessions.

Oppositely, the silver mining of ancient Athens or the gold looting from South America in Spain brought about prosperity to each nation by issuing additional coins.

In this way, each country repeated adoption and stop of the gold standard many times from the end of the 19th century.













A deficit bond and an undertaking of the Bank of Japan


In a simple term, it is that the Bank of Japan issues as many money as the government wants. 

In 1931, Finance Minister Takahashi extended the currency issuance limit of the Bank of Japan from 120 million yen to 1 billion yen.

Then the government was able to enrich the finance without difficulty.

The gross national product in that year was 1,400 million yen, and we can understand it is a large amount.








February 26th Incident, a coup, a photo by a movie 

 February 26th Incident, a coup, a photo by a movie >


In 1935, Finance Minister Takahashi feels a danger, and starts the military expense compression for a gradual decrease of the government bond issue.

But the military that got angry with this procedure assassinated him (February 26th Incident).

In this way, the military secured the revenues for rushing from Manchurian Incident to Sino-Japanese War in 1937.

After that, the government that was led by the military authorities continued huge bond issuance.

The inflation before and behind World War II became from 16% to 125%.

In the end, people had to pay heavily compensation, and changed it for a temporary relief.












A crack hand of his magic saved the painful economy many times.

At the end, it was misused, and Japan rushed the way of a catastrophe.

When a nation has touched a forbidden fruit once, even if the nation wishes to stop it, powerful vested interests will obstruct it.

The present public construction is also the same.

The world and Japan fear to adopt this crack hand from the regret of this history.










the Bank of Japan

< the Bank of Japan  >

An important thing is that we know the fear of currency issue and financial policy, and stop a reckless operation.

We must secure the independence of the Bank of Japan at least.


Next time, we will study world crises of the same period in the United States








Categories: economy, history+evolution, <english language, <japanese language, politics, Series: False rumor, prejudice, blind spots | Tags: , , , , | Leave a comment

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