Another Subprime Mortgage

Acquire for free, then add a margin to conduct business. The seller can't possibly lose, and must be laughing all the way to the bank. This is akin to the current financial policy in Japan. Ultra-low interest rates have persisted for a long time. This is due to the Japanese government's ultra-low interest rate policy, close to zero, aimed at stimulating the economy. The idea is that by lowering interest rates to make it easier for companies to borrow money, they will increase capital investment, leading to higher production.

The interest rates we receive on our savings in banks, credit unions, and post offices, including ordinary and fixed deposits, are all in the 0% to 0.3% range. At an interest rate of 0.1%, depositing 100,000 yen in a bank for one year yields 100 yen in interest. After a 20% tax deduction, you're left with 80 yen for the entire year. This isn't even enough for a single cup of coffee, let alone useful at a 100-yen shop. It's no exaggeration to call it zero interest.

Ultra-Low Interest Rates: An Unprecedented Anomaly

I vividly recall a foreign professor at a private university, an American, telling me, "Japanese people are so docile. In America, this would cause an uproar." To further illustrate this point, let's compare the 10-year government bond yield, a benchmark for long-term interest rates, internationally.

The 10-year government bond yields in Western countries like the United States, the United Kingdom, and Germany are around 5-6%. In contrast, Japan's yield is just under 2%. Furthermore, it has never exceeded 2% annually since 1998. This highlights the prolonged era of low interest rates. The rate remains abnormally low compared to other countries.

All Due to the Government's Massive Debt

Mortgage loans are being offered to companies and individuals by adding 1-3% to the deposit interest rates, which are virtually free (the cost of acquiring funds from us, the consumers). While maintaining an unusually low interest rate policy compared to other nations, the primary reason behind it is the government's enormous outstanding debt.

Currently, the total national and local government debt stands at approximately 800 trillion yen. Government bonds and municipal bonds, which are essentially IOUs, must be repaid with their stipulated interest. This is only natural.

Any slight increase in interest rates would only add to the burden on the government and local authorities. The increase in government payments due to interest rate hikes would be substantial. For these reasons, we are subjected to a zero-interest rate environment.

Japan Lacks Investment Opportunities

Given these circumstances, it's no wonder that high-yield financial savings products are nonexistent in Japan. Due to Japan's ultra-low interest rates, the lack of domestic financial products forces people to look overseas.

Some experts wryly remark, "This is why people end up jumping into monstrous subprime mortgage products and suffer severe losses." This sentiment cannot be entirely dismissed as untrue.

It is becoming increasingly difficult for Japan to sustain its ultra-low interest rate policy indefinitely. It is imperative to move towards a level comparable to other developed nations, truly on par with global standards. The continuous outflow of capital from Japan in its current state is abnormal and unhealthy. It is crucial for us, who are constantly disadvantaged by low interest rates, to recognize the significance of this low-interest rate issue in our daily lives.