- Conclusion: National Debt Is “National Assets” and Should Not Be Viewed as a Problem
- 1. What Is National Debt?
- 2. “One person’s debt is another person’s asset” — A Fundamental Economic Principle
- 3. The True Nature of Bank Deposits: A “Liability” for Banks
- 4. True Credit Creation: Money Is Created Through “Input”
- 5. Why the economy is struggling: Because money is “constantly disappearing”
- 6. Why Should the Government Issue More Government Bonds?
- 7. Why the Ministry of Finance Emphasizes “National Debt”
- Summary: National debt is not a “problem” but a “necessity.”
Conclusion: National Debt Is “National Assets” and Should Not Be Viewed as a Problem
Let’s start with the conclusion.
The media’s portrayal of “national debt = a burden on the public” is a misconception; in reality, “government debt = private-sector assets.”
In other words, the more government debt increases, the more assets held by the private sector (citizens, businesses, and financial institutions) also increase.
1. What Is National Debt?
The Term “National Debt” Itself Is Misleading
The expression “national debt” used by the media sounds as if it were a debt borne by each and every citizen.
However, strictly speaking, it is “government debt,” not the citizens’ debt.
Government Debt = Citizens’ Assets
Government bonds issued by the government are primarily held by the following entities:
- Domestic banks
- Insurance companies
- Pension funds
- Some individual investors
In other words, the structure is such that the more the government increases its debt, the more the assets held by the private sector (government bonds) increase.
2. “One person’s debt is another person’s asset” — A Fundamental Economic Principle
One person’s debt is another person’s asset.
Example: Mortgage
You take out a 30 million yen mortgage
→ For you, it is a liability
→ For the bank, it is an asset
This relationship always balances down to the last yen.
The same applies to government bonds
The government issues government bonds
→ A liability for the government
→ An asset for the private sector holding the bonds
In other words, an increase in national debt equals an increase in private-sector assets.
3. The True Nature of Bank Deposits: A “Liability” for Banks
One point that many people misunderstand is how bank deposits work.
Your deposit is a “liability” for the bank
Your deposit of 10 million yen
→ An asset for you
→ A “liability that must be repaid at any time” for the bank
The bank is not “lending out” this deposit.
4. True Credit Creation: Money Is Created Through “Input”
Banks do not lend out deposits
When lending a 30 million yen mortgage, the bank does the following.
All you have to do is enter “30 million yen” into the system
You don’t need to come up with 30 million yen from somewhere.
Money “comes into existence in that very moment” as electronic data.
When you repay the loan, the money disappears
You repay 30 million yen
→ The bank deletes “30 million yen” from its system
→ The amount of currency in circulation decreases
In other words,
Lending = Money is created
Repayment = Money disappears
That is how the system works.
5. Why the economy is struggling: Because money is “constantly disappearing”
During the bubble era, lending exploded, and vast amounts of money were created.
However, currently,
- Neither companies nor individuals take on debt
- Only repayments continue
- The money supply in the economy shrinks
- Money stops circulating
- The economy worsens
We are caught in a vicious cycle.
6. Why Should the Government Issue More Government Bonds?
What the government should do during an economic downturn is
issue government bonds to inject money into the private sector.
As government debt increases, private-sector assets grow, and the economy recovers.
Conversely, what happens if we reduce government debt?
Suppose we halved government debt from 1,300 trillion yen to 650 trillion yen…
- 民間の資産が650兆円消える
- 大増税と大幅な支出削減が必要
- 日本経済は壊滅的ダメージ
This would be the worst-case scenario.
7. Why the Ministry of Finance Emphasizes “National Debt”
- Stirring up panic by claiming, “The national debt is a serious problem”
- Justifying tax increases
- Justifying spending cuts
However, in reality, issuing government bonds is a way to increase the public’s assets, and it is precisely the kind of policy needed during the current economic downturn.
Summary: National debt is not a “problem” but a “necessity.”
- ✔ National debt = government liabilities and national assets
- ✔ As government bonds increase, private assets increase
- ✔ Bank deposits are bank liabilities; they are not actually being lent out
- ✔ Money is created as an “input” at the moment a loan is made
- ✔ Money disappears when loans are repaid
- ✔ What is needed now is the issuance of government bonds, not tax increases
- ✔ The economy is struggling because “money keeps disappearing”
