A Deutsche Bank report argues that Japan’s debt itself isn’t a real problem given the country’s massive net foreign assets, and that if the Bank of Japan raised rates at a pace comparable to other central banks, the yen would ultimately strengthen. The thread debated whether the government is deliberately keeping the yen weak and rates low to prop up exporters, what actually makes up Japan’s net foreign assets, and the risks facing homeowners with variable-rate mortgages.
Joint Japan-US yen-buying intervention would be “counterproductive”; without intervention the yen would be even stronger — Deutsche Bank
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The report also stressed that Japan’s economy doesn’t have a debt problem, stating that “for a country with net foreign assets this large, much of which the government itself holds, debt isn’t the issue.” It added: “If the BOJ starts raising rates at the kind of pace typical central banks do, and the yen stops being a low-interest-rate currency, the yen will ultimately rise. In the end, the question is simply whether the government is willing to accept that outcome.”
No. Isn't the real story that they're deliberately keeping rates low and steering the yen weak on purpose, for the sake of the economy and export industries?
189AnonymousAug 21, 2026 20:18
Re: #5 Exactly. For Japan to make a real comeback, staying on the weak-yen path is still the way to go. Once we've built up enough national strength, then we can let the yen appreciate.
219AnonymousAug 21, 2026 20:24
Re: #189 I think around 140 yen [to the dollar] would be about right.
237AnonymousAug 21, 2026 20:29
Re: #189 Trade deficit for the 3rd straight month — ¥634.5 billion in July. What exactly are you trying to achieve here?
8AnonymousAug 21, 2026 19:45
Japan's accounting is just broken. We're being deliberately kept poor.
72AnonymousAug 21, 2026 19:56
Re: #8 Japan being wealthy is a moral no-no, apparently.
11AnonymousAug 21, 2026 19:46
That's something the BOJ's 'little old men' just can't grasp (a jab referencing the 'chiisai ojisan'/tiny-old-man urban-legend meme, implying BOJ officials are out of touch).
208AnonymousAug 21, 2026 20:21
Re: #11-20
Germany's a rival to Japan in industrial exports — cars, submarines, machine tools, parts, you name it.
A weak yen puts Germany's export industry at a disadvantage lol
Of course Germany's going to say "make the yen stronger!" lol
.
12AnonymousAug 21, 2026 19:46
Just try matching US interest rates for 3 months, see what happens.
Though… is this actually about the yen carry trade becoming a global problem?
117AnonymousAug 21, 2026 20:05
Re: #12 If you knew the scale of 'Mrs. Watanabe's' yen carry trade (a nickname for Japan's army of retail FX traders), you wouldn't be talking so casually about this.
28AnonymousAug 21, 2026 19:47
Wasn't it mostly assets that can't just be sold off on a whim?
34AnonymousAug 21, 2026 19:49
Re: #28 Because it's mainly overseas assets held by private companies and individuals.
41AnonymousAug 21, 2026 19:51
They keep saying they're suffering from the weak yen, so a stronger yen would fix that, wouldn't it? Plus it'd mean a weaker euro, which helps Germany's economy too — win-win.
46AnonymousAug 21, 2026 19:52
Re: #41 What does Germany even sell these days!?
76AnonymousAug 21, 2026 19:57
Re: #41 Japanese people tend to prefer lose-lose over win-win.
61AnonymousAug 21, 2026 19:54
What about mortgages though? There must be tons of people who bought with basically no down payment — they'd be wiped out lol
92AnonymousAug 21, 2026 20:00
Re: #61 That's just gambling addicts who borrowed on variable rates losing their bet and going bust. Gambling's on you.
98AnonymousAug 21, 2026 20:01
Re: #61 Those people chose variable rates knowing the risk going in. I went with fixed rate — glad I did.
143AnonymousAug 21, 2026 20:10
If they could pull that off, they'd already be doing it. The second they tried, the economy would tank instantly — it's a non-starter.
152AnonymousAug 21, 2026 20:12
Re: #143 They just need to cut the amount of government bonds issued. Tax revenue is up, so if they stop the handouts it should be doable.
157AnonymousAug 21, 2026 20:13
Re: #152 Dousing the economy in cold water on top of austerity? That'd finish it off. That's exactly what kicked off the Lost Decade(s).
164AnonymousAug 21, 2026 20:14
Re: #157 That's beside the point, dummy.
174AnonymousAug 21, 2026 20:15
Re: #157 They're not cutting spending, so it's not austerity. What's actually crazy is that the budget grows every single year no matter whether it's a boom or a bust.
158AnonymousAug 21, 2026 20:13
In the end, this is exactly what Takahashi Yoichi and others have been saying — the Ministry of Finance only ever talks about debt while treating receivables/claims as if they were basically zero. Even for a company's balance sheet, what matters is how much debt there is versus total assets including receivables — but the MOF stays silent on assets and claims. They just keep hammering the narrative into the public that debt is so huge that tax hikes are necessary.
181AnonymousAug 21, 2026 20:17
Re: #158 Because the Ministry of Finance is too powerful, I'm betting there's no real rate hike coming — so I'm piling into weak-yen plays without hesitation.
192AnonymousAug 21, 2026 20:19
Re: #158 External assets: roughly ¥1,805 trillion. External liabilities: roughly ¥1,243 trillion. The ¥560 trillion difference already puts Japan below Germany, in 3rd place. These reserves should be kept intact for fiscal stability anyway — there's no upside to folding them into the general account.
204AnonymousAug 21, 2026 20:20
Re: #158 Takahashi Yoichi is only talking about the domestic picture. This thread is about forex. A balance sheet is a domestic concept, so Takahashi Yoichi just ignores the exchange-rate side of things.
216AnonymousAug 21, 2026 20:23
Is China's job crunch actually real? Factories and farms seem so short on workers that they're bringing in large numbers of Black African migrants — feels more like Chinese workers have just gotten picky about jobs.
233AnonymousAug 21, 2026 20:27
Re: #216 Every industry outside the state-designated ones is collapsing spectacularly, you know?
100 million Chinese factory workers are screaming: 15-hour shifts, or replaced by robots
https://youtu.be/RgHk8JWLOKI?si=0MsCkpvwwyCFFK3n
235AnonymousAug 21, 2026 20:28
Re: #216 Watch any travel YouTube footage and it's obvious right away. Even experts are picking up on the real situation from those videos. Since it's inconvenient footage for China, it'll probably get cracked down on eventually.
245AnonymousAug 21, 2026 20:30
Re: #216 It's true. In Tokyo's Bunkyo Ward, some elementary schools are now 20-30% ethnic Chinese. Plenty of Chinese families want their kids educated in Japan and employed in Japan. Back in China, even university grads end up working convenience stores or Uber Eats. Competition for big companies or civil service jobs is like thousands-to-one.
228AnonymousAug 21, 2026 20:26
Then just hike rates already lolololol Why can't they, huh? lol
247AnonymousAug 21, 2026 20:31
Re: #228 Look at the Heisei bubble and it's obvious why.
Background and Key Points
Japan has held the title of world’s largest net external creditor for over three decades, a position built on trade surpluses and, more recently, on income from an enormous stock of overseas holdings — the very net foreign assets Deutsche Bank cites. The thread’s own numbers, ¥1,805 trillion in external assets against ¥1,243 trillion in liabilities, describe Japan’s net international investment position (NIIP), a balance-of-payments concept tracking cross-border ownership. That is a distinct thing from the Ministry of Finance’s oft-cited gross government debt figure (JGBs outstanding, over 260% of GDP), which is a domestic fiscal liability mostly owed to Japanese institutions and the BOJ itself. Conflating the two — treating a national creditor position as if it could simply retire government bonds — is the misunderstanding several posters flagged when noting Takahashi Yoichi’s balance-sheet argument addresses domestic accounting, not the yen’s exchange rate.
The thread didn’t split over whether Japan has money; it split over motive and cost. Some read the weak yen and near-zero rates as deliberate industrial policy to keep exporters competitive against Germany’s manufacturers; others countered that Japan is now running trade deficits anyway, undercutting that rationale. A second fault line was who bears the risk of normalization — posters were unsympathetic toward variable-rate mortgage holders, framing a rate hike’s fallout as self-inflicted.
What nobody raised: rate hikes also raise the government’s own interest bill on that ¥1,000-trillion-plus JGB stock, a domestic fiscal cost entirely separate from the foreign-asset cushion being discussed.
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