80 Years On: Japan's Fiscal Discipline as Wartime Lesson Eroding

   Tokyo, Aug. 23 (Jiji Press)--Japan's postwar fiscal discipline rules are at risk of becoming mere formalities as the amount of outstanding government bonds snowballs to cover swelling social security, defense and other costs.
   Since the start of the Second Sino-Japanese War in 1937, Japan had repeatedly issued wartime government bonds to fund military expenditures, and most of the bonds had been underwritten by the Bank of Japan. This, together with goods shortages, caused rapid inflation.
   Military spending accounted for most of Japan's wartime state budget. Over 70 pct of the budget for fiscal 1944 was funded by government debt, bringing the country's ratio of outstanding debt to gross national product to 204 pct.
   Inflation accelerated after the World War II ended in 1945, as daily necessities were sold at exorbitant prices on the black market. One study shows that wholesale prices soared roughly 70-fold in about four years through 1949.
   To tame the skyrocketing inflation, the government froze bank deposits and issued new yen banknotes in 1946.

(2025/08/23-09:30)