On one side of the coin, Mr. Koo explains: "National debt stands at 240% of GDP; falling birthrates and an aging population have led to a shrinking population. The industry is hollowing out. Adults are said to have no confidence and children no dreams. There is an uncertainty over the supply of electrical power, and even the balance of trade has fallen into deficit."
However, the other side of the coin show that "despite Japan’s economy is in terrible shape, and under ordinary circumstances no one would want to hold the currency of such a country, nobody questions the value of yen in Japan and it remains a favorite on the forex market" Mr. Koo notes.
Mr. Koo concludes: "Japanese politics, bureaucracy, and industry may be on shaky foundations, but the Bank has done nothing in the last 40 years (ie, since the galloping inflation that accompanied the first oil shock) to impair the public’s confidence in the currency. That, in my view, is why the Japanese public continues to use the yen in spite of current conditions."