According to the newspaper of November the 4th Nikkei, the president of FRB raised the short term interest rate by 0.75 consecutively 4 times. Now the short term interest rate is 4%.

What does this mean? Japanese short term interest rate is now 0%. Money flows from low – interest rate country to high- interest country . Japanese yens are sold and Us dollars are bought. The yen is getting weaker and the dollar is getting stronger.

Last year 1 dollar was about 105 yen and now 1 dollar is about 150 yen. The worth of yen decreased by about over 30%.

Why does the Japanese government raise the Japanese short term interest rate to stop depreciation of the yen? The answer is they cant do it. Why?

This is the world ranking 2002 for the outstanding balance of government bonds.

N. 1 Japan:262.49% compared with GDP

N2. Venezuela:240.52%

N3. Greece:199.40%

N.7 Italy: 150.86%

N.40 India:84.16

N.69 Morocco: 68.94

N.98 Servia : 57.85

Japans onumber one position is outstanding!

According to the Japanese financial ministry, the outstanding balance of government bonds would reach over 1000 trillion yen at the end of this year.

Can Japanese government pay back this huge amount of money? What do you think?

Is there a solution? Absolutly not?

But there is one solution.

Inflation!!!

While the inflation proceeds, the percentage of the debts in GDP dreases.

proceeding.