Japan Depression and Reflation, 1929-1936

The Japanese deleveraging during the Great Depression was similar to the experience of the US, though Japan printed money earlier than the US did. The ugly deflationary phase, labeled (1), began three months after the Wall Street Crash of 1929 when Japan returned to the gold standard at a high pre-WWI level. That arose because the political party gaining power believed the debt excesses of the past required fiscal and monetary restraint to fix the debt problems. The expensive currency and the deteriorating global economy caused a collapse in real growth, severe deflation, a decline in exports, a crash in stock prices, and a tightening of liquidity as Japan’s gold reserves fell. Collapsing incomes resulted in debt increasing from nearly 75% of GDP in 1929 to nearly 110% of GDP by the end of 1931.

大萧条期间的日本去杠杆化与美国的经验相似，尽管日本早于美国印钞。标记为（1）的丑化通货紧缩阶段在1929年华尔街崩溃后三个月开始，当时日本在第一次世界大战前水平恢复了黄金标准。这是因为政党获得权力认为过去的债务过剩需要财政和货币限制来解决债务问题。日益恶化的货币和全球经济恶化导致实际增长崩溃，严重通货紧缩，出口下滑，股价暴跌，以及日本黄金储备下滑等紧缩流动性。收入减少导致债务从1929年的近75％上升到1931年年底的近110％。

Then, in response to this pain, a new government came into power in late 1931 and broke the link to gold as one of its first moves. Over the course of a year, the yen devalued about 60% against the dollar and gold. At the same time, the government increased expenditures by about 3% of GDP, and the Bank of Japan kept rates low and monetized a modest amount of government debt. This stimulus supported a recovery in exports, price levels and incomes over the period from 1932-1936, labeled (2) in the charts below.

然后，为了应对这一痛苦，一个新政府在1931年底投入运作，打破了黄金的联系它的第一个动作之一。一年来，日元兑美元和黄金贬值了约60％。与此同时，政府将支出增加约占国内生产总值的3％，而日本央行则将利率维持在较低水平，并通过适度的政府债务获利。这种刺激支持了在1932 - 1936年期间的出口，价格水平和收入的恢复，标有（2）在下面的图表中。

The charts below show debt levels against nominal GDP growth year over year (left chart) and against the total return of stocks (right chart). Debt levels as % of GDP are on the right axis of each chart. The line shows where the government delinked the currency from gold. The devaluation and low short rates brought nominal growth above nominal interest, which led the total debt to fall by 10% of GDP.

下面的图表显示了债务水平与去年的名义GDP增长（左图）和股票总回报（右图）。债务水平占GDP的百分比在每个图表的右侧。这一行显示了政府将货币从黄金脱钩的地方。贬值和低利率使名义增长高于名义利率，导致总债务下降了GDP的10％。

The table below shows the attribution of the changes in some detail. As shown, during the ugly deflationary depression phrase from 1929-1931, incomes collapsed as nominal GDP fell 9% per year, mostly from deflation, though real growth fell as well. As a result, nominal growth was 14% below nominal rates, and debt to GDP rose at a rate of 11% per year. After the devaluation, nominal growth recovered at a rate of 7% in this period, a combination of 6% real growth and moderate 1-2% inflation eroding domestic debt burdens. Nearly half of the recovery in nominal GDP came from a rebound in exports that was supported by the more competitive yen and global recovery. This level of growth, combined with low interest rates, kept nominal GDP growing 2% above nominal rates. Accordingly, the private sector reduced its debt burdens, though the government kept borrowing through the period.

下表显示了更改的归属情况。如图所示，在1929 - 1931年的丑化通货紧缩抑郁短缺期间，收入下降，名义GDP每年下降9％，主要是通货紧缩，尽管实际增长也下降。因此，名义增长率低于名义利率14％，债务与国内生产总值每年上升11％。贬值后，名义增长率在这一时期以7％的速度回升，实际增长率为6％，中度1-2％的通货膨胀削弱了国内债务负担。近一半的名义GDP复苏来自出口反弹，受到日元升值和全球复苏的支撑。这个增长水平加上低利率，名义GDP比名义利率上涨了2％。因此，私营部门减轻了债务负担，尽管政府在此期间继续借贷。

As shown below, the biggest driver of the increase in debt relative to GDP in the ugly deleveraging phase was deflation. At the same time, a real growth contraction further pushed incomes downward and borrowing to pay for interest payments pushed debts higher. After the gold peg was broken in late 1931, debt to GDP gradually fell, as rising income from real growth and inflation offset increasing debt stocks.

如下图所示，在丑恶的去杠杆化阶段，增加债务相对于GDP的最大推动力就是通货紧缩。同时，实际增长收缩进一步推高收入下降，借款支付利息支付推高债务。黄金挂钩在1931年末被打破后，由于实际增长和通货膨胀的收入抵消了债务股上涨，债务与国内生产总值逐渐下降。

The private sector saw nearly all of their increase in debt/GDP from the ugly deleveraging stage reversed as inflation and real growth boosted incomes and offset interest burdens. Note that we do not have good information on whether defaults played a material role in the deleveraging.

私营部门几乎所有的债务/国内生产总值从丑恶的去杠杆化阶段的增长转变为通货膨胀和实际增长提振了收入和抵消了利益负担。请注意，我们没有关于违约在去杠杆化中扮演重要角色的良好信息。

During the reflation, the deleveraging in the private sector was partially offset by an expansion in government borrowing that funded extensive military spending programs.

在通货膨胀期间，私营部门的去杠杆化部分被政府借款的扩大部分所抵消，这是资助广泛的军费开支计划。

The chart below shows nominal GDP growth during the two phases of the deleveraging. In the ugly deleveraging phase, a deflation rate of 7.4% shrank incomes, even as the contraction in real growth was more modest. Following the devaluation, nominal GDP grew at an average rate of 7.0% per year due to strong real growth and more modest inflation.

下图显示了去杠杆化两个阶段的名义GDP增长。在丑恶的去杠杆化阶段，通货紧缩率为7.4％，使收入减少，即使实际增长的收缩更为温和。贬值后，由于实质增长强劲，通胀率较为适度，名义国内生产总值每年平均增长7.0％。

Nominal long rates were on average about 50bps lower following the devaluation. With the rebound in growth following the devaluation bringing nominal rates above nominal interest rates, Japan was able to gradually lower its debt burdens over the subsequent years.

贬值后，名义长期利率平均下跌约50个基点。随着贬值使名义利率高于名义利率的增长反弹，日本能够在随后的几年逐渐降低债务负担。