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The chart above summarises Japan's financial balance sheet since 1980. A wall of red below the line, and blue above. Additionally, a persistent 'slice' of green below the line, indicating that Japan – the country, not the government – is very much a creditor (ie saver) nation. This red wall has been the norm for Japan, except for a brief period in the late 1980s and early 1990s when Japan had one of the world's most spectacular financial bubbles and busts. Japan took a decade to get over that crisis, and in the process forged a new macroeconomics; a macroeconomics created 'on the fly' so to speak, and which substantially demonstrates the validity of modern monetary theory. (For Japan's story of recovery, restoration and education, refer The Holy Grail of Macroeconomics: Lessons from Japan's Great Recession 2009 by Richard Koo.) The red wall shown in the chart is Japan's monetary base. It functions in the monetary world much as gold was meant to function during the gold standard era. Japan is not starved of money, and Japan has inflation no higher than the rest of the most-economically-developed world. Its equivalent of New Zealand's Official Cash Rate is 0.5%; the highest it's been for over ten years. (Contrast the OCR, which has come down from 5.5% to 3.0% in the last year-and-a-bit.) Further Japan's ratio of people over 60 to people under 60 reached 'crisis levels' at least a decade ago, yet Japan is still able to provide for – to afford – an older generation of healthy and happy retired people. The wall of 'red gold' in the chart features in Japan's national accounts as government debt. On the other side of Japan's national balance sheet, that red wall becomes a blue wall; a blue wall which features as the principal store of private wealth in Japan. The red wall and the blue wall are the same wall; it's simply 'painted' blue on one side and red on the other. During 25 years of construction, that red wall grew to 250 percent of Japan's GDP in 2020; to the equivalent of five trillion United States dollars. Since 2020, Japan's government has continued to run substantial though diminishing deficits, adding to its red golden wall of public debt; though the growth in the wall since 2020 has been slower than the growth of Japan's economy, meaning that Japan's government debt has fallen to 237 percent of GDP. (Among developed economies, after Japan the next biggest red walls are those of Singapore, Greece, Italy, and the United States. The Singaporean government effectively borrows internationally at very low interest rates (and in its own currency), thereby providing much of the funding for its much-vaunted sovereign wealth fund; and the United States' wall of red gold is the de facto base of the global monetary system. The currencies of Singapore and Japan will be best placed to take over from the $US as world reserve currencies – because of, not despite, the level of public debt in those currencies – should any financial catastrophe befall the USA.) Japan's red gold is safer than yellow gold, because it is fully backed by the Japanese taxpayer; all governments have the sovereign right to claim taxes from their citizens. The purchasing power of Japan's store of red gold is not contingent on the variability of the global market for yellow gold. The Yellow-Gold Bug Meanwhile, the world has become enamoured with yellow gold; you only have to look at the triffid-like growth of yellow bling in the White House in Washington DC. Likely the unsanctioned new ballroom replacing the East Wing of that presidential residence will soon enough house the world's biggest display of yellow gold. Red gold drives the global economy forward, though – given the levels of inequality outside of Japan – into some nasty elite consumption spaces. Yellow gold drives the narcissists' vanity, and is driven by the widespread fear of the middle classes – especially in the emerging and developing world – of global collapse. Also meanwhile – just this week – Sudan has experienced another genocidal setback; see Massacre in el-Fasher: What’s happening in Sudan right now? and ‘A true genocide’: RSF kills ‘at least 1,500 people’ in Sudan’s el-Fasher, both Al Jazeera 29 October 2025. Many people will be wondering what it's all about, though listening to mainstream news media won't help very much. (We know that Sudan will continue to play a role in the world's military armaments industry, both as a cynical testing ground for big boys' toys and as a significant future supplier of the rare earth minerals needed to make those toys.) However, this piece from Al Jazeera's Charles Stratford gets close to the real truth: Sudan’s natural wealth becomes the new front line of its ongoing war, YouTube, 29 October 2025. Sudan has produced truly massive amounts of gold bullion since the start of its 'civil' war; yellow gold which has been smuggled out by the genocidal 'Rapid Support Forces' under the patronage and tutelage of its megarich backers. ‘A true genocide’: RSF kills ‘at least 1,500 people’ in Sudan’s el-Fasher states: "Saudi Arabia, Egypt, Qatar, Türkiye and Jordan have condemned the abuses committed by the RSF in Sudan". Significantly missing from that list – and from the whole story that we do hear – is the UAE, the United Arab Emirates, reputed to be the RSF's principal patron. The Virtual-Gold Bug Crypto-currencies seek to mimic gold, through an equally environmentally unsustainable process of 'mining'. They have succeeded, becoming a speculative commodity par excellence. Indeed the First Family, in addition to its very overt and rather sickening displays of yellow gold, is reputed to have made nearly a billion dollar's worth (Reuters) of acquisitions (and capital gains) of various cryptocurrency hoards. (And see this from the Australian ABC.) New Zealand's Opposition leader Chris Hipkins wants to make revenue from a capital gains tax on residential and commercial real estate (see this on Scoop). Yet, except for a brief bubble in 2021/22, there have been minimal capital gains on New Zealand land holdings since 2017; rather, capital losses have been the 2020s' norm. Yet there are massive capital gains being made, in yellow and especially in virtual gold. Also, there are increasing claims that world sharemarkets are at unsustainable levels; see Awash with cash. How the investment world is feeding upon itself, ABC. Indeed, the 'investor'-class is busier than ever, though not in real estate. Further, there is no clear reason why there should be a resumption of real estate bubbles anytime soon, given the abundance of alternatives. These booms in real-gold and unreal-gold pose a major financial instability risk. Red-gold, on the other hand, can be the epitome of stability. There is a form of 'gold' – invisible in the political chatter – which represents the backbone of the world's monetary system. That's red gold, and Japan is showing us the way, if we could only look and see. (There's an ever-present fear that Japan will sooner or later snatch monetary defeat from the jaws of victory. And see this about "embarrassing antics in Tokyo": I hope that Japan's new prime minister Sanae Takaichi will not push too far her Mrs Thatcher reputation.) Meanwhile, parts of the financial world are spinning out into some Lulu La La land, in the gargantuanly wasteful – and at times genocidal – pursuit of gold and virtual gold. Keith Rankin (keith at rankin dot nz), trained as an economic historian, is a retired lecturer in Economics and Statistics. He lives in Auckland, New Zealand. © Scoop Media
