Perfect Days
While in Tokyo, a friend recommended I watch Perfect Days, watching it there added a special resonance. Each day from the high-rise hotel, I watched as the city awakened, transited to bright daytime, until the lights lightened up the night skyline. The story of the film happened in the vibrant Tokyo. Hirayama’s job is cleaning public toilets. It is a poetic story develops with repetition — an exquisite monotony in daily routines: waking, washing up, watering plants, driving to work, cleaning toilets, gazing at sunlights passing through tree leaves, bathing at public bathhouse, dinner at a modest eatery, reading, drifting to sleep. And repeats.
What’s mesmerizing is the way these mundane tasks are filled with grace and Zen beauty, as though Hirayama’s life is a poem in motion. The spices of this mundane life are the unexpectedness — an idle young worker, a sudden kiss, a niece who’s run away, and the imminent death of a related person. These moments seem random yet inevitable. No life can move forward, always repeating yesterday. Entropy is part of nature.
The Beauty of Endurance
Western film critics praised this film greatly, but I found no mention of what stood out to me: the quiet endurance. Perhaps, growing up in an oriental culture, I can naturally feel it. Hirayama finds focus and tranquility in the monotonous work, embracing each detail with intention and care, even finding happiness in it. This acceptance and adapting to life circumstances is a virtue in oriental culture — finding pleasure within limitations, even transforming dissatisfaction into satisfaction.
Abundance and Distance
Apart from the Zen beauty, in Japan I encountered vibrancy — an overflowing of people and goods. Shops that never end and eating delights that always bring something new. Things are busy but ordered, people are courteous but distant. One side is the vibrancy and crowdedness, another side is the respectful distance between each other. I may brush past you but I will never meet your eyes.
The sense of personal distance can be compensated by the abundance of material comforts. A steaming bowl of rich, savory ramen for just 5 euros. 24-hour convenience stores situated every hundred meters, whose existence makes life comfortable without planning. In Kichijoji, Tokyo’s top-rated neighborhood, home rental ads are so dense to look at. Every listing is a short walk to the station, with sunlit one-room apartments for only 400 to 500 euros monthly — a price that isn’t enough for a bed in Milano, where I live mostly. I flew Japan’s budget airline twice. Both turned out to be business class experience. In a one-hour flight, I got leather seats with my own TV. The flight attendant even opened the tray for me for coffee service. Experiences like this make me wonder: has Japan reached Valhalla ahead of us all?
Saving Is A Virtue
How has Japan managed to maintain such an orderly society, an abundance of material goods, and remarkably low prices?
Japan, like many nations, has implemented policies where central banks inject money into the economy to encourage spending and investment, for over two decades. Yet, unlike the soaring prices and widespread discontent seen elsewhere, Japan has experienced little to no inflation — sometimes even deflation — all while people are undisturbed and carry life forward. Despite aggressive monetary easing, the Japanese keep diligently saving money, providing for the future with steadfast discipline. A Japanese friend once told me that Japanese culture emphasizes self-reliance, avoiding dependence or burdening others. This mindset extends to their long-term planning, aversion to debt, and the popularity of minimalist lifestyles.
Japanese culture inherently values stability — prioritizing steadiness over speed. Saving is a virtue, a noble act of forgoing immediate pleasures to accumulate wealth for the future. It is this delayed gratification that enables the accumulation of capital, which in turn drives productivity and innovation. The Japanese save rather than over spend or speculate, living life with restraint and endurance. While the government is frustrated not achieving a 2% inflation target, the collective discipline of the Japanese shields them from the turbulence of inflated prices. With their preference in saving, In one way or another, they’ve also become the largest holders of their national debt (source).
Inflation is not a prerequisite for growth
Mainstream economics has instilled in us the belief that inflation is essential for growth. Without it, deflation will lead to economic stagnation, soaring unemployment, and social collapse. Yet, look at Japan. Over the past 20 years, Japan has experienced little to no inflation and even periods of deflation, yet its GDP has continued to grow, slight but growing. And Japan’s unemployment rate remains lower than in the EU. While Japan’s unique societal structure plays a role, these macroeconomic figures and real life evidence proved that the absence of inflation does not inevitably lead to apocalypse. While moderate inflation may reflect healthy demand-side dynamics, the true drivers of growth lie in the effective accumulation and allocation of capital and resources for production and societal progress.
We’ve been used to relying on monetary expansion to stimulate the economy. It becomes radical to think without the inflated money how we can invest to grow. In a hard money market, the extra money to invest comes from capital accumulation. Simply put, capital accumulation is the savings left after consumption. As a consumer, when I’m cautious about spending and able to save some money, I can deposit it in a bank, the bank can then lend to businesses, and I will receive interest in return. As a business, the profits after costs and taxes which can be reinvested for growth. Businesses can also get loans from banks to expand their operations.
In a market driven by monetary inflation, i.e “money created out of thin air”, the capital creation bypasses capital accumulation. It artificially injects not-backed money into the market. Money units increase, but resources available for production remain the same. The resources are things like land, labor, raw materials — everything that are used for production activities. In an artificially inflated monetary market, there is more money to compete for the same amount of resources, inevitably bidding up the prices.
In this context, those who have early access to cheap credit will be the beneficial ones, because they have the credit money to buy resources before its price goes up. While the ones who are farther in queue for getting credit money or not at all will inevitably suffer. Currency devaluation is essentially the loss of purchasing power. In a situation like this, you are better off shorting the currency and getting debts, rather than saving it.
A quick explanation of what I mean.
Imagine that you make a debt of 1000 eur today which can buy 250 pounds of copper, widely used for industrial production, at the price of $4. In a year its price rises to $4.4, the 250 pounds of copper now worths $1100. If the interest rate is 5%, you make a profit borrowing money to buy the copper now and sell them later, without using them for real production. This is the math:
Your interest payment = 1000*5%= 50
Your profit from selling copper= (4.4–4)*250 = 100
Your gains = 100–50 = 50
This is the logic of using the borrowed currency to buy something that increases in price at a rate higher than the interest rate. There are many measures in finance to play this game. What I want to say is, in an inflationary society, people are inclined to play the financial game to earn money rather than down-to-earthly doing real business.
In a market where the credits are backed by hard money, the total money amount is not artificially increased. Investment capital comes from people who forgo instant consumption and choose to put savings to work — investing in production activities and getting interest payment. People save under the condition that the purchasing power of their saved money does not decrease. When the savings have the same purchasing power, or even better, more purchasing power, people are more inclined to save than spend it right away. More savings means more capital to invest. If the investments turn into production efficiency improvement, then we will have more goods and services — abundance of material comforts without depreciating the value of money.
Japanese Efficiency
Despite two decades of monetary easing, Japan has not seen significant inflation. This can be attributed not only to the Japanese habit of saving but also to their efficient use of capital. Observing Japan’s markets, with their overwhelming variety of products, I wonder if their supply has reached a point of extreme abundance — or even surplus.
I easily get lost in pastries. Although Japan is part of East Asia, its pastries offer a dazzling fusion of styles, with shelves consistently well-stocked. It’s rare to find anything sold out. Contrast this with Italy, a country renowned for the food, that cherishes limited varieties of desserts and keep their supply somehow scarce. Visit an Italian pasticceria in the afternoon, and you’ll likely find many exquisites sold out.
Suppose pastries in both countries received the same credits to expand operations. Japan’s efficiency in using capital and production lead to increased supply and stable prices. Meanwhile, in Italy, inefficiencies or unwillingness to grow would limit supply growth, keeping production constrained and consequently prices high. This isn’t a critique of Italian pastries — it reflects a systemic issue rather than the efforts of individual businesses.
You might argue that Japan’s aging population suppresses demand, explaining its lack of inflation. But Italy and Japan make a fair comparison as both face similar demographic challenges. Italy has nearly 24% of its population aged 65 or older compared to Japan’s 30%. While weak demand in aging societies does help contain inflation, what sets Italy and Japan apart is not demographic, but a series of structural differences. My observations say that Japanese workers are more self-motivated, whereas Italians are more laid back — how many times have I seen Italian shopkeepers refuse to serve customers near closing time, even when demand is high? Better less work than more money, it seems. But I’m not criticizing Italian workers either. When you produce more, but tax burden offsets your profits, workers are not incentivized to work better and faster.
Can the Japan phenomenon go on perpetually?
Print money -> Improve production efficiency -> Abundant supply -> People save money -> no inflation -> print more money
Cost-pull Inflation
Can this model illuminate our path to Valhalla? Sadly, the natural laws of cause and effect ensure that this cycle cannot last forever. Japan’s culture of frugality and efficiency are not able to perpetually offset the inflationary consequences caused by continuous money printing. As the supply of money increases, its value declines. The Yen has been depreciating for a decade and has now reached a critical point. This tipping point is marked by the rising cost of imported materials and goods due to the weaker Yen, leading to cost-push inflation in Japan. In other words, prices in Japan are starting to climb. When inflation becomes tangible to real life, will the Japanese continue to save, or will they shift to early consumption and riskier investments?
Debt
Another prominent problem brought by the inflated monetary system is ever increasing debt. The process of creating excess money is through debt. Japan has the highest Debt-to-GDP ratio in the world. Most of its government bonds are held domestically, so the problem is relatively “under control”. It once again relies on the Japanese’s collective power to maintain the economic stability. In plain words, as long as Japanese don’t collectively ask for repayment, it is fine. The debt situation puts every participant in the Prisoner’s Dilemma, where the rational choice for individual participants (domestic debt holders) aligns with sustaining the system, even if the system itself might have long-term vulnerabilities. The participants, i.e Japanese financial institutions and individual households have a mutual dependence relationship with the Bank of Japan. This creates a mutually reinforcing cycle where the government can continue to issue debt, and domestic institutions are better off holding it than disrupting the cycle. They are aware that their own survival is tied to the system’s survival. The risk of a “run” on JGBs (Japanese Government Bonds) would lead to economic chaos, inflation, or even default.
Carry Trade
The continuous Yen depreciation and the near-zero interest rates in Japan have fueled the arbitrage game — carry trade. The carry trade involves borrowing Yen at near-zero cost and investing it in assets denominated in other currencies. For example, in the U.S. dollar, which offers a roughly 5% interest rate. Not only does this yield a 5% rate gap, it also profits from the Yen’s depreciation against the dollar.
The assets targeted by carry trade range from stable ones, like U.S. dollars and treasury bonds, to riskier assets like stocks, real estate, and crypto — anything that offers higher returns. Many of these investments are leveraged, amplifying both profits and risks. The total volume of the carry trade is now immeasurable, the certainty is that it has become a key component of the international financial system. Should the carry trade unwind, meaning people start undoing it, the global markets will be shaken badly. We saw a glimpse of this in August, when the Bank of Japan signaled an interest rate hike to reverse the depreciation of Yen. The mere announcement sent global capital markets into a straight downfall within a single day. In response to the market’s overreaction, the Bank of Japan quickly softened its stance that the rate hike would be delayed. Japanese don’t like violent reactions.
These three are the Elephant in the Room. The systematic deficit cannot be perpetually burdened and offset by people’s collective spirit and actions alone. Entropies are unavoidable. Beneath the surface of stability is walking on eggshells.
Perfect Days
Can we embrace patience and down-to-earthness? Can our praise for the film Perfect Days transform in real life?
In economic terms, taking time and sweat for capital accumulation, for keeping the hard money — money created through labor and savings, not out of thin air.
Economic growth, at its core, reflects improvements in real productivity and innovation — not the speculative bubbles.
People who are pragmatic, efficient, and disciplined are naturally suited for a society built on hard money. These are the values that hard money fosters and rewards.
