Excess liquidity

Japanese: 過剰流動性 - かじょうりゅうどうせい

A state in which the liquidity of cash, deposits, etc. exceeds the appropriate level required for normal economic activity. It is one of the factors that causes prices to rise because it makes it easier for expenditures on goods or services to increase. Under the classical gold standard system, adjustments to the balance of payments were the responsibility of both surplus and deficit countries, but under the International Monetary Fund (IMF) system after World War II, the United States, the key currency country, was able to make external payments in its own currency, so such a brake did not work and the result was that the oversupply of liquidity was promoted in the long term. Excess liquidity occurred twice in Japan, from 1971 to 1973 and from 1985 to 1988. In the former case, a large surplus in the balance of payments and monetary easing were combined, and companies' surplus funds were used to purchase land and stocks, which led to hyperinflation. In the latter case, international cooperation to correct the high dollar and domestic policies to deal with the high yen recession led to the official discount rate being lowered to the lowest in history, resulting in ultra-loose monetary policy and a booming stock market, but prices remained stable.

Source: Encyclopaedia Britannica Concise Encyclopedia About Encyclopaedia Britannica Concise Encyclopedia Information

Japanese:

現金や預金などの流動性が正常な経済活動に必要な適正水準を上回った状態をいう。財もしくはサービスに対する支出が増加しやすくなるため物価の上昇要因の一つとなる。古典的な金本位制度のもとでは国際収支の調整が黒字国と赤字国双方の責任においてなされるように仕組まれていたのに対し，第2次世界大戦後の国際通貨基金 IMF体制では，基軸通貨国であるアメリカは自国通貨で対外決済をなしえたため，そのような歯止めが働かず，流動性の過剰供給を長期的に助長する結果となった。日本においては 1971～73年と 85～88年の2回，過剰流動性が発生した。前者の場合には，国際収支の大幅黒字や金融緩和などが重なり，企業の余裕資金が土地や株式の購入に向い狂乱物価を招く要因となった。後者の場合には，ドル高是正を進める国際協調と円高不況への国内政策から公定歩合が史上最低に引下げられたため金融超緩和となり株式市場が活況を呈したが，物価は安定していた。

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