The U.S. reduced its debt-to-GDP ratio from 113% to 23% between 1945 and 1974. Growth gets the credit. Inflation and financial repression did the actual work — accounting for 34 of the 90 percentage points. America has done this before. The window to do it again may be open right now.
The trade deficit is real. The frustration with wealth flowing out of America is legitimate. But tariffs collect 90–96% of their cost from American consumers, generate $19.5 billion in government revenue against roughly $160 billion in consumer burden, and do nothing to stop the $260 billion that flows overseas each year in interest payments.
Mortgage rates nearly tripled from 2.65% to 7.79%. Credit card APRs hit 25.2%. Americans paid $160 billion in credit card interest in 2024, up 52% in two years. The textbook inflation cure has imposed real costs on real households — while sending a share of those costs overseas.
In fiscal year 2024, U.S. interest payments surpassed defense spending for the first time since 1940. Of the $881 billion paid in interest, roughly $260 billion flowed to foreign creditors. This is not a policy failure — it is a structural flaw built into how reserve currency nations use monetary tightening.
Japan's $550 billion U.S. investment pledge is routinely framed as a capitulation to tariff pressure. The numbers tell a different story: the world's largest foreign holder of U.S. Treasuries is redirecting a decade of interest receipts back into the American economy — on its own terms.
Morito (TSE:9837) holds the world's top position in metal hooks — a business most investors have never heard of. Behind that stable B2B foundation, the company is quietly acquiring distressed apparel suppliers and EC brands, positioning itself as the consolidator of Japan's fragmented garment accessories industry.
Terra Drone (TSE:278A) has deployed the Terra A1 interceptor drone in Ukraine — a $2,500 unit designed to take down Shahed-type drones that have been draining NATO missile stockpiles costing up to $4 million per shot. With Gulf states already eyeing the technology and NATO facing a systemic cost problem, this is arguably the most timely defense story in Japan right now.
SUBARU (TSE:7270) trades at 0.67x book and yields 4.5% — priced as a struggling automaker. But inside the company is a lineage stretching back to Nakajima Aircraft, Japan's largest WWII aircraft manufacturer, now delivering experimental loyal wingman UAVs to Japan's defense agency as the country's defense budget hits its highest level since 1945.
Hioki E.E. (TSE:6866), Japan's leading maker of electrical measuring instruments, briefly yielded more than 10-year JGBs during this year's tariff-driven selloff — a rare entry signal for a debt-free, structurally advantaged manufacturer riding the EV and data center supercycle.
OBIC Business Consultants (TSE:4733) earns a 45.9% operating margin not by out-featuring rivals, but by embedding its software into the accountant and tax advisor ecosystem that actually controls Japan's SME purchasing decisions.