Japan’s development after the Second World War. 1. The real situation after World War After the World War II ended, Japan was one of the defeated countries. She was left with a lot of damages, especially the two cities Hiroshima and Nagasaki which suffered serious atomic bombing. Severe food shortages were common; the economy was almost totally paralyzed from wartime destruction, rampant black marketeering and runaway inflation; few Japanese had any money but there really wasn’t anything to buy anyway.
Besides, as soldiers and civilians returned home from war fronts and former colonies, unemployment became a serious problem. To cope with output collapse and unemployment, the Japanese government printed money to finance subsidies while trying to control prices. Actually, this strategy could not be successful in long term. Monetization of fiscal deficits created triple-digit inflation from 1946 to 1949.
Black market inflation was even higher, especially in the early period.This was the highest inflation that Japan ever experienced, before or after. In the picture, the red light shows the stock of Bank of Japan notes in circulation; the blue line shows the Tokyo retail price index (the average of 1934-36 =1. 0). This picture can effectively illustrates the inflation in Japan after the War.
In the following table can be found the percentages of lost physical assets in Japan between 1935 and 1945 Type of capita
