ABSTRACT
After the war defeat, Japan was occupied by the allied forces. In reality, the United States was the only country that ruled Japan from 1945 to 1952. The occupying force was called the Supreme Commander of the Allied Powers or, more commonly, the General Headquarters. Economic planning was continued even after the war ended and up until 1949. In a crisis situation, previously for executing war and now for resuscitating the economy from severe shortage, economic control had been used to complement paralyzed private sector activity. Immediately after the war defeat, two young officials, Okita Saburo and Goto Yonosuke, organized a study group to discuss ways to rebuild the Japanese economy from the war damage. Inflation peaked in 1946 and persisted in triple digits until 1949. The cause was clear: monetization of the fiscal deficit. The Priority Production System refers to a policy of concentrating scarce resources in a few strategically important sectors to jump-start an economy.
