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Kasz216 on 30 April 2012
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makingmusic476 said:
badgenome said:
makingmusic476 said:

Japan does have the highest debt-to-GDP ratio in the first world at 208%.  But guess what, it doesn't matter.  They're showing no signs of default, and they've been dealing with deflation more than inflation over the past several years.  Japan is the perfect example of why total public debt is a non-issue for a nation that prints its own currency.  The primary thing that matters is how much total currency (total spending power) effects inflation/deflation.

 

I feel like you probably haven't studied Japan's economic situation very well... as there are 2 points worth noting.

1) Japan's economy has been stagnant... well forever.  They aren't exactly a country to be pining over economically.

2) Japan's debt is like 95% owned by Japanese people... a large percentage of that being owed by thrifty "play it safe" private citizens and pension funds.

Japan isn't facing signs of default because it's borrowing interest rates are low.  It's rates are low because it's debt is still serviced by local citizens with extra cash buying bonds for a rainy day... and well pension funds. 

Japan actually really wants to get it's debt to GDP ratio down, because it fears the day it's invsetors have had their fill, because then Japan will have to go to internatioanl investors who will pretty much eat them alive interest rate wise... and then they'll be at the point of no return. (if they aren't already.)


Japan's had some signficant advantages that have allowed it to spend recklessly, though most people seem to think the gravy train is coming to an end with the passing of the current elderly generation as they begin to spend their savings.

http://articles.businessinsider.com/2011-12-27/markets/30560295_1_debt-crisis-yen-euro-zone

http://www.4-traders.com/news/Japan-Not-Immune-To-Debt-Crisis-BOJ-Kamezaki-Says--14048848/