"Japan Has No Illusions That Rates Will Ever Rise": Is This What The Endgame Looks Like

By Viktor Shvets of Macquarie Capital

Japan Debt Mountain: does it matter?

For almost 25 years, Japan’s debt burden has been the poster child of what would happen to others if capital is misallocated, bubbles burst and then clearance and required reforms are either delayed or not implemented. Indeed, at more than 5x GDP, Japan is shouldering a greater debt burden than other key jurisdictions. It is also facing severe demographic challenges, while its labour market remains constrained and the state maintains a sway over the private sector. Since WW II, Japan has always been more statist than most other major economies, with Korea and China subsequently following Japan in developing a similar model. The conventional argument has been that Japan’s debt would ultimately crush its economy and severely crimp public sector spending, while the private sector would be unable to adjust, and hence lose competitiveness. Eventually, the private sector might lose confidence and stop repatriating cash and the country would then suffer from massive capital outflows.

Not only were these dire projections wrong for decades, but as the rest of the world joined Japan in secular stagnation and unorthodox monetary policies, it is no longer perceived as an exception but rather as a pointer to the future. Japan’s success in navigating disruption, deep financialization and permanent overcapacity is now studied and imitated. While there are local nuances, Japan shows the way forward. QEs associated with the Fed were invented in Japan more than a decade earlier. The same applies to fiscal stimuli, collapsing velocity of money and strong disinflation. Whatever are the policies, Japan has already tried them. Japan is far more advanced in fully monetizing its debt by utilizing multiple asset classes, from bonds to equities. It also accepts that normalization is not feasible, and unlike the Fed, it has no illusions that rates could ever rise or that immigration and deep labour market reforms are either possible or desirable. When the US is focusing on returning outdated factories, Japan is building for the future, when labour inputs would no longer be the key.

Although Japan’s cultural and labour market constraints reduce its ability to fully commercialize inventions, it has not prevented the country from maintaining its rating as the most complex economy in the world, while keeping leadership in patents and yielding above-average labour and multi-factor productivity. Japan’s stagnant domestic economy is overshadowed by its competitive externally-facing sectors that are becoming complementary rather than directly competing against China. Even financial repression that Japan practised for decades is becoming a global norm, nowhere more so than in Eurozone. We expect BoJ to quietly abandon its inflation targets while maintaining flexibility in asset acquisitions to keep cost of finance close to zero. This would be a recipe for continuing twilight for years to come, with debt burden neither derailing the economy nor financial markets, even as BoJ assets rise beyond 100% of GDP (~45%+ of JGBs).

Assuming that Abenomics is dead and that there is neither desire nor capacity to lift inflationary outcomes, then it would be positive for ¥. Higher ¥ would erode Topix’s ROEs (corporate governance is unlikely to offset lower returns) but it should also highlight the strength of its globally competitive and thematic plays. In our global portfolios we currently have Yaskawa, Fanuc, Mitsubishi Electric, Nintendo, Nidec, Murata, Keyence, Tokyo Electron and Yamaha. Any further ¥ appreciation should also reduce pressure on Korea and China while extending EM reflationary cycle and its investment ‘goldilocks’.

Why is Debt Mountain not crushing Japan?

“We know that advanced economies with stable governments that borrow in their own currency are capable of running up very high levels of debt without crisis.”

       — Paul Krugman

This quote by Paul Krugman neatly encapsulates the main reasons as to why Japan has not been crushed by ever-rising public sector debt. Japan is state with a high degree of credibility and it borrows almost exclusively in its own currency, with debt owned predominantly by its own citizens. Financial crisis is all about perception rather than reality.

However, one issue that Krugman has not emphasized but which is increasingly important is the ability of central banks (CBs) to support and distort the governments’ cost of funds. Given that the CBs are not economic agents, their bids and bond acquisitions are not designed to discover appropriate pricing levels, but rather to support governments’ objectives (usually to simulate economies by lowering cost of capital). In the past, such aggressive interventionist policies were unique and infrequent events (accompanying wars or other major dislocations), but over the last two decades, they have become an increasingly acceptable tool in the governments’ armoury. Japan has been leading from the front for more than two decades, followed by the rest of the world after GFC.

Thus, there are essentially four reasons as to why most bets against Japan failed on a consistent basis:

  1. Japan is a homogeneous society, with relatively egalitarian income and wealth distribution, and hence, pain has been shared fairly evenly, thus preserving economic and societal coherence.
  2. Japan maintained credibility by selectively boosting and adjusting national commitments to elderly and medical care while irregularly pushing up consumption tax. Although some of these measures were counter-productive on a longer-term basis, they have placated global markets.
  3. Japan borrows in its own currency and the bulk of JGB holders are Japanese residents (over 88%). This massively reduces the degree of external vulnerability.
  4. BoJ has been exceptionally aggressive in driving money supply up and cost of capital down. This aggressiveness coincided with the growing global disinflationary trend, which eroded bond yields and significantly reduced the proportion of the government spending that is spent financing interest commitments.

As can be seen below, despite massive rise in the governments’ gross and net debt burden, the proportion of state spending that is dedicated to servicing interest has declined significantly over the last decade and is now below 5% of total expenditure.

The extent to which BoJ has become the key to Japan’s perceived longer-term sustainability can be seen from the explosion of its balance sheet and how its asset base increased at a pace much faster than state requirements. BoJ has by now accumulated almost 45% of the entire JGB’s market (vs 10% only five years ago), and its balance sheet is rapidly closing on 100% of the country’s GDP (vs 37% G4 average). Also, BoJ is not just buying state paper but it has become actively involved in the corporate and ETF (equities) markets. BoJ already controls 75% of all of Japanese ETFs (although only 4% of overall equities) and as much as 15% of the Japanese corporate bonds.

The public sector over the last two decades did not really have an option but to become far more aggressive in transferring excess debt from private sector and onto government books. While this private sector de-leveraging was largely complete by 2005, the combination of GFC as well as subsequent earthquake (2011), continued to suppress private sector desire for more aggressive spending. Private sector sectoral savings even today remain at ~6% of GDP, whilst velocity of money is at best only stabilizing.

If public sector did not step in, the country would have undergone a massive and uncontrolled deflationary bust. Instead, Japan had simply kept its nominal demand intact, despite the private sector sustaining losses (real estate and equities) of equivalent to 100% of Japan’s GDP in ‘90/91 (or ~US$5 trillion). For perspective, consider that the GFC caused initial contraction of only around 1/3 of the US GDP. In other words, bursting of an asset bubble in the ‘90s Japan was at least three times more powerful than the GFC’s impact.

The net outcome of aggressive public sector policies offsetting sluggish and deleveraging private sectors was a ‘tranquil autumn’ of a civilized relative decline.

The Japanese economy is today a fraction of its importance several decades ago. Whereas in the late ‘80s, Japan was responsible for ~10% of global merchandise exports, its share is now below 3.8%. In the same period, Germany’s share eased from 10%-11% in ‘80s to around 8%, while the US’s share is down from 12% to ~9% and France’s share is down from 5% in the ‘80s to ~3%. The same occurred to Japan’s share of global GDP (whether on a nominal or PPP basis). The growth rates have compressed massively, but the country managed to maintain its overall aggregate demand and per capita income intact.

Japan emerged from this traumatic experience, as land of no inflation (indeed mild deflation for most of the time) and steady demand funded by the fiscal stimulus and resilient private sector productivity.

It has become a land where the central bank has been effectively cancelling national debt by acquiring more securities than the government needed to fund its deficits. While this poses many questions (such as ability of life and insurance companies to price their products, in the absence of a viable JGB market), it also implies that Japan is shifting closer to embracing far more extreme (but necessary) policies, such as minimum income guarantees and abandoning any further consumption taxes.

In the world where labour inputs are becoming increasingly less relevant and where robotics, automation, AI and social capital are likely to play an increasingly important role, even the traditional argument of a negative impact of demographics no longer dooms Japan to oblivion and collapse. It also implies that the conventional arguments in favour of large-scale increase in immigration is not only irrelevant but is likely to be faulty on both theoretical and practical grounds. It is likely that the current age of ‘declining return on humans and conventional capital’ will become far more pronounced over the next decade. It so happens that Japan is in the forefront of this evolution.

It is highly unlikely that Japan would ever accept large-scale immigration (whether it applies to high or low skill labour). It is equally unlikely that the Japanese themselves would ever prefer to work and live in foreign jurisdictions. At the same time, the pace of human replacement (whether it is waiters in the restaurants or nurses in hospitals) is accelerating in Japan at a far more robust pace than elsewhere. The unique nature of Japan is also translating into sustainably high levels of private sector productivity while containing income and wealth inequalities. Although Japan is today more unequal than it was in  late 1980s-early 1990s, it still remains one of the most egalitarian societies in the world.

While Japan is yet reluctant to accept the most radical of policies, it is far more advanced in fully monetizing its debt burden and unlike most other countries it no longer requires an ever accelerating pace of financialization (or addition of new debt-driven generations). The objective in Japan is to maintain per capita income rather than generating growth to accommodate a rising population and keeping society intact. The extent to which Japan would be able to achieve this objective would depend critically on Japanese corporates and its overall economy maintaining productivity gains.

* * *

In part 2 tomorrow: "Global lessons from Japan - the future is Red"


JoJo Kracko Five Star Sat, 09/23/2017 - 20:26 Permalink

I think the point is that they control rates by keeping it all in house. Also, it is 2.5x, not 5x debt/GDP. I'm assuming after decades of this, they didn't have a PENSION FUNDING SHORTFALL CRISIS like the US is about to have.   The US must raise rates or deflate the hell out of their dollar or a decade from now the whole thing will crumble.    Boy are they ever lucky to have Trump in power. /green font

In reply to by Five Star

philipat Five Star Sat, 09/23/2017 - 20:44 Permalink

So we have a rising JPY and increasing debt monetization, the latter being the main winning strategy. Apparently.The article is mis-titled because it references endpoints and then does not address them. The endpoint, presumably, is when BOJ owns everything, purchased with printed money. When the State owns "all means of production" isn't that the same as a soft communist coup?You could also call it fascism because the political spectrum is more like a circle. When you go very far to either the left or the right, you meet in the middle at the other side of the circle and they become indistinguishable.Either way, it is "we the people" who are being, and will continue to be, shafted?

In reply to by Five Star

NoDebt philipat Sat, 09/23/2017 - 22:27 Permalink

"When the State owns "all means of production" isn't that the same as a soft communist coup?"Yes.  But also no.  Ownership of the means of production is by the government (communistic).  But it's distribution and exchange is run by the private sector (not communistic).There is no word to describe this situation, that I am aware of.  In the US, "corporatism" is probably pretty close.  Maybe they call it something else in other countries, I don't know.  What I do know is that it's what's taking over the entire developed (debt-driven) world.  It's a necessary hybrid that must be constructed when debt levels grow beyond market forces to repay them yet their default can never be allowed to happen.  Look at China- an authoritarian government dictating who owns what (not exactly, but they put firm boundaries on it) but leaves the distribution and means of exchange largely to the private sector.  Does the US play this game?  Of course.  Certain corporations are practically government institutions at this point (clear example:  banks) but the means of distribution and exchange are still private sector.  Europe?  Same deal, different nuances to the control mechanism via the EU.  It's very similar all over.  It's not the extremes of capitalism or communism, but a blending of them.  Communist (or Fascist, depending on how you look at it) up top, capitalist below.  Will it work?  You better hope so because they bet the entire globe on it.And, as I've said many times before, always watch Japan.  If it blows up, it will do so in Japan first.

In reply to by philipat

The Real Tony philipat Sun, 09/24/2017 - 06:31 Permalink

The end game in Japan is everything state owned but in America the end game is everything central bank owned and all the central bankers in America will trade everything back and forth amoungst themselves driving the price of everything towards infinity assuming no bankers ever get arrested first. The classic penny stock pump amass.

In reply to by philipat

SDShack The Real Tony Sun, 09/24/2017 - 13:29 Permalink

Just to add t to the discussion by the 3 of you above. True communism (Marxism) envisioned all means of production being controlled by the workers. As such it was more Socialist in theory. But in reality, what actually happened in the Soviet Union, and later China was the "workers" party was just a means to the end by dictators for single party govt control. Thus all means of production were controlled by the State (Workers Party). This technically is not communism, but is actually fascism. I like to refer to it as Leninism or Stalinism because both were no different then Hitler's Nazi party, and none had anything to do with "right-wing" or "left-wing" politics that ignorant educators try to teach.What the West is evolving to is control of all assets by wealthy powers... essentially an Oligarchy, Corptocracy, or Plutocracy. It is what for years I have called the New Feudal World Order because the Elite/Soverigns will control all assets, funding a massive Security State to enforce their claims, and controlling the masses as debt slaves or serfs. 

In reply to by The Real Tony

Paul Kersey philipat Sun, 09/24/2017 - 07:44 Permalink

Shafted? Japan has the highest longevity rate in the world. The U.S. longevity rate is ranked 31st, and it is dropping. Here's a comparison of Japan vs US crime rates.


The Japanese don't live under a system of communism, but rather under a system of higher civilization. Many US inner city dwellers live under a system of social anarchy, and the results of this are all too evident.

In reply to by philipat

MEFOBILLS philipat Sun, 09/24/2017 - 11:07 Permalink

Either way, it is "we the people" who are being, and will continue to be, shafted How exactly are the Japanese people being shafted?  The BOJ is pulling private debts onto its balance sheet.  As an aside, it was private debts BOJ created by bubble economics in the first place.  See the movie, Princes of Jen.  (You may mean that it is "American's" who are being shafted?)Private debts are what matters.  Public debts can be ignored.  They are ignored especially if the the interest on public debt is rebated.  It is something like shifting money from your left pocket to your right pocket, you are not materially worse off.Japan is not immigrating new labor, and thus they are not screwing their future with social conflict.  Their debt is denominated in their own currency.  Said debt is public, and hence can be erased in a Jubilee if necessary.  Japan's economy remains productive, which means that the population is doing meaningful things to make a living, and are not being reduced to low wage automatons. 

In reply to by philipat

any_mouse any_mouse Sat, 09/23/2017 - 21:01 Permalink

Update on JGB ETFs.

The only "long" play is two ETNs ( ETN(ote) as in credit instrument) offered by our friends at Deutsche Bank. The ETNs are based on JGB Futures. Thus perfect for DB, a credit instrument of derivatives based on derivatives.

Every JGB ETF was an Inverse. Betting that rates will go up.

In reply to by any_mouse

spanish inquisition Sat, 09/23/2017 - 19:27 Permalink

I don't know. If you control a world wide group of currencies and have a 50 year endgame, does all this make sense? Has the course of Japan over the last 40 years confirme this in relationship to the other currencies under control?

Juliette Sat, 09/23/2017 - 19:28 Permalink

So the madness will be perpetuated ... Thoughout history, if you elnt sb. your money you got paid interest. And now the crazy federal banks are trying to change that with ZIRP and NIRP.

Squid-puppets … Juliette Sat, 09/23/2017 - 20:15 Permalink

well I guess when evert CB on the planet is a Rothschilds CB, then there's no external force to call in the debt. We've been waiting for the 'bond market revolt' for a decade, but if the only significant bond holders are also money printers - , its to infinity & beyond So whats the circuit breaker? There is none, unless there's a factional split in the very upper echelons of the oligarchy

In reply to by Juliette

The Real Tony Northern Flicker Sun, 09/24/2017 - 06:36 Permalink

Close, after they own everything all the American central bankers will trade everything amoungst themselves driving the price of virtually everything towards infinity assuming the bankers aren't jailed first. The classic penny stock pump amass but no one gets rich because the bankers are just trading everything back and forth like the Chinese do with home prices.

In reply to by Northern Flicker

holdbuysell Sat, 09/23/2017 - 19:44 Permalink

Monetize the debt, let the newly-created money get absorbed by the equity/debt markets and then let it leak out to the real economy as the population requires it via pension, 401k liquidations, etc. That's when the inflation will become apparent. Until then, it's a 'ton of water behind a dam'.That seems to be the plan no one talks about.

deev Sat, 09/23/2017 - 20:13 Permalink

Just more proof that the US Capitalist Wall Street model isn't the be all and end all of economics.More and more people in the US are jobless and homeless and in poverty.The US "one percent", "greed is good" model won't be around for long as it gobbles itself out of existence.It killed itself once recently but was bought back to life by the US government, that can't go on forever, as it got back to its old practices as soon as it was back on its feet.  

nati Sat, 09/23/2017 - 20:20 Permalink

Another factor of the BoJ's success is the centralized education regime (courtesy of the Ministry of Education) that indoctrinates all Japanese to blindly acquiesce to authority, never question leaders, follow like docile sheep and induldge in needless consumption.There will be no revolution in Japan.

uhland62 nati Sat, 09/23/2017 - 22:13 Permalink

They are doing a lot better than Germany then.Just saw a video on Spiegel (German only) that 20% of ALL German children live in poverty, have to be fed and clothed by charity. When they grow up they'll be a reservoir for something or other.One thing is for sure, they will not join the militrary and defend THAT system or if they do they'll do it to sabotage.There were no foodbanks or such children charities when I left Germany in 1983. 

In reply to by nati

Is-Be Sat, 09/23/2017 - 20:38 Permalink

So Japan lends money to itself?It takes coin out of one pocket and puts it in the other and pays someone to do that?There's an app for that.

shinobi-7 Sat, 09/23/2017 - 21:17 Permalink

This is the pink tinted view from inside the Yamanote. Japan 1% growth rate is now the combination of 10% growth in the main cities based on speculation and -5% outside. Because money has no cost for those who can access it, the government and big corporations, budgets are wasted on unproductive investments. It will therefore be extremely difficult for Japan to increase productivity and stay competitive. The only positive thing on which I agree with the article is that Japan is managing decline beautifully. But look out for the imported black swans. What happens to deflation when Japan which imports more than 60% of its foods encounters scarcity for whatever reason?

EndOfDayExit Sat, 09/23/2017 - 21:47 Permalink

So, CBs will eventually buy everything. Then, I am guessing, they will confiscate most of the money in the system, will then return and spread out equally everything they have previsouly bought, and then they could start playing the same game all over again? :) And this will keep working great till the end of times. How come no one has come up with this plan before?...Just one point which bothers me the most -  if the majority of people will eventually end up on universal (printed) income, implying there is no need for them in the economy... then what are they living for and why? Solely to be a pass-through medium from Ctrl-P to corporations bottom line? Future looks pretty dark.

stillcode Sun, 09/24/2017 - 02:43 Permalink

The article paints a rosy picture for Japan, but I'll tell you all, life sucks over there. Most people work unpaid overtime, have low wages, high stress, live in rabbit hutches for houses that they take out 50 year mortgages on, are coerced into spending their evenings after work drinking with colleagues, and live vicariously through all the happy-faced soulless talents on TV. I once considered moving to Japan, but quickly discounted the thought after thinking about the quality of life that my children would have. My family is much better off even here in Commiefornia. The brightest future that one can have over there is to get a stable, soul-sucking government job.I will say that they have several redeeming factors though. The sense of community is still strong, the festivals are amazing, the transportation by train is good and the women are beautiful and marriage material. I don't think you'll find a larger concentration of conservatively valued, athiestic women anywhere else in the world. Still wouldn't live there though.

Batman11 Sun, 09/24/2017 - 03:57 Permalink

Central Bank credibility relied on them doing what they were supposed to do.They were supposed to create financial stability, but they have presided over an unprecedented era of financial crises.Gordon Brown made the BoE independent and went around telling everyone there would be no more boom and bust. The poor man has never lived it down. A new scientific economics was supposed to bring in an era of unprecedented prosperity for all and the Central Bankers would achieve financial stability with their expertise in this economics.  Things didn’t turn out as expected.   The FED have provided the evidence against independent Central Banks.Let’s imagine the FED weren’t independent and could avail themselves of advice from those whose thinking was more advanced before 2008.All the financial instability of recent times was helping those outside the mainstream work out what was going on.Steve Keen can you help the FED (he sees 2008 coming in 2005)?https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.pngAnother 1929 situation is brewing up and Steve knows just where to look to see it.Richard Werner has been studying financial crises since 1989 in Japan and has got a lot further than the “black swan” of the mainstream.Richard Werner can you help the FED?What you are seeing is the unproductive lending building up in the economy just like Japan before 1989.Productive lending goes into business and industry and gives a good return in GDP.Unproductive lending goes into real estate and financial speculation and it shows up in the graph above as it doesn’t give a good return in GDP.Alan Greenspan hasn’t seen the problem developing and suddenly slams on the brakeshttp://newsimg.bbc.co.uk/media/images/45089000/gif/_45089770_us_rates_oct08_226gr.gifI can help the FED.What have you forgotten Alan?He’s forgotten the delays in the system.There were delays while the teaser rate mortgages reset; the new mortgage repayments became unpayable; the defaults and other losses accumulated within the system until everything came crashing down in 2008.The FED had tightened much too fast by not appreciating the delays in the system.The independent Central Bank can get shut off in its own little world and not keep up with the latest thinking.A little outside help can go a long way.100 PhD’s in the conventional wisdom are no match for one person with a new idea.

Batman11 Batman11 Sun, 09/24/2017 - 03:57 Permalink

A proposed Central Banker update program based on the work of people who have looked at what’s going wrong and come up with the answers.Steve Keen - Minsky moments and affects of debt on the economyRichard Werner - Money and debt, bank credit and how it must be allocated for economic success, studying Japan around 1989Michael Hudson - The history of economics, the difference between earned and unearned incomeRichard Koo - After the Minsky Moment, studied 1929, Japan 1989 and 2008.The ECB really need to understand Richard Koo’s work before they do anymore damage with austerity in the Club-Med.

In reply to by Batman11

rex-lacrymarum Batman11 Sun, 09/24/2017 - 08:49 Permalink

Actually, the only work on monetary theory anyone needs to read is The Theory of Money and Credit (original title: "Theorie des Geldes und der Umlaufsmittel")  by Ludwig von Mises. I don't know Richard Werner, but I know the other Keynesians and post-Keynesians you list (Hudson isn't even an economist, he's a lefty historian), and their work is extremely flawed imo. The biggest flaw is their inability to differentiate between money and capital, and the consequent lack of a theory of capital. Their interest rate theories are arrant as well.Let's focus on Richard Koo for a moment, arguably the most prominent of them. Even if one doesn't understand monetary theory properly, Koo's advice - which he has provided incessantly for more than two decades - is demonstrably wrong on empirical grounds. The Japanese government has followed the recommendations of Koo and his fellow Keynesians to a T - and all it has to show for it  is the biggest mountain of debt on the planet. Its stock market is still nearly 50% below the peak levels reached 37 (!!!) years ago, and its economy has become sclerotic (hint: it is this debt mountain, which was accumulated on the advice of Koo and his fellow travelers, that it is weighing it down). "Austerity" is also not the problem of "Club Med" - not really. For instance: every working person in Greece supports six strangers via government transfers - a world record. And the situation is supposed to somehow improve if this number is boosted to seven or eight by pushing government debt to even higher levels? The very idea is totally absurd. The Greek government is bankrupt. You no longer have a choice between "austerity" and largesse once you are bankrupt. Bankrupt means you have run out of money, in the case of governments it means they have literally run out stuff they can steal, so no-one wants to lend to them anymore. If the other peripheral countries eschew austerity, they will simply end up where Greece has ended up - in bankruptcy. Government spending does not add one iota of wealth to the economy - on the contrary, it is a burden on the economy. Government has no funds of its own - every cent it spends, it has to take from the private sector, either by taxation, borrowing or in the worst case, inflation. It follows from this that every cent government spends is a cent the private sector can no longer spend, save or invest. Unless government bureaucrats have magically become better at allocating capital than the private sector, scarce capital will obviously be wasted. Bueaucracies are unable to gauge the opportunity cost of their spending. If that were not so, the Soviet Bloc would still be around and would be a Utopia of riches. 

In reply to by Batman11

Last of the Mi… Sun, 09/24/2017 - 07:42 Permalink

If you print they (inflation everywhere) will come theory disproven once again. All of these massive financialized economies continue to think that tomorrow the economic engine will begin to overheat and the required inflation will magically wipe away the deadly income gap that their printing has caused. It is lunacy and goes to the very heart of insanity within a government (or not) institution. Once you go to 5x GDP debt there is little hope of ever returning to any sort of an economy where participation is even remotely equal for all. They just don't get that "it's the economy stupid" and their printing, massive wealth divide and zero velocity of money is the problem.

Let it Go Sun, 09/24/2017 - 11:15 Permalink

The myth promoted by the central banks that a major currency cannot fail is accepted as fact by many people however, the rapid demise of either the yen or the euro is all that will be needed to reveal the truth. When a major currency fails it will remind people everywhere that our system of fiat money is held together only by faith in the system and a prayer.Japan's public debt, which stands at around 250% of its GDP is the highest in the industrialized world. In the future Japan's debt can only be addressed by printing more money and debasing the yen. The article below explores how when Japan crumbles it will be felt across the world. http://brucewilds.blogspot.com/2016/06/the-yen-and-its-failure-to-fail.html

Anonymous (not verified) Sun, 09/24/2017 - 15:27 Permalink

North Korea has a 36% debt to GDP ratio. They cut out the middle man, the privately owned central bank cartel and trade directly with other nations.http://mecometer.com/compare/korea+north-korea/public-debt/At least we aren't as bad as the Luxembourg with a 6731% external debt to GDP ratio. That's where we are heading if we don't repeal The Federal Reserve Act of 1913.https://en.m.wikipedia.org/wiki/List_of_countries_by_external_debtThis 2011 Article states that Luxembourg's per capita debt is 84 times that of the United States:http://www.businessinsider.com/luxembourg-2011-09?op=1/#ere-is-it-1