Japan's long-term gov't debt may be at worst level of ¥1,000 tril

"the market" is overwhelmingly determined by central bank actions, so it's not much of a market.

That pretty much sums up your position - central planning to the max. Go Soviet.

The reality is different. The BOJ can print all the money it wants and finance profligate government spending, but it can’t decree the value of the yen versus other currencies.

History shows what markets think of the ability of central banks to control markets.

I think we can all agree that the yen is the new toilet paper.

@fxgai

the value of the currency is determined by the market

You don't seem to understand that "the market" is overwhelmingly determined by central bank actions, so it's not much of a market. For example, the US Fed, etc. are raising their interest rates to tamp down on levels of inflation deemed dangerous, ie, eating away at people's wages and fix-incomes. Higher rates attract more capital inflows = higher currency.

Japan isn't having such a severe prices problem, so it's staying the course. Import costs will rise but those will be offset by more competitive exports and higher earnings for Japanese companies, the BOJ believes. Lower rates=lower currency. That is why the yen is lower.

They were explicitly saying that these policies were risk free,

Govt spending? Sure, if inflation remains low. Or are you changing the goal posts? Rate policy is a balancing act: you choose to get more of one over less than another. The global Ukraine covid shocks are what Japan's balancing act is about, not about any inherent limits, weaknesses or strains on its monetary/fiscal structures. The crises were made overseas, not in Japan. All healthy countries have this dynamic. Russia, very unhealthy, for example, however, has very few choices.

The value of currency is determined in relation to prices.

Well, the value of the currency is determined by the market, and the market often doesn’t value currencies according to consumer inflation rates in the countries where they are used.

What matter is what it can buy. 

So tell me then, if the price of international commodities doubles, and the yen falls in value at the same time, who do you think is paying for that extra cost? The commodity producers are going to pay the extra for Japanese people?

Inflation Rate today:

Japan: 0.9%

USA: 7.9%

Germany: 7.3%

Spain: 9.8

Argentina: 52%

In short, while people in many countries are losing buying power of their currencies every day, the people in Japan are not.

I have different data for Japan:

Through Feb., year-on-year cpi: 2.7%

Through Feb., year-on-year wholesale prices: 9.3%

socrateos

Garbage in, garbage out. Japan has a history of data scandals. Anything coming out of Japan has even lower credibility than that coming out of China.

fxgai

The yen used to be regarded as a safe haven currency… but while war rages in Eastern Europe like many alive today have never experienced, the yen has dropped to lows.

The value of currency is determined in relation to prices. What matter is what it can buy.

US, EU and other countries are suffering from high inflation today, but not Japan despite oil price.

Inflation Rate today:

Japan: 0.9%

USA: 7.9%

Germany: 7.3%

Spain: 9.8

Argentina: 52%

In short, while people in many countries are losing buying power of their currencies every day, the people in Japan are not.

a cheaper yen is best for Japan

Japan relays heavily on imports because of the limited natural resources and limited productive workers.

What would be a weak yen good for?

Well, that's what the BOJ wants. 

Some were saying that all was fine and dandy, that the yen is a premier “safe haven”, there were no risks to the crazy policy, yadda yadda.

They weren’t saying that, yes the currency was being deliberately trashed. The opposite. They were explicitly saying that these policies were risk free, and that others were “wrong”.

… I guess it became dead obvious to all around 120 yen.

@fxgai

And you know the value of the yen as plunged ...

Well, that's what the BOJ wants. Kuroda said this week he thinks on balance, a cheaper yen is best for Japan, given the current geopolitical impact. Indeed, he acted on Monday to make the yen cheaper. In addition, other economies feel under pressure to raise interest rates, which leads to their currencies going higher. The BoJ prefers to take the opposite path -- keeping borrowing costs cheaper.

You seem to be portraying the yen is sinking out of control, due to a crisis of confidence. That's clearly not the case. The BOJ is controlling events. True, the yen's safe haven status is diminished, but that's due to the BOj's current priorities, not because of any monetary or fiscal strains.

As a sovereign nation capable of issuing money, Japan can print money any time they wish to service this so called "debt"

Yes.

And you know the value of the yen as plunged from below 80 to the US dollar to less than 120 (eg, lost half its value) over the past decade of Crazy Curoda?

The yen used to be regarded as a safe haven currency… but while war rages in Eastern Europe like many alive today have never experienced, the yen has dropped to lows.

So go on, tell me more about how the yen can just be printed endlessly because it is all accounted for and as much Mickey Mouse Modern Monetary Theory quack money can be printed as central planner clowns like.

Always get a chuckle out of these "Japan debt panic" stories.

As a sovereign nation capable of issuing money, Japan can print money any time they wish to service this so called "debt" - which is almost all domestic.

Foreign debt would be a disaster, as we will see in other nations like the US, but the Japanese government has virtually none.

It is not any domestic problem that the Japanese government cannot deal with but rather international ones.

The oil shocks in the seventies showed this.

Japan no longer produces vast amount of products that the world wants to buy consequently the majority of Japanese people cannot find the work which allowed them to prosper over a generation.

Commodity prices are influenced by geopolitical events outside the scope of any one government.

Life is and will get much tougher in Japan.

@happy

the other national banks are raising interest rates because they can.

Sure, because everyone loves paying higher interest on their loans.

Japanese people as well as private sector are the biggest creditors to the Japanese government.

It's actually the other way around. Where do you think people and companies got their yen from in the first place?

The wall is coming closer.

Japan is surviving only because of US ratings given for its credit rating.

How can any sensible person believe an economy can remain high when population is crashing at half million inhabitants less, soon a million per year, with ballooning of social costs due to aging ?

Who is creating wealth ? Robots ?

There will be a break point sooner or later.

Personally, if you know the Japanese banks, you'd flee them if you compare them to some other main banks. They are so obsolete.

Not really sure I want my grandchildren saddled with a debt that actually doesn’t benefit them?

If MIT are correct and civilization will collapse anyway by 2040, that's not much longer to keep the debt plates spinning.

Around the same time as a modelled Econ 2.0 quasi singularity machine intelligence should be taking over.

This could be an April's Fool, with the actual debt being 10 times larger. No-one would notice.

If MIT are correct and civilization will collapse anyway by 2040, that's not much longer to keep the debt plates spinning.

This is exactly why BOJ is afraid to increase the rate, a tiny increase will eat away huge chunk of their tax revenue, at a time when they increasingly spend more than they can earn. More budget for this, more budget for that. I guess when BOJ blows up it will serve as a textbook example on the max limit for a country's debt to GDP ratio and what you don't do as a central bank, lol.

The current US 10 yr govt bond rate is 2.35%/yr (which is still far below inflation).

2.35% of 1000 trillion yen is 23.5 million yen, about 1/4 of the latest government budget.

Ie. massive cuts across the board and/or massive tax increases.

No wonder Kuroda is printing away...........

The estimate signals that the nation's fiscal health, 

Be precise. It is the government's fiscal health. In fact, Japanese people as well as private sector are the biggest creditors to the Japanese government.

@JeffLee: Why? The yen is weak because other economies are raising their interest rates while the BOJ has chosen to keep its policy loose (because it can.) Kuroda also says he prefers a weak yen.

On the contrary, the other national banks are raising interest rates because they can. Given Japan's debt load, the BOJ cannot. Without any increase in overall Japanese production (which there isn't) printing money to cover debt just means that each yen in circulation is worth a bit less.

This is the first international crisis I have seen where the yen has fallen (sharply) instead of rising (sharply).

Luckily I got rid of the yen a long time ago, and on top of that, I always convert my salary to different currencies/assets as soon as it comes in.

I like how they use 1,000 trillion instead of 1 quadrillion.

You can't keep printing money and keep people believing that it has value.

Famous defaults like Argentine and Greece were not this extreme.

When the Japanese economy implodes will be the mother of all implosions.

@lar flint

After default they won't be able to do it

How will Japan default? Put another way, how would Japan run out of its own currency to service a debt that is overwhelmingly held by its public sector and domestic institutions, governed by the central bank's policies and regulations?

 there won't be trust in Japanese currency. 

Why? The yen is weak because other economies are raising their interest rates while the BOJ has chosen to keep its policy loose (because it can.) Kuroda also says he prefers a weak yen.

We should commemorate the moment with a photo of Abe, Suga, and Kishida celebrating with the "guts pose".

debt to...who?

They don't need to confiscate anyone's money. They will just keep doing what they continued for two decades now. More QE, more yen printing with zero interest. That will put yen on a slow downward trajectory and consequently depreciate any savings in yen and the government debt.

the nation's fiscal health, already the worst among major developed countries, has been further deteriorating on swelling social security costs as a result the aging population, falling tax revenues and emergency spending in response to the coronavirus pandemic, the officials said.

That signature Kyodo spin, absolving government (LDP) policy of any responsibility.

Abenomics corporate tax cuts which never trickled down to the public and massive wealth transfer to corporations in the guise of pandemic stimulus surely never had an effect on shortfalls?

Kyodo:We don't speak of that.

Got to give it to the Japanese no half measure’s if we are going to accumulate debt let’s beat everyone else, that will show them how great we are.

Bet against Yen.

You will win big when Japan enters a debt crisis.

the nation's fiscal health, already the worst ....

If it's so bad, then why is Japan able to issue debt almost freely or at will, with no macroeconomic strains like high interest rates, high inflation or bond\default crises?

Growing interest payments on the accumulated debt...would be a headache for the government. 

"A headache? Why? Nearly half the payments are made to the BOJ, a public sector institution, with another big chunk to the pension and other public funds (within the govt). The govt pushes a button to "pay" this, which marks up bond holders' accounts. That's it. It can do this until core inflation goes dangerously high, which it isn't and won't be for a very, very long time, aka, until the cows come home.

An article filled with bold assertions and no qualifying follow up. Obviously, the writer has no idea of what he/she are talking about.