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Japan gov't long-term debt to top ¥1,000 trillion

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No need to panic. This extraordinary spending was vital to keep things ticking along in this once-in-a-hundred-year pandemic.

Unlike most other nations, the vast majority of this debt is domestic debt. The Japanese government can choose to repay it any time they choose, through electronic money transfers, and printing money. Foreign debt is the debt you worry about.

-3 ( +7 / -10 )

The money must be owed to somebody, to whom is it owed?

The biggest buyer of government debt is the Bank of Japan.

The Bank of Japan is owned by the government.

The government owes itself all this money.

They own the bonds for all this debt, it's just a paper game.

16 ( +19 / -3 )

Keep in mind the Japanese government is probably worth at least 5,000 trillion yen including land, buildings, fishing and mineral rights, securities holdings, etc.

4 ( +5 / -1 )

This story is criminal in its ignorance of how public finance works in a currency issuing nation.

The money must be owed to somebody, to whom is it owed?

Nearly half the "debt" is owned by the Bank of Japan, a public sector institution. It's owed to the govt., who receives the principal when the bonds mature and coupon payments til then. Other big holders are similarly the state pension fund, etc. So the govt is both the creditor and debtor. Neat, huh

With the need to continue issuing bonds...

Why a "need"? Much of the money has already been created and spent, (which is proof that the govt doesnt need to "borrow" yen in order to spend it). So why the "need" to issue bonds ("debt") after the fact? How many loans do you know are arranged AFTER the money is gone? LOL.

...a huge amount of bonds each year to finance growing social security and defense costs, 

So those bonds owned by public sector institutions are "financing" the spending in the same sector? How the devil does that work?!?

 its fiscal health rapidly worsening

if Japan's fiscal health were bad, we'd be seeing skyrocketing interest rates and inflation and a plummeting currency. We're seeing actually the opposite of all that.

Fire this article's writer!

3 ( +8 / -5 )

Bank of Japan, Federal Reserve Bank, and just about every other bank around the World,(except for few countries that have not been subdued yet), are own by the Rothschild banking cartel. They have a scheme where the government prints the bills, sells them to the central banks, then it lends the “money” back to the government with interest. It is the biggest Ponzi scheme and scam in World history. And that is why World economies find themselves in such anguish these days. You can find “The Money Masters” by Bill Still or William Still. It will tell you everything in great detail, including the demise of the Roman Empire because of the continued borrowing to fund endless wars. Those elected in governments who promote wars are accomplices of the banking cartels.

2 ( +5 / -3 )

MMT (Modern Monetary Theory) is the answer to the problem.

0 ( +4 / -4 )

Doesn't sound good! The whole money thing is so convoluted. I have a house money comes in money goes out. It's pretty simple. I don't have debt that exceeds the houses income? People say it's ok because the debt is 50% Japanese or so depending on who you ask? That doesn't excuse the massive level of debt. Or the massive growing level of poverty with in Japan.

3 ( +3 / -0 )

This story is criminal in its ignorance of how public finance works in a currency issuing nation.

@ Jeff Lee - Well stated. The writer makes no reference to the fact that almost ALL Japan's debt is domestic, thus able to be paid back at any amount at any time at the the push of a button.

As a nation with a sovereignty currency (¥Yen) Japan prints her own money and can ramp up the release of cash any time she chooses.

Domestic debt can be ¥1 trillion x trillion x trillion , and it is basically paid back at the push of a button.

Why cant journalists understand basic economics?

1 ( +4 / -3 )

On the positive side, when the US-Sino War breaks out, no way would China annex Japan because they would then be responsible for our debt.

-3 ( +1 / -4 )

No country has ever paid back the government debt denominated in its own currency. They just keep carrying over government bonds till the end of time.

3 ( +4 / -1 )

Not different than US and EU.

But true, Japan’s highest debt along with ageing population is something that makes it slightly more concerning.

The best you can do to protect yourself long term is to diversify your investments and not park all your money in JPY.

3 ( +3 / -0 )

Fighto!Today  06:37 am JST

No need to panic. This extraordinary spending was vital to keep things ticking along in this once-in-a-hundred-year pandemic.

Unlike most other nations, the vast majority of this debt is domestic debt.

Great. Hooray for Japan, tenno heika banzai, treble sakes all round etc etc. So why don't they just go wild and provide totally free education, healthcare and WiFi, and give everyone massive tax cuts if there's no need to worry about paying the money back?

The Japanese government can choose to repay it any time they choose, through electronic money transfers, and printing money.

So why don't they, instead of expecting us to pay it off with more tax hikes?

5 ( +6 / -1 )

No country has ever paid back the government debt denominated in its own currency. They just keep carrying over government bonds till the end of time.

Exactly. Why would it pay back debt it owes to itself?! This is one of the biggest advantages a country with its own currency has.

As someone mentioned above, MMT is the answer.

1 ( +2 / -1 )

Nearly 45% of the 2022 budget revenues will be coming from issuing bonds. Japan does increase its debt year by year.

As an individual, can I indefinitely live with an increasing debt without problems ?

1 ( +1 / -0 )

No country has ever paid back the government debt denominated in its own currency.

After WW2, many debts were forgiven. Currency manipulation was born.

0 ( +2 / -2 )

Works out to be around 8 million yen per person. No real problem while interest rates remain at zero. Picture will look very different if interest rates go up. No way the govt would stay afloat. Some inflation would help reduce the it in real terms but they haven't much luck there. No doubt J-workers will be asked again to defer retirement and keep working.

2 ( +2 / -0 )

wow!, how the love for Japan fog they eye to this reality of who own who in Japan, let see, Japan Lose the war to the USA, knowing how the USA work, I don't think they will let the Japanese own they Central Bank, hell, Remember who write the Japanese Constitution? keep dreaming that the Government own Japan Ginko.

1 ( +1 / -0 )

Even during the boom years, Japan's economy was always precariously poised. No underlying assets, no commodities of her own, this country has only ever been wealthy on paper. The enormous debt that we are reading and hearing about is also only on paper. Japan is a paper country and will always be economically fragile.

0 ( +1 / -1 )

By simple calculations, the debt, already the worst among developed countries, means each Japanese citizen needs to be burdened with 8 million yen.

It's the state debt, NOT the Japanese people who are also the biggest creditor to the Japanese government. (by almost the same amount of its total debt).

-1 ( +0 / -1 )

"People say it's ok because the debt is 50% Japanese or so depending on who you ask? "

Well, you have been asking the wrong people then.

Actually, 90 percent of the debt is held by Japanese investors.

"https://economictimes.indiatimes.com/news/international/business/japans-debt-mountain-how-is-it-sustainable/articleshow/76298563.cms"

The BOJ is not the only Japanese holder of their own debt.

Private J-citizens and other Japanese institutions own most of the rest.

Gaijins hold the remaining 10%.

Less than a week ago there was an article here on JT noting the increase of foreign ownership of Japan's debt to such "hights" of 10%.

-5 ( +1 / -6 )

@SimonFoston

So why don't they, instead of expecting us to pay it off with more tax hikes?

Because fiscal/economic policy is decided by politicians, not by economists. They do insane things like raise the consumption tax even when smart economists warn them doing so threatens causing a recession.

No country has ever paid back the government debt denominated in its own currency.

Good point. If the Japanese paid back, say, a group of Singaporeans in yen, the Singaporean creditors would have two choices: convert the yen to Sing. dollars, since yen generally can't be used to buy or invest in anything outside of Japan. That yen, bought by a counterparty, would then be repatriated back to japan, where it would be spent and invested in the Japanese economy. Score!

Option 2: keep the yen, and therefore be forced to spend or invest all of it in Japan. Score! For example, they could buy -- more Japanese bonds. LOL.

-5 ( +2 / -7 )

JeffLee

Unfortunately, economic and fiscal policy can never be, almost by definition, an exact science. Whoever calls the shots is irrelevant; sometimes it works, sometimes it doesn't.

0 ( +1 / -1 )

The problem consists not of debts or money, but only of available potential future assets, enabling to pay the many debts. What are the biggest assets in this case? Free fish from the sea, rice fields, a certain number of children with their education level and potential to develop, produce and sell innovative products or services. And all those are quickly declining, less fish, less rice , less children, less education, less innovations. The rest you can surely estimate yourself.

0 ( +0 / -0 )

Start here,

Central Government Debt…..

https://www.mof.go.jp/english/jgbs/reference/gbb/index.htm

Now, question one, how is that debt serviced?

-1 ( +1 / -2 )

A hint.....

Japan Ministry of Finance to seek $242 billion for debt servicing FY2021/22: draft.....

https://www.reuters.com/article/us-japan-economy-budget-idUSKCN26F1O7

-1 ( +1 / -2 )

The Japanese government needs to get the economy functioning again so there's a productive balance of payments ASAP

This can't carry on forever

0 ( +1 / -1 )

Who owns the debt, the people of Japan, every single citizen to the tune of between seven to eight million yen.

-1 ( +2 / -3 )

As an individual, can I indefinitely live with an increasing debt without problems ?

No, because you owe that debt to another party who at some point will want it back.

If, on the other hand, your ever increasing debt is in your own personal currency and you have the power to print more - then yes you could. The reason being you can always print more to service the debt you owe to another party.

2 ( +2 / -0 )

HBJ, first year  Finance & Economics, LSE..

Nope, sorry ......

Inflating away the public debt?

https://personal.lse.ac.uk/reisr/papers/99-HilscherRavivReisdebt.pdf

The mythical money tree, the magic printing press, it doesn't exist.

Take 10,000 yen. print another, then real world a pair of 5000 yen bills, if any retailer would be crazy enough to accept the dud, because the bank won't

0 ( +2 / -2 )

Domestic debt can be ¥1 trillion x trillion x trillion , and it is basically paid back at the push of a button.

Not exactly. Yes, the debt is mostly held domestically, much of it by the Bank of Japan, just like much of the U.S. debt is held by the Social Security Trust and the Federal Reserve. But what would that mean to pay it back at the push of a button?

Option one: create more money. Except that money is debt. Every time the government prints more money, it expands the debt balance with the central bank. So printing money expands government debt, not pays it back. Plus, the expanded money supply produces inflation, which essentially devalues the cash savings that Japanese people have.

Option two: use assets to pay off the debt. But in this case, the “push of a button” is essentially emptying every person’s bank account in Japan. Everyone’s personal savings would be robbed, and people would be left impoverished.

National debt is loaned with the labor of the nation’s people as collateral. We are all slaves to the debt, and the only way out is to work.

Of course, we could just dissolve the central banks and leave the financiers holding the bag, but that’s the option we’re not supposed to talk about.

2 ( +3 / -1 )

Even if Bank of Japan owns all the debts, then is the bank even under Japanese sovereignty?

Yes, Bank of Japan is among a few Central Banks in the world to offer public offerings in stocks exchange as well as being completely independent.

After the Plaza Accord, the US financiers also paid a lot of lobbying money to destroy the fusion of MITI and MoF. The plan worked as the MITI was dissolved and MoF was weakened. The Bank of Japan was completely free from the MoF. Many central bankers at the time were graduates from Goldman Sachs.

The monetization of debts is a sickening trick from the global financiers and rentier capitalists in the US. Japan happens to be its best experiment.

6 ( +8 / -2 )

it has been unavoidable for the government to issue a huge amount of bonds each year to finance growing social security and defense costs, in addition to coronavirus countermeasures.

This notion of unavoidability is completely wrong.

All of us have seen news articles about wasteful government spending that disgust us.

That is because each of us knows that we are able to spend our own money in a way that is far more effective than what those detached from us in central government bureaucracies can.

So such high levels of government spending is absolutely avoidable.

It is ridiculous for the majority of the population to pay taxes to this centralized bureaucracy, only to receive less of it back in benefits than the amount of tax that we paid. For the majority of us, it would make for far more effective spending if we were to each get to keep more of our money, but in return have the choice on how to spend it for ourselves.

That would the only leave taxes needing to be paid to support those in need, and services that are genuinely best provided by a central bureaucracy.

Japan could absolutely therefore reduce spending to 50 trillion yen a year, and see far better use of the money made in return for it.

The time will come when this is to take place. There will be some discontent then. But the other side is far brighter than what we face now, with out of control government spending imposing huge tax burdens on the populace.

As for MMT, it is not modern, monetary nor a theory. It is quackery.

0 ( +1 / -1 )

This story is criminal in its ignorance of how public finance works in a currency issuing nation.

The story is completely right, and your suggestion of criminality and that the writer ought be fired comes across as something from the communist press.

Be off with your harmful propaganda now.

-1 ( +0 / -1 )

Why cant journalists understand basic economics?

You betray little such understanding yourself.

Zimbabwe also just printed money to pay for its spending.

Venezuela also recently started issuing bolivar notes in denominations of a million.

Think about that.

-1 ( +0 / -1 )

MMT is the answer.

Even MMT proponents do not deny that inflation is a limit on how far the madness can go.

The problem with inflation is that it won’t be admitted, until the people at the bottom whose wages don’t rise fast enough to keep up with that inflation are already screwed big time.

Those who are for this kind of trickle-down government spending are killing the poor.

-1 ( +0 / -1 )

Whenever Japan's debt question is raised, it's guaranteed someone will chip in with the old chestnut that "It's fine, because it's national held debt". The fact is that, yes, in the case of an economy like Greece, external debt is an awful thing but, in the case of countries in relative fiscal health, there's a strong link between external debt and foreign investment and innovation. When it comes down to it, it's academic whether or not it is publicly or externally held; there is still no getting away from the fact that Japan's quality of life for the last 25-30 years has been sustained almost entirely on the babyboomer's credit cards. Japan's debt today is comparable to Britain's in 1945 - after funding a global war. I doubt the Japanophile tourists who come for a week to see the shiny streets of Shibuya and Dotonburi grasp the tax rises, the salary stagnation, the cracks forming in the infrastructure, the ghost towns, the newly-built coal power stations...

0 ( +1 / -1 )

The whole debate about whether the debt is held domestically or by foreigners depends greatly on the context.

With Greece, many foreigners held the Greek debt and so it was of great interest to foreigners if that debt wasn’t to be repaid (and being part of the Euro meant they couldn’t just print money to repay it).

With Japanese public debt it is certainly mostly held domestically, but I’d hazard a guess that the majority of us here commenting at Japan Today are residents of Japan, not merely foreigners on the other side of the planet. The debt certainly does matter to residents of Japan who are directly exposed to the potential fallout from the excessive debt accumulated.

A default is only one way to alleviate the debt, but printing money is another, and so with potential deleterious effects on the value of the currency used domestically.

Japan issued a brand new yen currency in the past in the wake of excessive amounts of debts, leading to great hardships for the residents of Japan at that time. Me personally, I take a very cautious approach to this and don’t expect to be hit as hard as your average Hiro Tanaka when it reaches some kind of logical conclusion.

As was noted by Reckless I think , Japan does have trillions of assets that could be sold to pay down debt, but it must also bring the out of control spending into order. It will be rocky when the time comes, but Japan will become a land of greater opportunity once its bloated government is whittled down to a more reasonable and affordable size.

0 ( +1 / -1 )

A default is only one way to alleviate the debt...

Or the BOJ can simply let the JGBs it holds - nearly half the fiscal debt - run to maturity. Bingo, nearly half the national debt is gone.

Japan's quality of life for the last 25-30 years has been sustained almost entirely on the babyboomer's credit cards.

Conflating private consumer debt with a fiscal debt. Back to Econ101 for you!

-1 ( +0 / -1 )

Or the BOJ can simply let the JGBs it holds - nearly half the fiscal debt - run to maturity

The MoF needs to pay the money promised back to the bond holder at maturity, it’s not a BOJ decision.

-1 ( +0 / -1 )

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