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Dec 19
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Unearned Wisdom's avatar

Yes, in Japan, the debt is largely "owed to themselves." When the government issues bonds, Japanese households and institutions (and now the Bank of Japan) buy them. This creates a closed loop that prevents the "sudden stop" or capital flight that usually triggers a Dalio-style deleveraging crisis. The ultimate counter-force against inflation is technology, Japan being a case in point - this provides a clue as to which economies will be most resilient in the future despite debt/demographic strain.