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They have had a historically high internal savings rate that allowed this. One thing to keep an eye on is their terrible demographics. I believe Japanese citi
by rmrm 15y ago
They have had a historically high internal savings rate that allowed this. One thing to keep an eye on is their terrible demographics. I believe Japanese citizens as well as the largest institutional buyers (Japan Post etc) have just recently become net sellers of JGBs as they move towards liquidation to fund retirements.
Japan currently funds more than half of their gov't via borrowing, with the demographic shift and the internal demand for JGB turning towards net negative, they will increasingly rely on external buyers of their debt. I believe China has been a buyer of late.
What has worked for Japan historically may not work so well going forward.
- muraiki 15y agoI've read that most of this money came from retiree savings, which are rapidly running out. Furthermore, the younger generation doesn't have such savings, yet alone the population, to keep such a thing going. In a sense, this system of internal borrowing in a hidden tax. While it of course is not mandated, it's required in order to keep things going smoothly.