Japan's Incredible Sovereign Debt Problem

The chart below shows global sovereign debt as a percentage of total government revenues. As can be seen, Japan's debt is far more out of control than that of any other country.

Japan has been able to issue so much debt because of the great propensity for the Japanese to save. However, as Japan's population ages, many of those savers are entering retirement where they are going to be liquidators of Japanese debt rather than adding to positions. No way Japan gets out of this without default, unless the Bank of Japan money starts massive printing that props up the sovereign debt. Such money printing will, of course, result in massive Japanese price inflation.

On another note, Japan's "Lost Decade" was made worse by this debt. Instead of money saved by the Japanese going into private sector investments that would have boosted the productivity of the country, it went into the the government sector where it was spent on wasteful crony government projects.