1. slotowner says

    Good Article. I think that too many people are acting like an ostrich with their head in the sand about how the change in demographics will affect the world. We have growth up in a world where growth is assumed to happen due to population growth. That is will stop because for good reasons we are stopping world population growth & it is turning every economic model on its head.
    There are plenty of rational event that could cause people to loose faith in Japan, a likely one being an escalation of the pseudo cold conflict between China & Japan. Just one strong crisis could start an escalation that would rock the world. This disaster is unlikely but not insignificant & if we keep our heads in the sand, it will hit us out of the blue at the worst possible time.

  2. Joel Sitty says

    You quote the IMF, who states that “Should JGB yields rise from current levels, Japanese debt could quickly become unsustainable.” And how would nominal interest rates on JPY government debt rise to something other than what the Japanese Central Bank (JCB) desires? The JCB can buy as much government debt as they want, since they have a balance sheet of infinite size. This will increase the reserves of yen held at banks. In an effort to earn a return on these deposits, banks will compete down the overnight rate to the policy level desired by the JCB. The change to the overnight rate will affect Interest rates for longer terms will follow as investors compare interest rates of varying durations.
    No bank or creditor can stop this from happening. Nominal interest rates are what the JCB decides they should be.

  3. Wted says

    Some of the working age ratios overstate the problem and derive from definitions of working population based on past norms. As life expectancy and the health improves, there is no reason why the working population should not include older workers. My (Japanese) mother-in-law still works close to a full week aged 75 – caring for the old! It is also worth noting whilst ecomomists focus on problems of a declining workforce – Japan has an unemployment problem.
    Japan’s problems stem from the high value of the Yen and the lack of investment of Japanese savings in overseas assets. They do though seem to have the luxary to print Yen and still buy those assets. This should result in inflation, reduce the debt problem and help to keep older workers in employment.

  4. Sophia Perovskaya says

    Could you please comment on a possible solution by immigration? Wouldn’t Japan’s immigration policies radically change before the point you envision?

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