74 days ago • Posted by Charles-Henry Monchau

Is Japan a Template for the indebted world?

As shown by Chris Rutherglen and Ritesh Jain, QE has worked for Japan. While Debt to GDP has soared to more than 200% of GDP, this ratio drops to 90% if one substracts what the debt the Bank of Japan holds on its balance sheet. Since BOJ remits interest received above their costs back to the Treasury, they are essentially zero-cost to the Government. It is not too far away from the concept of writing them off...This is a very tempting solution for the U.S and the Eurozone...

Japan debt to GDP and (Japan Debt - BoJ Assets) / GDP