This post is to collect together some information on Japan and to point out a confusion that I and I think some others have from the Japanese numbers.
Video's on Japan situation
OtterWood video on Japan.
Kyle Bass video on Japan.
My posts on Japan
Japan will soon be zooming past their inflation target of 2%.
Japan is already printing money at hyperinflationary rates.
Japan to be First Currency Domino.
I was commenting on Sumner's blog and he pointed out that my numbers for Japan did not look right. The Japanese ministry of finance web site made it seem like national debt service was already about 25% of expenditures and 50% of taxes, even at near zero interest rates. However, Krugman says this 25% includes principle for bonds coming due.
It is not clear from the MOF web site how much is spent on interest. Kyle Bass, and someone trying to rebut him, say that interest is about 25% of taxes. This would mean half of the reported "national debt service" is interest and half principle.
Sumner also says that for hyperinflation it is only the net debt to the public that matters. He says for Japan this is about 100% of GNP. It does make sense that net debt is the correct number to use. This also explains why Japan could get debt over 200% of GNP without hyperinflation.
An article in the economist has Japan's net debt at 114% of GNP in 2010. This article has net debt, years to maturity, and primary budget balance. These all are important factors when looking at the chance of hyperinflation.