Japan's debt is a trailing indicator of economic malaise, not a leading indicator.
>The only reason it can keep going is because it pays remarkably low interest rates.
It ought to be obvious to anybody with an ounce of sense that any country that prints the currency it borrows in can choose its own interest rates. This is precisely what Quantitative Easing does.
>But the first "arrow" of Abenomics is to push up inflation, and you can be sure that this arrow will meet its mark because they can always "print" more yen.
Yes, this is true.
>One of the iron laws of economics is that, when inflation goes up, so do interest rates.
This is totally utterly false. As long as QE continues (and so far it has continued), interest rates on Japanese bonds will be held at zero.
>Now, to cut a long story short, it looks like the government's going to get out of this bind by directing the Bank of Japan to print even more money to buy it's debt at below-market prices. In fact, if you follow the bond market news, it's clear that this is already happening. And that, my friends, is a recipe for hyperinflation.
This is not just false, it is absurdly false. Hyperinflation hyperventilators have been predicting Japanese hyperinflation since 1997 when their debt went over 80% and they continued deficit spending. What happened instead? Deflation.
They couldn't have been more wrong then just as you couldn't be more wrong now.
Like any economic variable, inflation can be targeted. In Japan, it simply wasn't targeted and it wasn't aimed for during the last 20 years. They just engaged in QE, which swapped bonds that represented Japanese savings earning subinflation interest for cash savings which also earned subinflation interest. And they thought this money was magically going to be spent?
For inflation to happen you need spending. PART of what is new about abenomics is that it actually does do a bit of that, but not very much.