Once again, Neil Irwin, chief economic propagandist at Fox on 15th, dishes out Pete Peterson's claptrap:

"As Japan begins the complex and costly job of rebuilding the areas of the country that were destroyed, the task will be made more difficult by the government’s vast debt.

Japan has the highest level of debt relative to the size of its economy of any major industrial nation — 234 percent of gross domestic product this year, the International Monetary Fund estimates, compared with 99 percent for the United States. With the cost of rebuilding devastated areas expected to be in the hundreds of billions of dollars, that debt level is likely to grow in the years ahead.


There are lessons for the United States. Even when borrowing rates are low, as they are for the United States and Japan, running high budget deficits can leave a country with less flexibility to respond to a disaster or an economic setback."

Less flexibility?

Oh really? Then how come the interest rate on Japanese national debt has fallen since the disaster, while the yen has increased in value to its highest level in history? Just exactly how do those changes cause Japan to have less flexibility?

Of course Irwin has no explanation except to quote a Peterson propagandist:
“When you have as much debt as the Japanese have, you’re vulnerable to this kind of shock and can’t do much about it,” said Carmen Reinhart, a senior fellow at the Peterson Institute.

Maybe Carmen and Neil should inform the BoJ to stop printing yen to fund the reconstruction.

Of course the Japanese just owe that dough to themselves. Macro-economically meaningless.

Of course half of it is just the Ministry of Finance - one pocket of the government owing it to the JCB - another pocket. Super-duper ridiculously meaningless.

But if anything, the high debt/gdp makes Japan more flexible. Government debt is money.
Read Reinhart's statement correctly:
"When you have as much money as the Japanese have, you’re vulnerable to this kind of shock and can’t do much about it" Sound right to you?


High debt/gdp means the Japanese private sector has a lot of cash it can dip into and immediately spend, perhaps more quickly and responsively than the government, to fix what needs fixing, what was destroyed. Sensible people will say, "If this isn't a rainy day, what is? What, are we waiting for Godzilla?"