Hey all,
I am just curious as to what it is that I am missing regarding the Japan situation. Clearly, massive increases in the money supply and an ever growing debt to GDP ratio is something that I feel will lead to inflation and rising yields on government bonds.
However, Japan has one of the highest debt to GDP ratios that I have ever seen at 170% and they have been relentlessly printing money for the past 20 years or so, yet they are experiencing deflation and their yields on government bonds are extraordinarily low. Considering that I would have expected the exact opposite, what is it that I am missing about this scenario to explain why this is?