How the *#!@ is Japan not bankrupt??? Even more… how the *#!@ is the Yen gaining strength!?!?! Lets compare Japan’s debt to GDP vs USD/YEN:
Japan by all rights should be bankrupt! Greece failed at 135% debt to GDP and IMF economists claim the maximum sustainable debt to GDP is 120%. Japan’s trade deficit is increasing and productivity is low. Yet somehow the Yen is considered a “safe haven”. The Yen doesn’t have as much pull as the USD… does this mean the US could sail through 250% debt to GDP while the USD gains strength??? What is going on here?
Here is an article that tries to explain why the Yen is a safe haven: http://www.financialsense.com/contributors/matthew-kerkhoff/why-japanese-yen-safe-haven-currency
It basically says the reason is net foreign assets. Japan’s net foreign assets = $1.17 Trillion USD (2015 – 121.25 Trillion Yen)
Compare this to the US at -$612 Billion
Canada’s net foreign assets is around $9 Billion (2015 – $12.5B CAD)