Japanese debt might be high, but it isn't comparable to American debt, which is set to trigger a financial implosion — and light a spark under Bitcoin.
On the face of it, the United States' debt to GDP ratio doesn’t seem that bad on a global scale. In 2023, it was lower than the average for G7 nations — at 123% — and roughly half of the most indebted country in the world, Japan, where debt stood at a whopping 255% of GDP in 2023.
Looking at the numbers alone, it would be easy to brush this off as a non-issue. After all, Japan has managed to navigate its growing debt pile relatively well over the years. Its economy remains stable, while the Nikkei 225 index is up around 31% over the last year (as of May 10), outperforming the S&P 500. In reality, though, the economic situations in the two countries couldn’t be more different, which means that what works for Japan is unlikely to work for the U.S.
The glaring difference between the two is the composition of their debt ownership. In Japan, nearly 90% of debt is owned domestically by its citizens and institutions. By contrast, roughly a quarter of U.S. debt is held by international debt buyers. And so needs to ensure that its debt remains attractive to them by paying a high enough yield versus its global competitors — especially as this debt rises to higher and higher percentages of GDP, meaning that it becomes riskier to lend to the government.
