One thing that I didn't see mentioned that is important is the real estate bubble that led to the deflation. Part of the reason that the government has been able to issue so much debt is that homeowners (and real estate investors) have been paying down the mortgages on their underwater properties. As property prices continue to drop, many properties stay underwater or nearly so. Mortgage debt has been shrinking as government debt has been expanding. When the real estate market bottoms out, it will become more difficult to grow the government debt. However, with an aging and shrinking population demand for real estate will remain low and will fall below replacement cost. The Fukushima disaster has put further downward pressure on real estate prices, at least regionally.