Ron,

I agree with your comments that "the status quo is changing and it will affect the national debt, the Japanese economy and the Japanese people (i.e.JGB’s) in a material way." I think this much is obvious.

But then you move onto a comment such as: " I am concerned about the value of JGB’s and the levels of Yields on JGB’s / interest rates, the value of the Yen and an inflationary spiral. I don’t claim to know how exactly it will manifest itself." One of the points that ArmoTrader was making is that when you try to map out what will happen then you need to look at a path that maintains the simple macroeconomic identities and takes into account the way that fiat money behaves at a macroeconomic level in a modern banking system.

When this is done you find that the debt/GDP ratio is not an important concept. However, even if it's not an important concept we still have that debt as a major factor in the economy. As an exercise in how to think about these concepts in a modern money sense, consider this case of dissaving:

The aggregate of Japanese pensioners wish to sell a certain amount of JGBs, say Y1bn. This will require the buyers to electronically shift Y1bn from their bank accounts to the pensioners accounts. The bond sales are settled electronically too. Who are these buyers and why do they have Y1bn in cash earning 0%? (Note that you can't assume they sell other assets, as this just shifts the question back one step - who has the cash?) Note that the government (BoJ) could be the buyer. What are the implications in this case?

Why do the pensioners have to sell bonds? The rolling maturity of existing bonds gives a very high cash flow to the holders of the bonds, over 10% a year of the stock of JGBs mature each year.