Japan's Debt Crisis Is Just the Beginning || Feb. 9, 2026
Japan has a...special way of measuring deficits, leaving true borrowing understated by excluding major obligations like pensions and local government debt, and counting planned bond issuance as income. But Japan isn't the only country facing debt issues.
Japan has run an annual deficit of 7-10% for decades, making it the most indebted country in modern history. The U.S. and Europe are on a similar trajectory, though. The U.S. has interest payments that rival defense spending, thanks to the demographic situation. Europe has the same people problem, a weaker tax base, and has to ramp up defense spending to deal with Russia.
While Japan might be first through the gate, this is a global issue. Budget cutting alone isn't going to solve any problems, but existing economic models simply can't square this circle.
Comments (41)
Folks, you've heard it here! Peter Zeihan has figured out how to correct the spending deficit/ tax base given the demographic mismatch! And I quote, "Unless you just decide to liquify old people somehow, which would be just to say complicated". Reference the movie "Logan's Run" .
Pretty much! I haven't got a better idea, even though I'm unconstrained by knowledge or information!!! 👀 We need to discover a new hemisphere!
Don't things come to a head for a given country when they can no longer service their debt and default on a payment? Is that perhaps the bigger question?
A "Tokyo Side" Sounds a lot like the Year of Jubilee practiced in ancient Isreal which occured on seven year cycles (as I undersand it). A "Tokyo Side" It would certainly destroy the banking system. Would a "Tokyo Side" destroy the value of the USD, stock values, and other stores of value? Other than "canned goods ans ammunition", what would good stores of value?
Politicization of debt has more value than the debt itself. Let that sink in
Japan faces economic catastrophe in all likelihood.
I think that was the first time you talked about country's debt situations and did not mention China once.
Have you looked at Galvon versus copper? New super conductive material
Appreciate the comments Peter. However, there have been a lot of countries that have undergone debt crises in modern history. According to Debt Justice, 54 countries today are considered to be in a debt crisis or at high risk, especially in the Global South. Here are some examples of notable countries that have undergone a debt crisis in recent history... Argentina- One of the most frequent modern defaulters. Has experienced multiple sovereign debt crises, including major defaults in 2001 and 2014. Greece-Entered a severe debt crisis around 2010. Required multiple EU and IMF bailouts and underwent deep austerity measures. Russia-Defaulted on domestic debt in 1998 during a financial crisis triggered by falling commodity prices and capital flight. Mexico-Faced a major debt crisis in 1982, triggering the broader Latin American debt crisis. Brazil-Experienced repeated debt problems, including defaults and restructurings in the 1980s and early 1990s. Turkey-Has faced multiple financial and currency crises, including debt-related stress in 2001. Egypt-Experienced a major sovereign debt crisis as early as 1876, leading to foreign intervention. It's had a more recent financial/debt crisis from 2022-2024.
What happens when know one intervenes? That is the fear.
LOL Peter shook his finger at us. ... as we wait for the emperor to wave his receptor.
I can’t understand why people focus on gold, it’s worth nothing when there is a food shortage and a plague of hungry mouths bursting forth from cities. You can’t buy what you can’t grow/harvest/store. Perhaps the farmer in me, but land has always held more value than metals for me. And of course knowing WTF to do with it. 🫡
Because others value it, and hence gold and other precious metals have a value of exchange. Plus historically it was important, it’s seen by some as “more real” than fiat money, and in some ways, jut the look and feel.
That fan is gonna give you a hair cut, don’t jump in the summer time! But yeah. Why can’t we get an administration that doesn’t increase debt. Like it wasn’t enough the time before…
Of course, the biggest question of them all is when do you think this will happen? What can we as citizens do to hedge against collapse? Gold, silver, and other precious metals. I'm trying to think how that would work. I remember Napoleon Hill saying he had some sort of warning a day or two before the Market crash of 1929. He went to the bank and got a one-thousand-dollar bill. When the crash happened, no one could break it into smaller workable bills. If you have an ounce of gold worth more than $6K, how would you use it?
Get out your hack saw and cut off a slice. Don't forget to save the dust!
My biggest concern has been a global debt crisis. All I can think of is the aftermath of WW1 and we dont have the young population to bounce back from that.
If all you can think of is the aftermath of WWI and global debt crises, to what do you attribute your nocturnal emissions? Interest rates or the treaty of Versailles?
Yeah, let's party like it's 1999!
What's the explanation for the rising GDP?? Tariffs? AI?
Are they taxes? If so, why haven't the economies like the EU/India - that have high tariffs - collapsed? I'm assuming you don't know the answer about the rising GDP...
Curiously, no mention of mainland China, which seems to be on a course to replicate Japan faster than the US…
Do you think that Japan will dump their position of US treasuries to try and stave off hyperinflation? And if so, what happens in the United States if the largest holder of treasuries starts a massive sell-off?
Who knew Chuck Palahniuk was a prophet? 🤣
Jewish jubilee but yeah. Lenders would not like it
Jumping from 4% to 6% on a mortgage rate does not mean you're paying 50% more on your monthly payments. That's a common misconception based on simple arithmetic (6/4 = 1.5), but mortgage payments aren't linear with interest rates—they follow an amortization formula. ## Mortgage Formula Basics Monthly payments are calculated as \( M = P \frac{r(1 + r)^n}{(1 + r)^n - 1} \), where \( P \) is principal, \( r \) is monthly rate, and \( n \) is total payments. For a typical $300,000 loan over 30 years (360 payments), a 4% annual rate gives about $1,432 monthly, while 6% gives $1,799—a 25.7% increase.
This is why Bitcoin was created
Sounds like you described the Biblical Jubilee in which, often, all debts are voided.
Eh, it's all made up at this point and everyone knows it. What's a PE ratio? Once some of the bigger countries start to go down, they'll have some massive global debt restructuring deal and essentially do the Emperor's hand wave, only make it sound way more complicated so as not to spook retail.
I’d love to get Peter’s take on Modern Monetary Theory
When was the last time the Emperor erased all the debt?
Isn't the historical answer to government debt: Inflation, inflation, inflation? In turn, isn't the individual response to buy and hold hard assets like property, precioius metals, oil (stock)?
I was not expecting to hear ‘debt jubilee’ as a solution to the debt crisis.
All this government spending in the U.S. and NONE of it is going to bribe an unruly population into complacency. Can some please get his Excellency Malik Salman bin Abdulaziz Al Saud to invite TroTUS over for some shay and dates so he can explain to him how a REAL monarch ordained by a Higher Unquestionable Power deals with us Plebs… https://knowledge.wharton.upenn.edu/article/to-stave-off-arab-spring-revolts-saudi-arabia-and-fellow-gulf-countries-spend-150-billion/ It was the best of times.. no that’s it for me, really was the best of times.
Jesus how tall are you
Pretty sure he is standing on something. So, as not to show too much of his house.
There is a Jewish debt forgiveness (+land +slave emancipation) concept of Shmita. Every seven years the fields should be left fallow, all slaves should be emancipated and debts forgiven. Of course, they quickly came up with clauses and ways to avoid Shmita rules, because cyclical debt forgiveness ruins the economy. So even in your scenario, Peter, this is a single event after which debt goes back to normal because of Time Prefrence of Money which does not go away even in declining populations
Does liquify mean erase?
In this case yes. Think dissolve.
Finger wave advice noted 💰 🛍️😉 congratulations to Takaichi on her election. It might be expensive, but it looks like security will be a priority.
And people wonder why gold is so high.