Can Japan maintain its fiat?

In simple terms, Abe’s plan is to flood the economy with cash, either from government coffers or the Bank of Japan (BOJ), to boost growth. The LDP advocates a plan to lavish a staggering $2.4 trillion on public-works programs over the next decade — a gargantuan stimulus equivalent to 40% of the country’s GDP. And where will Abe find the money to pay for all of that construction? The government itself, already posting huge deficits, doesn’t have the resources. So Abe figures he can extract the cash from the supposedly independent Bank of Japan.

Read more: http://business.time.com/2012/12/17/will-japans-new-prime-minister-start-a-debt-crisis/#ixzz2FLLSkOMs

Abe is guaranteeing a negative real growth rate for some period, a sure bet for bond investors. But he gets into the musical chairs game, when should bondholders exit and avoid the debt crisis. Foreign holders of Japanese debt can use it for exchange as long as Japanese real growth is negative  (bonds rise in price). But Japan cannot guarantee real negative growth forever, eventually Japanese disappear, not a pretty sight.