Japan's government debt is owed to... Japan, mostly the Bank of Japan (ie, the government). Ironically the yen is weak because Japanese interest rates are low, because Japanese prices have barely nudged since 1990, averaging approximately no inflation until roughly last year. If anything, Japan isn't printing nearly enough yen. They can afford to spend more and tax less.
> If anything, Japan isn't printing nearly enough money
Japan has very low wages compared to other OECD countries (the average wage in Japan is only around $25,000), so inflation - especially the kind you are proposing - is catastrophic, especially given how a significant proportion of the population is on a fixed income due to retirement or social subsidizes due to un- or underemployment.
This is why the Japanese government tries to limit inflation to 2%.
> because Japanese prices have barely nudged since 1990
> Interest rates have been negative for nearly 2 decades
Nope.
Only since 2015 when the Japanese economy entered a recession and CPI rose to 4%.
> What significant government intervention has there been to keep inflation low
Negative inflation rates, impacting the ability to borrow further.
The expansive welfare system that allows 2% of the poorest Japanese to get direct benefits transfers (it's a great program, but very expensive, so other priorities are lower).
Price controls on utilities and some crops like Wheat.
> I don't know why they didn't just raise the minimum wage
Because Japan has a very extensive set of FTAs, and before 2015 a very high youth unemployment rate (8-12%).
If Japan raised the minimum wage, employers would leave for South Korea, Taiwan, China, ASEAN, and India.
> Negative inflation rates, impacting the ability to borrow further.
Government doesn't set the inflation rate.
> The expansive welfare system that allows 2% of the poorest Japanese to get direct benefits transfers (it's a great program, but very expensive, so other priorities are lower).
Price controls on utilities and some crops like Wheat.
> That does NOT mean interest rates were negative.
You're being pedantic. Your graph shows interest rates have been essentially under 0.5 for 30 years. At no point is that a hammer being used to curtail inflation, which was the point.
> Japan has very low wages... so inflation is catastrophic
Wages increase with government spending (and inflation), unless productivity falls a lot or there's a huge wealth transfer from labor to capital. When the government prints a bunch of money and uses it to purchase a bunch of rice from Japanese farmers, that money ends up as higher wages for farmers and their supply chain, and this in turn circulates throughout the economy, as one farmer's spending is another retail worker's wages.
This doesn't help retirees of course, who aren't earning any more, but the government can choose to hand them more money too if necessary; inflation-indexed pensions are a policy choice. (Although I would say that they should be handing more money to young children, in the custody of their parents).
When I refer to government spending and money-printing I am talking about fiscal policy, which can produce inflation if not counterbalanced by taxation. The BoJ, like any central bank, sets monetary policy in response to inflation (and expected inflation) and will raise interest rates if inflation increases; this is what "implements monetary policy with the aim of maintaining price stability" means. Although most central banks, the BoJ included, consider price stability to be a state of low inflation, not necessarily zero inflation.
