Japan has by far the biggest national debt in the developed world, relative to the size of its economy. Why is the Japanese government able to borrow money at what may be the lowest interest rate on the planet?
In large part because almost all of Japan's debt is held domestically, mainly by big institutions that aren't looking to sell.
This is also an important factor for the U.S. and the U.K., which both have high debts and low borrowing costs. In the U.S., more than a third of the federal debt is held by the government itself, largely in the Social Security trust fund. (Yes, it's weird for a government to lend money to itself; we explored that concept in this podcast.)
A report out this week from the IMF has a graph that lays this out very nicely.
Click on the graphic to see a bigger version.
Hat Tip: Big Picture