Be prepared for more stories like this because they are surely coming: Japan MOF to seek record debt-servicing costs in Fiscal Year 2014/15

Japan’s Finance Ministry will request a record 25.3 trillion yen ($257 billion) in debt-servicing costs under its fiscal 2014/15 budget, up 13.7 percent from the amount set aside for this year, a document obtained by Reuters showed on Tuesday.

The decision, aimed at guarding against any future rise in long-term interest rates, underscores the increasing cost Japan must pay to finance its massive public debt.

The country’s debt is double the size of its $5 trillion economy and is the biggest among major industrialized nations.

Watch What Happens Next

  1. If interest rates rise to a mere 3%, it will consume 100% of all revenues
  2. If Japan monetizes interest payments, the Yen will collapse

So, what’s it going to be? Both?

My best guess is #2 happens whether or not #1 does any time soon.

Mike “Mish” Shedlock