The Japanese Central Bank has accounted a Quantitative Easing Program that is estimated to be worth $1.4 Trillion that is expected to double to countries money supply. This program is expected to restore the economy and to get rid of deflation that has stuck to Japan for decades. As part of a new set of policies known as Abenomics, formulated by Japan's new prime minister Shinzo Abe, the Bank of Japan will buy ¥7tn yen (£46bn) of government bonds each month using electronically created money, with the aim of rekindling demand and pushing up prices and wages. The hope is the increase inflation of 2% within the next 2 years.
The Bank of Japan's decision is likely to spark concerns that Tokyo is deliberately depressing the value of its currency in a bid to improve its export performance in a tough global trading environment. There have been many critics and opponents towards Abenomics. Many feel that they debt load is just too large and any additional increase in Japanese interest rates will destroy the program and Japan’s overall economy. A beg opponent, Kyle Bass, has stated in multiple conferences that Japan will default on their debt obligations and the Yen will crumple.
Japanese debt has soared to 20x their government tax revenue. A ballooning government debt is often associated with sovereign debt crises, as market shocks can send the interest rate paid on the debt to unsustainable levels. Coupled with Japan's shrinking population (and thus tax base), the country is setting itself up for a Yen implosion. With a debt-to-GDP ratio over 200% and a contracting population, it's only a matter of time before a sovereign debt crisis sets in. A sovereign debt crisis would raise Japanese interest rates, which the government would be unable to service with a shrinking and aging tax base.
Investors wanting to capitalize on Japanese massive debt issuance and the future implosion should consider purchasing the Inverse Yen ETF, which is the ProShares Short 2x Inverse Yen ETF. This Short ProShares ETF seeks a return that is -2x the return of an index or other benchmark (target) for a single day.