Truthdig has the article Japan Is Writing Off Nearly Half Its National Debt—Without Creating Inflation. We Could, Too.
But the point underscored here is that large-scale digital money-printing by the central bank used to buy back the government’s debt has not inflated prices, the alleged concern preventing other countries from doing it. Quantitative easing simply does not inflate the circulating money supply.
I sure hope that the BOJ asks itself why Quantitative easing does not inflate the circulating money supply under the current circumstances. Whenever you see an economic pronouncement about what any particular policy causes, you must automatically add the implied qualification “under the current circumstances.” Then you must look into and understand the current circumstances that make this true. That will allow you to monitor those circumstances so that you can tell when those circumstances change.
The answer is not fully explained in the article.
In Japan, as in the US, QE is just an asset swap that occurs in the reserve accounts of banks. Government securities are swapped for reserves, which cannot be spent or lent into the consumer economy but can only be lent to other banks or used to buy more government securities.
My understanding is that reserve accounts can be used to meet government regulations so that banks can increase their lending into the consumer market. The reason why banks are not doing that now is that there is no huge increase in demand for consumer lending.
When there is increasing consumer demand for loans, then they will come into the market. Currency in circulation will increase. The government better have a plan on what to do if the money in circulation increases to such a point that inflation exceeds the government’s target. Such a plan could include tax increases and it could include reductions in government spending.
It would be ruinous to public confidence in government, for the government to appear helpless in the face of increasing inflation. It would be catastrophic if government took actions that made the inflation worse.