Allison Schrager, Columnist

Japan’s Bond Market Has a Warning for America

February 2, 2026 at 1:00 PM UTC

Allison Schrager is a Bloomberg Opinion columnist covering economics. A senior fellow at the Manhattan Institute, she is author of “An Economist Walks Into a Brothel: And Other Unexpected Places to Understand Risk.”

Signs of the times.
Photographer: Toru Hanai/Bloomberg

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When interest rates are near zero, government debt doesn’t matter. That was the theory at least, in the previous decade, not just from economists on the fringe but also from a few in the mainstream. If rates stayed low, the argument went, the US didn’t need to worry about debt.

And it didn’t. Debt increased, and economists who cautioned against it (ahem) were dismissed as cranks, with many of our critics pointing to the history of one nation: Japan, which managed to keep interest rates low even as its debt grew to more than 200% of its GDP.