It will deal with it by doing nothing. Muddle muddle muddle as always. It doesn't need to do anything. Do you think that everyone is going to suddenly say, "uh oh Japan has a massive dept, we better sell all of our Japanese stocks and bonds and we better ask for repayment of all of our loans right away because the debt, well the debt is so BIG." I mean do you really think that is going to happen? I remind you the debt has been big for a long time, and Japan is not the only country with a big debt. The fact is that is spite of the debt, Japan will continue to be thought of as a very safe bet. People will continue to buy yen-based instruments - even as the returns are so low. And there is the fact that Japan and the US crosshold a huge percentage of their respective debts so JApans major trading partner will not let it fail. It will not let the yen tank. The worse that can happen is that inflation will go up a few % points. Its already started.