Double you money in exactly 100 years!

Like it or not, we are living through history. In Japan, 10 year bond yields (known as JGBs) have collapsed to 0.72% from 1% as recently as April. Why is this level significant? Because if you own an asset returning 0.72%, or 72 basis points, you will double your money in exactly 100 years! You want some? What is baffling is how bond prices in the land of the rising sun have continued their relentless 20-year rise in the face of a doubling of supply. The marginal buyer at the moment appears to be the foreign speculator/ investor. Hence, foreign ownership of JGBs has now reached ¥76 trn, 8.5% of the total, up from 5% in 2010. Every recent bout of weak economic data coming out of Japan has pushed yields lower, as one would expect. However, the Bank of Japan's February pronouncement of inflation targeting was blisfully shrugged off by the bond market. Bond prices have moved higher since. Why, as JGBs prices rise (yields fall) demand for them keeps rising, hence pushing prices ever higher? Are JGBs a Giffen good? Named after Scottish economist Sir R. Giffen, this phenomenon was explained by Alfred Marshall in the third edition of his Principles of Economics (1895). Marshall observed that demand for bread in the face of rising prices among Victorian era Britons was also rising. In isolated instances, demand for inferior goods actually rise as the price of the said goods increase. JGBs must be 'inferior goods'...