Harding directed me to the example of Belarus, which like Japan has a falling population in recent years:
And yet Belarus has lots of inflation:
Not as bad as the 100% inflation of 2012, but still running around 10% per year in recent years, despite a falling population.
So why do demographics cause deflation in Japan but not Belarus? Simple, demographics don’t cause deflation in Japan, or anywhere else.
If you have the right model of money, the world is a much less confusing place.