"Yes, consumer demand trumps money supply with regards to inflation, and consumer demand in the younger countries is much stronger than in the U.S."
So then money supply DOESN'T cause inflation, only demand does. If demand is high, inflation high, regardless of money. If demand is low, inflation low, regardless of money.
"As for Japan, we didn't really discuss it because I have thought that who holds one's debt is one of the most irrelevant matters I have ever heard of. If foreigners hold most of your debt, and you default, as was the case with Argentina, the short term effect is more pleasant than if your own citizens held your debt. Yet I hear everyone going on about how scary it is that China and Japan hold so much of our debt. It isn't. "
This is changing the subject. Your question is why has Japan's currency remained strong while they run large deficits. Talking about "scary" or the impact of a default has nothing to do with that question. Try to remember what the question is.
Since you agree (or do you) that money supply causes inflation, then I don't understand why you keep insisting that the upcoming deficits won't cause inflation. Oh I see, you think we're going to try to tax our way out of it. But since you think the market will get pounded then presumably that means the economy will be also. So those tax revenues can't possibly materialize. What's going to happen then? How will the debt be serviced? Think real hard.