A Central Bank's Collapse Into Schizophrenia: The Complete Disconnect Between BOJ Monetary Policy And Economic Assessment
One of the more amusing side-effects of the Keynesian system's death throes are the ever greater disconnects between a central bank's lies about reality and its actions. In this case, there is likely no better recent example than the BOJ (our Fed has been less vocal in its minutes recently in extolling the virtues of the US economy, which is the primary reason why the only thing driving the market are expectations of the arrival of "QE the Saviour"). Goldman has compiled a handy table showing how beginning in September 2009 there has been a major divergence between the BOJ's economic assessment and actual policy decisions, confirming that a nation's central bank is nothing but a populist tool to preserve a political system, even as it acts completely in opposition to its convictions.
If the real economy is showing improvement and the bank’s assessment is also improving, we would not normally expect monetary easing. However, that has been happening in Japan since late last year. The BOJ has implemented further easing while upgrading its economic assessment. It was the October 14 2009 Statement on Monetary Policy where the BOJ said “Japan’s economy has started to pick up”. The tone was maintained in subsequent statements and on August 30 2010 the stance was upgraded to “Japan’s economy shows further signs of a moderate recovery and it is likely to be on a recovery trend.” Yet, starting at a special meeting on December 1 2009, the BOJ has introduced additional easing such as special financing for the corporate sector and funding to expand existing measures and support the foundations for economic growth. These seem to exist independently of the improvement in the BOJ’s economic assessment. Interestingly, none of the easing since December was on the policy list the BOJ drew up in response to the financial crisis in autumn 2008. The BOJ does not appear to associate its recent measures with the financial crisis.
Yes, there is now no longer any cause and effect between a deteriorating global economy, which is portrayed as improving beautifully and monetary policy responses. They all just happen thanks to magical unicorns.
As the collapse of modern economics continues, we expect to see much more such examples of "Fed" doublespeak as everyone professes that the recovery is surging even as QE XYZ is implemented.