More BOJ Policy Members Join Hoenig's ZIRP Vigilantism; Japan's Central Bank Realizes It Is A Media Manipulated Puppet

Tyler Durden's picture

The just released minutes from the March 16-17 policy-setting meeting by the Bank Of Japan indicate that dissension to global ZIRP, and its mutant step brother, Galactic Moral Hazard (we can't wait for Goldman to LBO Uranus, with $1 of taxpayer equity and a 0.001% perpetual PIK loan from the Federal Reserve), is growing: the vote to double the BOJ's 0.1% interest lending facility to Y20 trillion saw a final tally of 5 to 2, with two opposing. It is no surprise that as time goes by, ever more rational people will emerge at most central banks, and join such vigilantes as Tom Hoenig in expressing that extremely rare CB quality - unbribed common sense. Yet what is more notable in the last sentence is that Japan just increased the amount of funds to be injected to cover 3 month cash needs among commercial banks, and not only that but that the BOJ will also double the frequency of the new operation from once to twice per week. In summary: the fiscal tragedy discussed earlier by Koo is starting to once demonstrate the powerlessness of monetary policy when you are dealing with a defunct state. Yes America, this is coming here too. Here's why - the reason for all of this newfound excess monetary flooding: "To encourage a decline in longer-term interest rates." Because that is just what Japan need - more deflation. 

In the words of the BOJ:

In December 2009, the Bank newly introduced a fixed-rate funds-supplying operation against pooled collateral (hereafter the fixed-rate operation) to further enhance easy monetary conditions, and has been implementing such measure to encourage a decline in longer-term interest rates. Given that the amount outstanding of funds provided by special funds-supplying operations to facilitate corporate financing will gradually decline from April 2010 onward, the Bank will expand the measure to encourage a decline in longer-term interest rates by substantially increasing the amount of funds to be provided through the fixed-rate operation.

And with the BOJ shows that once again the cause and solution to all of life's problems is simple: just print more money.

An amusing anecdote in the March minutes, indicates that even the BOJ now realizes just how hilarious any calls to central bank independence are. To wit:

Members discussed the Bank's communication to the public. Many members noted that, well before this meeting was held, there were media reports that the Bank was examining an additional measure, prompting various speculations in the market. Some members were of the opinion that media reports made ahead of the meeting and a consequent increase in market speculation might eventually undermine the credibility of the central bank's conduct of monetary policy, irrespective of whether or not the decision made at the meeting was in line with market expectations. Many members expressed the view that (1) monetary policy should be conducted solely based on the assessment of economic activity and prices in the medium to long term, and (2) even if the Bank made a decision contrary to prior media reports and market speculation, it could secure public confidence by clearly explaining its assessment of economic activity and prices and its thinking behind the conduct of monetary policy. Based on this discussion, members concurred that the Bank should be even more careful in its communication to the public.

In response to his observations, Tadao Noda, said it might heighten the erroneous impression
that monetary policy had been strongly influenced by media reports and
thus have a side effect of undermining the credibility of the bank’s
monetary policy.

He also said the expansion “was inconsistent with
the monetary policy framework adapted so far” and “such action would
have only limited effect in lowering interest rates and was unlikely to
have an announcement effect.”


Nothing like our own Federal Reserve perpetuating its insane monetary
policy prodded by the demands of certain so called economists, whose
daily appearances in the media do nothing but add more fuel to the bonfire which will result once the Fed created ponzi scheme known as the US economy falls apart. 

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Gold...Bitches's picture

and the hits just keep on coming...

Rusty_Shackleford's picture

Gotta love that friggin' haircut.

Fritz's picture

20 years of ZIRP for Japan and nothing but deflation to show for it.

What a giant piece of shit.

glenlloyd's picture

I'll take Galactic Moral Hazard for 100 Alex

nmewn's picture

LOL...brevity is the soul of wit.

suteibu's picture

And let's not forget the doubling of the limits of deposits into the Japan Post Bank, where all funds are converted into J-bills.

Koo has the Hatoyama administration singing the Keynesian blues.  Another trillion yen stimulus is on the way.

Meanwhile, Hatoyama and BOJ Gov. Shirakawa (along with FM Kan) just had lunch together and are planning on regular meetings in the future.  If the media is the problem for these two dissenters at the BOJ, they need look no further than the BOJ, itself. 

BTW, it was Koo who said that the BOJ was 90% free of political influence due, largely, to the efforts of....wait for it....Gov Shirakawa.

MarketTruth's picture

J-Bills... just wait until the Gov steals 401k and turns them into paper debt junk. Already Capitol Controls are in play within the USA and it is now legal for money market guys to lock you out of your funds.

Time to buy physical gold is now. 401k is a liability!


suteibu's picture glitch.

Grand Supercycle's picture


The bear market rally wants to continue for a bit longer ... 

DOW/SP500 daily bull signals from Friday 9 April continue.

Number 156's picture

Japan's Central Bank Realizes It Is A Media  Manipulated Puppet?

Thats not too bad. Over here, the public is the media manipulated puppet.

trav7777's picture

Gosh and I thought that interest rates were the sine qua non of economies.

Why aren't those damned Japs borrowing at 0% to earn a -2% profit?  WTF is the matter w/ them?!??!