Sustainable?

Tyler Durden's picture

It is all too easy to look admiringly at levitating nominal stock prices, stick your head in the sand, and believe that Abe and Kuroda have it all under control (by "it" we mean everything that has happened and that Zero Hedge predicted would happen two years ago). But for those unwilling to take the BoJ's word for it that "the economy has stopped deteriorating," we ask one simple question. After looking at the following four charts of Abe's 2-2-2-2 Plan, "is it sustainable?" You decide...

 

Abenomics: The "2-2-2-2" policy

+2% inflation in 2 years - by printing (and implicitly devaluing the currency on a scale we have not seen)... way beyond anything anyone has ever tried before...

 

Double monetary base and BOJ’s JGB holding

 

Double the average duration of JGBs the BOJ buys

 

And all this with a Structural deterioration in the extrernal balance...

 

 

All looks very doable eh? Now ask yourselves, do you feel lucky?

Sustainable?

Given the volatility in JGBs on the last 3 days, we suggest not. ..