Japan Just Proved That Central Bankers Are Out of Ideas...

Phoenix Capital Research's picture

The Keynesian economists managing or advising the world’s Central Banks have always averred that they could pull us out of the weakest recovery in the post-WWII era if they were allowed to have their way.


Their “way” involves rampant debt monetization, also called Quantitative Easing or QE. Indeed, the primary argument from the Keynesians as to why QE has thus far failed to generate a rip-roaring recovery is that none of the QE programs in place were large enough.


Japan is where the Keynesian economic model rubber hit the road. In April 2013, the Bank of Japan announced a staggering $1.4 trillion QE program.


In today’s world of Central Banking madness, $1.4 trillion no longer sounds like an insane amount. So let me put this number into perspective…


$1.4 trillion is…


1)   The equivalent of 24% of Japan’s total annual economic output.

2)   Enough to fly every human being in Japan to California for a 2-week vacation.

3)   The equivalent of writing a check for $11,200 to every man, woman, and child in Japan.


Moreover, with $1.4 trillion, you could…


1)   Buy Australia’s entire economy for a year.

2)   Fund NASA for the next 82 years.

3)   Treat every person on the planet to a $200 five star-dinner at one of New York’s top restaurants.


For the US to engage in an equivalent amount of QE, it would have to announce a $3.7 trillion QE program. If Europe engaged in a QE program of this magnitude, it could buy back ALL of Spain and Greece’s debt outstanding.


Suffice to say, Japan’s QE was large enough that no one, not even the most stark raving mad Keynesian on the planet, could argue that it wasn’t big enough. Which is why the results are extremely disconcerting for Central Bankers at large.




1)   The Yen lose an astounding 22% of its purchasing power.

2)   Japanese exports, denominated in units… haven’t changed.

3)   Over 77% of Japanese citizens not feeling as though Japan’s economy is improving.

4)   Japan’s Misery index rising to a 33 year high.

5)   The number of Japanese Households on welfare hitting a new record high in May 2014.


In simple terms, Abenomics has failed to revitalize Japan. Just as importantly, this failure is being noticed by the press (articles regarding the failure of Abenomics have emerged in Forbes, the Financial Times, and CNBC) and is costing Abe his popularity (his ratings have fallen from 75% at re-election to roughly 50% now).


Thus, the Bank of Japan’s massive QE campaign has revealed:


1)   That QE does not generate economic growth

2)   There will be political consequences for its failure


Now, Central Bankers will never openly admit that they or their policies have failed. But it is not coincidental that the Fed is actively tapering while Japan proves the Keynesian dream is in fact a nightmare. It is also not coincidental that the ECB’s balance sheet has shrunken over the same time period.


In simple terms, Japan has proven than QE and money printing do not result in economic growth. Heck, they don’t even boost exports: when you account for Yen depreciation, Japan’s exports are unchanged during Abenomics.


Now it’s just a matter of time before the markets figure out that Central bankers are out of ideas…


This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://phoenixcapitalmarketing.com/special-reports.html.


This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.


Best Regards


Phoenix Capital Research



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patb's picture

Is it just me, or isn't QE principally monetary policy?

 The JCB is making interest cheap and lending to the bankers.

What the JPG isn't doing is building infrastructure.



Salsipuedes's picture

Central Bankers don't have "ideas". They have ambitions, insecurities, peculiar longings, estranged children with problems, friends they can't trust, wives they can't stand, and psycho-sexual suicidal tendencies manifest through latent homosexuality, big yachts, little dicks and no balls. But ideas? Not a one.

cn13's picture

The best post you have ever written.

Spot on.

And I have been reading them and sometimes shaking my head for many years.

Not that I don't agree with you.  But it is always a question of timing.

And for some reason I unfortunately feel that the timing may be now.

Trahald's picture

Yep - that didnt work.  Now to raise interest rates in New Zealand and see how that effects their economy. 


VWAndy's picture

Well they only had one idea to begin with.

kchrisc's picture

QE = "Quantitative Easing" = "printing" = stealing more to hide their prior thefts

blindman's picture

"we have tried nothing and are out of ideas" ...?
look it up.

blindman's picture

central bankers do not trade in the realm
of ideas, they scorn, ignore and despise ideas.
they trade in the realm of fraud, illusion,
speculation and the graft of credit money.
this is not the realm of ideas.
look it up.

Duc888's picture




Not so much as "out of ideas" as out of bag holders.


Entrophy is a bitch.



perelmanfan's picture

The estimable Robert Heinein once noted that religious types contend "If you pray hard enough, water will flow uphill."

So, how hard do you have to pray?

"Hard enough for water to flow uphill!"

Same thing for QEasing. Since the concept is flawless, only the intensity can be found wanting. Believe me, the zealots are quite capable of accusing Abe of being too timid.


SameAsItEverWas's picture

When a central bank prints money they need to balance the books by trading that new money for something of value, traditionally sovereign debt, world currencies, and gold.  But.

QE was so large that there just wasn't enough of the usual stuff, so they added mortgage-backed securities.

Abenomics is so large that the BoJ is buying stocks and REITs.


GreatUncle's picture

Think the whole point of this article is...

Japan created a whole load of money and it did diddlysquat to reverse their debt accumulation.

I swonder why?

Baby Eating Dingo22's picture


Yoe mean idea

The only one they know- print more

They are out of an idea, not ideas

doctor10's picture

the central bankers-by virtue of doing the same thing over and over again, expecting a different outcome each time, have simply self-certified their insanity.

Goldbugger's picture

I have and idea, send the central bankers to Nigeria.

ebworthen's picture

Krugman the bearded PhD Potato will say it wasn't enough.

"100% of GDP might not be enough.  It won't be enough until it works."

AdvancingTime's picture

 Japan continues to slide towards an economic abyss with each passing day. The writing is on the wall. Japan is facing a wall of debt that can only be addressed by printing more money and debasing their currency. This means paying off their debt with worthless yen where possible and in many cases defaulting on promises made. Japan's public debt, which stands at around 230% of its GDP and is the highest in the industrialized world.

 The moment the Japaneses stock market fails to rise enough to offset inflation this will turn into a tsunami of  money fleeing Japan and constitute the end of the line for those left holding both JGBs and the yen. This has been a long time coming and I contend the cross-border flow of money leaving Japan is why some stock markets have remained so resilient . When Japan crumbles it will be felt across the world. More on this subject in the article below.


jomama's picture

Japan is just in a holding pattern - hoping either the EU or USA fails first.

theonewhowaskazu's picture

This. The US is actually in a much worse situation, and has done a much better job of masking it. So, the Japan bubble will burst first, but not as badly, and will further delay the collapse of the US's as money fleeing japan flows into the US. Then just as it looks like the Japanese are recovering, the US will crash, and it will be even worse, simply because we've been masking it for so long. 


Only thing I question in your post is your assertion that Japan's stock market would suffer. Due to all the inflation headed their way, it will almost certainly appreciate at least relative to their currency (which granted, will depreciate). One thing's for certain: If you've got the choice to be holding cash, bonds, or equity, choose equity. This is the case pretty much everywhere in the world right now.

Comte d'herblay's picture

Yeah, but it's different over here; now. 

JRobby's picture

Like a cocaine overdose

giggler321's picture

Put's fukushima daiichi nuclear power situation in perspective - after all if you're a Jewish banker and want to profit by betting against a recovery, you'd want to make sure with the right sized nuclear camera bomb, wouldn't you?

Jack Sheet's picture

This concludes this comment.

TeethVillage88s's picture

This was a sophomoric blog, not an Analysis or a Report.

I could have wrote this in an hour.

My memory is no good here since I ignored the reports of Japans money pumping. I take it there was no:

- CAPEX Spending
- No Infrastructure Spending
- No Re-Tooling of Industry
- No new Skills Training for outdated industries

- This was just Japans version of QE right? I know the Fed was telling all other Central Banks to use Monetary Policy to increase Money Supply - which by default only helps bankers who then simply invest in paper.

The Most Interesting Frog in the World's picture

Once the US implemented qe japan basically felt they had no choice.  They had to devalue along with the dollar

OpenThePodBayDoorHAL's picture

You could of wrotten it in an hour, get yer grammar straight

wee-weed up's picture

"the most stark raving mad Keynesian on the planet"

Fuck you, Krugman!