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Charting Banzainomics: What The BOJ's Shocking Announcement Really Means

Tyler Durden's picture




 

Still confused what the BOJ's shocking move was about, aside from pushing the US stock market to a new record high of course? This should explains it all: as the chart below show, as a result of the BOJ's stated intention to buy 8 trillion to 12 trillion yen ($108 billion) of Japanese government bonds per month it means the BOJ will now soak up all of the 10 trillion yen in new bonds that the Ministry of Finance sells in the market each month.

In other words. The Bank of Japan’s expansion of record stimulus today may see it buy every new bond the government issues.

This is what full monetization looks like.

More from Bloomberg:

The central bank is already the largest single holder of Japan’s bonds, and the scale of its buying could fuel concerns it is underwriting deficits of a nation with the heaviest debt burden. The BOJ could end up owning half of the JGB market by as early as in 2018, according to Takuji Okubo, chief economist at Japan Macro Advisors in Tokyo.

 

“Kuroda knows when to go ALL in,” Okubo wrote in a note. “The BOJ is basically declaring that Japan will need to fix its long-term problems by 2018, or risk becoming a failed nation.

 

The unprecedented efforts to stoke inflation could scare bond investors, said Chotaro Morita, the chief rates strategist in Tokyo at SMBC Nikko Securities Inc.

 

Kuroda said earlier this month that while the BOJ holds only about 20 percent of Japan’s outstanding government bonds, the Bank of England holds approximately 40 percent of U.K. government debt.

We wish Japan the best of luck in avoiding becoming a "failed nation."

Then again there is something to be said about a nation which is now desperately, and obviously to everyone, trying to unleash hyperinflation... and, for now at least, is failing.

 

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Fri, 10/31/2014 - 09:15 | 5397875 PontifexMaximus
PontifexMaximus's picture

forget about the bonds, look for the ETF purchases!

Fri, 10/31/2014 - 09:20 | 5397902 DeadFred
DeadFred's picture

How long until they are majority owners of the companies? I couldn't find the data.

Fri, 10/31/2014 - 09:27 | 5397932 Xibalba
Xibalba's picture

It's the only play left for the Japs.  Back the NewYen with equity stakes in US companies and let the OldYen die with the population. 

Either that, or it's NukeYen

Fri, 10/31/2014 - 09:40 | 5397997 y3maxx
y3maxx's picture

...Japan could easily be WW3's Black Swan event.

Fukushima, Mathematically impossible to QE until 2018...BK country, Aging Population and Volcanoes

Fri, 10/31/2014 - 09:45 | 5398030 Pool Shark
Pool Shark's picture

 

 

And some analysts still believe the fed will raise rates next year...

Yeah, right...

 

Fri, 10/31/2014 - 10:17 | 5398180 Publicus
Publicus's picture

Nothing wrong with printing money to fund economic activity instead of tax.

Fri, 10/31/2014 - 10:35 | 5398246 Pure Evil
Pure Evil's picture

Now if we could just get the plans for the Death Star drawn up, Hillary would look fantastic in that black helmut.

Only question left to answer is who will play Darth Sidious?

 

Remember kids, only the Evil Empire can create jobs.

Fri, 10/31/2014 - 11:01 | 5398368 MeMadMax
MeMadMax's picture

So is there ANYONE else buying these bonds?

 

From the looks of it, not even a homeless guy is...

 

^.^

Fri, 10/31/2014 - 11:44 | 5398536 economics9698
economics9698's picture

Public debt 226% of GDP, paying it off with inflation.  What a bunch of assholes these bankers are all over the world.

Fri, 10/31/2014 - 12:03 | 5398613 dontgoforit
dontgoforit's picture

Bernakisan has taught them well, no?

Fri, 10/31/2014 - 12:10 | 5398640 Manthong
Manthong's picture

It’s all good as long as long as there is no Ponziness in the policy.

 

Fri, 10/31/2014 - 12:30 | 5398704 Four chan
Four chan's picture

its just the same as the move by the fed, the race to the bottom of valuation wont end until the paper reaches its intrinsic value. zero.

Fri, 10/31/2014 - 12:46 | 5398773 FMR Bankster
FMR Bankster's picture

Population aging rapidly, fewer workers every year but old age pensions and health care expenses mounting, what's the solution? Print up a bucket full of yen and use it to buy productive assets on a worldwide basis. Those Exxon dividends will come in handy. Wonder how long these chumps will keep taking the yen we're printiong up? Can't be forever, we'd better speed up the process before they catch on.

Fri, 10/31/2014 - 13:19 | 5398908 ATM
ATM's picture

First to beggar thy neighbor is the winner.

Fri, 10/31/2014 - 12:46 | 5398774 FMR Bankster
FMR Bankster's picture

Population aging rapidly, fewer workers every year but old age pensions and health care expenses mounting, what's the solution? Print up a bucket full of yen and use it to buy productive assets on a worldwide basis. Those Exxon dividends will come in handy. Wonder how long these chumps will keep taking the yen we're printiong up? Can't be forever, we'd better speed up the process before they catch on.

Fri, 10/31/2014 - 20:14 | 5400249 FreedomGuy
FreedomGuy's picture

It's not just the bankers. They are the bartenders and the government is the drunk with cash and a gun.

In the end it is about whole populations believing in the myth of the genius and benificence of the central planners. Japan just fully doubled down and stocks responded positively, not negatively. This tells me they are trapped and not very good economists/monetarists themselves. They, too are believing in the Central Bank Fairies.

Fri, 10/31/2014 - 11:38 | 5398511 KnuckleDragger-X
KnuckleDragger-X's picture

The death star will be built by government contract with kickbacks priced in.....

Fri, 10/31/2014 - 13:12 | 5398887 Uber Vandal
Uber Vandal's picture

@ Pure Evil:

That question is easily answered, simply refer to the video below.

https://www.youtube.com/watch?v=AEsdl0jft1o

Darth Sidious will be played by the former Pope Benedict XVI, Joseph Aloisius Ratzinger.

Fri, 10/31/2014 - 21:34 | 5400487 StychoKiller
StychoKiller's picture

So long as I get to vacation on Naboo...

Fri, 10/31/2014 - 14:14 | 5399155 ThroxxOfVron
ThroxxOfVron's picture

"Nothing wrong with printing money to fund economic activity instead of tax. "

I agree -under certain conditions.

The problem is that taxes on INDIVIDUAL LABOR and consumption are rising while corporations and the Owners and Managers of the corporations are being relieved of the duty to innovate and compete and fail when they cannot.

The productivity of the World is being aggregated into a few hands who are not themselves productive in any traditional sense.

The Citizenry are being devoured/liquidated by the neo-Globalist neo-Fascist complex via the Central Banking Cartel and it's political affiliates.

Fri, 10/31/2014 - 10:33 | 5398247 yogibear
yogibear's picture

The Fed can't raise rates.  The market will have to force them.

Fri, 10/31/2014 - 11:21 | 5398444 PT
PT's picture

1.  Hyper-inflation can only happen if prices go up.
2.  Prices can only go up if wages go up so people can support the new prices.
3.  Unless, of course, people borrow money and don't have to increase repayments beyond their wages ( which leads to Ponzi Finance ).

I guess when prices go up 1000% in one week, employers will have no choice but to pay their workers ten times more.  But I still have trouble imagining the mechanism that lets hyper-inflation take off.  I feel like something is missing.  Can anyone enlighten me here?

Business failures and scarcity?

Fri, 10/31/2014 - 11:31 | 5398481 Bioscale
Bioscale's picture

At point 2 you forgot that prices go up if the dollar tanks. No need for wages going up.

Fri, 10/31/2014 - 13:41 | 5399023 PT
PT's picture

Prices go up but nobody can afford to buy.  What happens next?
What happened in Weimar?
These days we have stupid people, credit cards and equity loans.  It may take a little longer but then it will be more vicious.

Fri, 10/31/2014 - 11:32 | 5398489 Not My Real Name
Not My Real Name's picture

Hyper-inflation can only happen if prices go up.

No. Hyperinflation is the result of a crisis of confidence in the currency. Skyrocketing prices are a symptom of hyperinflation.

Fri, 10/31/2014 - 11:43 | 5398527 Almost Solvent
Almost Solvent's picture

Exactly.

 

Hyperinflation is a terrible term. It implies super really crazy high inflation.

 

It really means deathbed of a currency.  

Fri, 10/31/2014 - 11:47 | 5398549 Not My Real Name
Not My Real Name's picture

Saying hyperinflation can't start without high prices is like saying you can't catch Ebola without a fever.

Fri, 10/31/2014 - 11:53 | 5398567 eishund
eishund's picture

"But I still have trouble imagining the mechanism that lets hyper-inflation take off.  I feel like something is missing.  Can anyone enlighten me here?"

 

The $ right now is being churned amongst financial assets, real estate, ponzi start-ups, bank reserves etc.

We are already seeing the symptoms of hyperinflation.

Look at the SP500. And, check out what you buy next time. I think ZH has a writeup on shrinkflation. That is also a symptom.

Fri, 10/31/2014 - 13:47 | 5399040 PT
PT's picture

Thanks everyone for trying to answer me.  I haven't seen the answer I am looking for.  Perhaps I need to reword the question.  I'll have a think about it.

Fri, 10/31/2014 - 20:26 | 5400280 FreedomGuy
FreedomGuy's picture

I think the hyperinflation has not set in for several reasons:

1. Demand is not there. Economies and new economic opportunities are not there. It is the irresistable force of inflationary monetary policy meets the immovable object of government's ability to wreck an economy. While earnings are decent at companies, no one has a rosy view of the future so hiring, promotions and pay raises are not taking off which are all signs of a vibrant economy.

2. Much of the money actually sits in bank reserves. It is not actually in the economy doing much of anything and it is not moving. There is very little velocity which is a key component of high or hyper inflation. If anyone did an actual Bernanke helicopter money drop of free money it would start to move rather rapidly.

3. The demand for money is still relatively high. Hyperinflation is a rejection of the currency. People's incomes are still stressed and debt levels are still high. Any extra money that comes along still has value whether it goes to debt reduction or a new HDTV. As long as there is a demand for the currency it will retain some value. Gold prices are a bit of a reflection of this.

 

Fri, 10/31/2014 - 12:16 | 5398667 DrDinkus
DrDinkus's picture

just wanted to let you know I am dressing up as your avatar tonight. any tips/sayings? planning on drinking too much bourbon and shouting BUMBLES BOUNCE until i forget about the farce that the mkt has become

Fri, 10/31/2014 - 12:29 | 5398699 LawsofPhysics
LawsofPhysics's picture

Bingo.  Remember, when fraud is the status quo, possession is 100% of the law.

 

If I have oil and other resources in my possession I can still survive/thrive.  I do not have to sell you shit, especially if I don't want your bullshit paper promises.  You can simply fuck off and die.

Fri, 10/31/2014 - 11:58 | 5398594 tmosley
tmosley's picture

"2.  Prices can only go up if wages go up so people can support the new prices."

Zimbabwe shows that that is not the case.  Most hyperinflations don't feature wages that rise anywhere close to as fast as prices.

Hyperinflation in fiat terms is deflation in gold terms.  Liquidity becomes the most valuable thing you can own.

Fri, 10/31/2014 - 14:55 | 5399327 lasvegaspersona
lasvegaspersona's picture

Hyperinflation is not the result of increasing wages. It is overprinting of the currency. We (USA) already have enough in outstanding bonds that we could have HI tomorrow. If there is a rush to sell those bonds and then use the cash generated by the sale, we could see something other than stock prices rise (what you thought stock prices were rising due to excellent corporate earnings?)

We could see gold spike or at least completely deplete all the physical available which would collapse the paper gold market which would kill the Forex market which would give you your HI before breakfast.

All the pieces are in place and the control rests, not with the FEd but with those who hold all of our paper. Who knows, if it looks like Japan is going the HI route maybe a critical mass will panic early.

These are very unstable times and the very indicators that make things seem to be going well are really signs of the unseen danger just ahead. 

Review the history of the stock markets in Zimbabwe or any other country that eventually hyperinflated. Look long and hard at the market in Japan today...we see a 1100 point rise just because everyne knows the Yen is going to lose value. That is a severe sign of sicknes in the system not a sign the Japanese economy is about to excel.

Most of us know what is coming. I think it is just hard to say...OMG it is starting to happen, but it is.

Fri, 10/31/2014 - 21:35 | 5400474 Wild Theories
Wild Theories's picture

hyperinflation only happens when confidence in the currency is completely lost

in other words, it will be a political happening, it won't be pure economics anymore

akin to losing one's faith or religion, in currency terms

Fri, 10/31/2014 - 13:10 | 5398821 Marco
Marco's picture

There is nothing mathematically impossible about the QE ... in fact the BoJ holding a greater percentage of the outstanding bonds will actually reduce the risk of currency collapse for Japan. It's the fact that savers/speculators hold so many bonds which creates the risk.

Lets say BoJ ends up holding all of the outstanding bonds, then there is nothing left for the market to dump to crash the Yen (they have to muddle along during the transitition of course and the inflation of the monetary base will still create inflation of course). The Yen then depends on Japan's trade strength and the discipline of the government to keep deficits down (discipline which governments generally don't have without the bond market, but I give Japan a better shot than most). In the end Japan's trade deficit is a greater danger to the Yen than the BoJ IMO ... turning all the nuclear power plants back on should help a lot in that respect.

Fri, 10/31/2014 - 13:24 | 5398934 ATM
ATM's picture

All of those trillions of yen that the BOJ prints to buy JGBs will flow directly into the Japanese economy as the government spends them on old age pensions, interest payments to bond holders, government works, etc. What that does is direcltly dilute the value of outstanding yen.

It also makes that carry trade ON again. Borrow yen buy everything and anything and repay with worthless chits of paper.

The race to the bottom is getting ready to start full steam, after the Japs have gotten a couple second head start. Can't wit to see who is next.

Fri, 10/31/2014 - 13:44 | 5399021 Marco
Marco's picture

As I said, it will still cause inflation ... but with a steady state inflation it doesn't allow carry trade, it's priced into the interest rates.

IF they can muddle on towards a new steady state without a disastrous drop in confidence and keep deficits under control continuing QE is not mathematically impossible IMO. The IF might very well be practically impossible though.

Fri, 10/31/2014 - 09:28 | 5397937 TruthInSunshine
TruthInSunshine's picture

Remember that BOJ is official Bad News Bears of CBs, and that BOJ Monetary Policy has Mothra-esque half life.

Fri, 10/31/2014 - 09:51 | 5398058 Ness.
Ness.'s picture

+80 trillion for the Mothra reference.

Fri, 10/31/2014 - 09:42 | 5398016 Colonel Walter ...
Colonel Walter E Kurtz's picture

To everyone sitting on the board of directors - You think Icahn and Ackman are bad, wait until the Fed/BOJ/ECB are your largest percentage shareholders. You'll be taking direction from Abe, Draghi and Hillary/Jeb!

Fri, 10/31/2014 - 11:40 | 5398522 KnuckleDragger-X
KnuckleDragger-X's picture

I'm looking forward to it, Ayn Rand will be shown to be an optimist.....

Fri, 10/31/2014 - 09:20 | 5397903 kliguy38
kliguy38's picture

Kramer's babbling that right now on CNBS and I'm LMAO..........

Fri, 10/31/2014 - 09:27 | 5397928 Divided States ...
Divided States of America's picture

The Jews on CNBC are going all out to sucker the sheeple into stocks....I mean they have been cheerleading on a daily basis the past 2 weeks since that 'correction'....If I could get a list of the guests that has gone on CNBShit the last 2 weeks, I guarantee you that 3/4 of them were Jews.

Fri, 10/31/2014 - 09:36 | 5397982 SMG
SMG's picture

Go somewhere else troll.  How are things at the NSA? I can't believe they can spend my tax money for you to sit there all day to try and divert blame from the Luciferian Oligarchs. 

Fri, 10/31/2014 - 09:58 | 5398103 Divided States ...
Divided States of America's picture

Dude...its a fuckin fact....look on CNBC right now.. Starbucks' Schultz is chatting with Cramer....

Fri, 10/31/2014 - 10:05 | 5398128 TheReplacement
TheReplacement's picture

If they show it to you it is meant to be seen.  Consider that for a moment.  Now ask, what are you not seeing?

The greatest trick the devil ever pulled was convincing people he didn't exist.  Or something along those lines.

Fri, 10/31/2014 - 10:42 | 5398291 Pure Evil
Pure Evil's picture

The greatest trick the Devil is currently pulling is convincing you that he only wants your soul for handing out favors.

What he really wants is for you to do his dirty work while your living, he has little use for you or your soul after your dead.

Once he has control of your inner conscious he has everything he needs.

Fri, 10/31/2014 - 10:05 | 5398132 StandardDeviant
StandardDeviant's picture

Really.  Where do they get these mouth-breathers?

On the other hand, perhaps it's just software - some sort of Markov chain code.  Wouldn't surprise me a bit.

Fri, 10/31/2014 - 09:22 | 5397905 Cognitive Dissonance
Cognitive Dissonance's picture

"forget about the bonds, look for the ETF purchases!"

Exactly. While the steak resides in the bond market the sizzle is in the stocks/ETFs.

Fri, 10/31/2014 - 09:16 | 5397878 Silky Johnson
Silky Johnson's picture

Well now we know why that rotten corpse mouthed cunt Greenspan was upselling gold.

Fri, 10/31/2014 - 09:27 | 5397939 LULZBank
LULZBank's picture

He did it for teh lulz.

Fri, 10/31/2014 - 09:16 | 5397881 hotrod
hotrod's picture

So one way or another it is QE forever.

Fri, 10/31/2014 - 10:48 | 5398312 Alea Iactaest
Alea Iactaest's picture

Anyone else ever wonder about the terms of surrender to end WWII in the Pacific? I mean, wtf Japan? Commiting sepuku due to guilt? Or does the US have you by the short hairs and is demanding a real-time experiment in the Keynsian end game?

Fri, 10/31/2014 - 14:55 | 5399338 froze25
froze25's picture

Great Question.  My guess was to join the banking cartel and all is forgiven.

Fri, 10/31/2014 - 09:17 | 5397883 venturen
venturen's picture

Failed Nation...wait I thought we wanted that?

Fri, 10/31/2014 - 09:27 | 5397910 Divided States ...
Divided States of America's picture

Failed??? its Fucked up nation, thats for sure....You would know these fuckers like Abe and Kuroda would do anything when Abe uses loopholes to massacre endangered protected whales in international waters, and to feed their kids in school with mercury laden whale meat?? I like most of the Japanese citizens but honestly, if these fuckin sheeps dont wake up and see whats happening, they deserve to get what is coming for them..

Fri, 10/31/2014 - 10:55 | 5398350 SeattleBruce
SeattleBruce's picture

Like most Americans, who prefer to be entertained and lied to rather than awake and informed - which is really hard these days because you have to research, read, comprehend and calculate (have you noticed how bad the average person is at even basic calculations?). The Japanese are surely better than we at math, but are just as deluded by being entertained instead of awake and involved.

Fri, 10/31/2014 - 12:10 | 5398646 shovelhead
shovelhead's picture

Thanks Bruce.

That was very entertaining.

Fri, 10/31/2014 - 15:00 | 5399357 froze25
froze25's picture

I don't know man, the Japenese youth is pretty fucked up.  The 20 something generation is into some twisted shit.

Fri, 10/31/2014 - 12:11 | 5398648 dontgoforit
dontgoforit's picture

They have been emasculated.

Fri, 10/31/2014 - 09:17 | 5397884 JustObserving
JustObserving's picture

may see it buy every new bond the government issues.

But they must also buy every new stock issued to complete the ponzi scam.  If the scam is failing, you have to go all in.

Fri, 10/31/2014 - 09:34 | 5397981 NoDebt
NoDebt's picture

At this point they have to.  Follow my reasoning here.

The currency is dead man walking.  We all know that now.  That means the bonds will be worthless, too.

The only thing left of real value (buying gold would only turbocharge the demise of their currency), is DIRECT CLAIMS ON PRODUCTIVE ASSETS.  I.e. stocks.

That's what they're left with when the Yen becomes valueless.  Like Zimbabwe, the stock market shot up (in nominal terms), while the currency died.

Fri, 10/31/2014 - 09:54 | 5398077 Chupacabra-322
Chupacabra-322's picture

"DIRECT CLAIMS ON PRODUCTIVE ASSETS. I.e. stocks."

You mean they're turning Communists?

Fri, 10/31/2014 - 10:00 | 5398108 NoDebt
NoDebt's picture

Stop with the "isms".  It's a game of control.  It' always has been.  Wealth is one projection of control. 

Fri, 10/31/2014 - 10:17 | 5398183 Chupacabra-322
Chupacabra-322's picture

I was just Fuck'n with ya. On a serious not though the end game for these Pure Evil Megalomaics is Total Complete Full Spectrum World Domination over what will be left of mankind.

Fri, 10/31/2014 - 09:35 | 5397983 NoDebt
NoDebt's picture

dupe

Fri, 10/31/2014 - 09:17 | 5397887 fooshorter
fooshorter's picture

Failed Nation. Wow.

Fri, 10/31/2014 - 09:18 | 5397890 john_connor
john_connor's picture

Looks like a debt for equity swap across the globe.  that is of course until the debt just swallows everything whole

Fri, 10/31/2014 - 09:45 | 5398027 numapepi
numapepi's picture

I wonder... can the Japanese Central bank rehypothicate that debt? Might as well spread the...

Fri, 10/31/2014 - 11:00 | 5398373 nope-1004
nope-1004's picture

toxicity?

Fri, 10/31/2014 - 12:13 | 5398660 Tall Tom
Tall Tom's picture

If you held Yen you lost roughly 10% overnight.

 

THe differtrnce between the Japanese version of QE and our version of QE is that the USA has the World Reserve Currency. We can export our inflation, our toxicity, worldwide.

 

However, outside of Currency Traders and Japanese Nationals just how mwnay own Yen? Not many?

 

Hyperinflation is about to eat Japan alive, right on track. They will be the first domino.

 

There will be massive suffering in Japan.

 

So can they export their toxicity? Not only can they but they must.

 

As they are, and will become even more, resource strapped, very soon they will be forced to sell off US Government Bonds.

 

And as they hold many of those the Interest Rates on US Bonds will rise as the US Government has stopped buying them.

 

So what does that do to our Government Deficits and Debt? They will explode due to Interest Rate increases.

 

And as for the Federal Reserve? They have no control over it.

 

Enjoy the Stock Market Blow Off Top.

Fri, 10/31/2014 - 15:04 | 5399373 froze25
froze25's picture

I have heard in the past that the downfall will start in Japan, then somehow spread to the bank of England.  I have no idea of why that is the case just what I heard.  Then from the Bank of England to the US.

Fri, 10/31/2014 - 09:19 | 5397893 rwe2late
rwe2late's picture

Is Japan "sacrificing" itself because of a stereotype that they are exceptionally "docile"?
Or, are they are being used, and not because they are exceptionally "docile"?

If Japan were militarily occupied by Russia, with a government set up by Russia, and had been so for 50 years
people would have no difficulty understanding that Japan's foreign relations and economic policies were being directed by the occupying power in collusion with its dependent collaborators.

who sets the parameters of military policy for Japan?

http://www.globalresearch.ca/americas-military-pivot-to-asia-obama-wants...

http://www.globalresearch.ca/dangerous-crossroads-us-japan-talks-escalat...

who sets economic policy for Japan?

… money was flowing into Japan at an unprecedented rate. Prices were beginning to move upwards and new money was flowing into the stock market at an unprecedented rate, causing the Nikkei to rise faster than market fundamentals might dictate.
By the mid-1980s, the Japanese Central Bank decided to slow the economy down by raising interest rates. This action would dampen any inflationary tendencies and prevent a stock market bubble from forming. However, as logical as this solution was, it was to be opposed by the US government and never implemented.
At the time, most of the Japanese money was being invested in US Treasuries, as the Reagan administration was borrowing heavily to fund its military buildup. During Reagan’s presidency, US government debt tripled from one to four trillion dollars, the greatest percentage increase of US debt in history.
The US knew that any rise in Japanese interest rates would slow the flow of Japanese funds to the US. Japanese investors would much prefer to keep their money in Japan if interest rates were high enough.
But during this time, the Reagan administration needed a constant flow of foreign dollars to pay for its military expenditures and when it heard about the plans of the Japanese Central Bank, it did more than register a protest. It threatened Japan with economic sanctions.
If the Japanese went ahead with their interest rate increase, the US threatened to retaliate with import tariffs on Japanese automobiles, electronics, and consumer goods. This threat was real enough to cause the Japanese to cancel their interest rate increase.
As a result, the US military buildup continued and the price of Japanese real estate and stocks, fueled by excessive amounts of liquidity, exploded upwards. Japanese real estate prices increased 70 times over and stock prices increased over 100-fold, with the Nikkei reaching a market top at 38,992 in January 1990.
As with all speculative bubbles, the Nikkei collapsed - and the collapse of the Nikkei in 1990 unleashed deflationary forces not seen since the Great Depression of the 1930s. Prices of stocks and real estate in Japan began a long and steep multi-year descent.
Commercial real estate lost 80% of its value in the next decade and the Nikkei fell from 38,992 in 1990 to 8,237 in 2003. Deflationary cycles are long and protracted and if not stopped will become deflationary depressions, an economic phenomenon for which there are no ready answers...

http://www.321gold.com/editorials/schoon/schoon121912.html

Fri, 10/31/2014 - 09:58 | 5398106 drdolittle
drdolittle's picture

How dare you sully Reagans name! He's a hero to republicans. A great example of small government. Or, a good example of a CONservative.

Fri, 10/31/2014 - 12:48 | 5398783 shovelhead
shovelhead's picture

Cap Weinburger was at the controls of that one. Reagan knew the military was in shambles and needed updating but Cap the Knife became Cap the Ladle and poured riduculous amounts of money into military hardware.

A few historians claim there is evidence that Cap kept Reagan unaware of his budget busting free-for-all as Reagan was a delegator rather than a overseer in his style of management.

Reagan, the small govt. President, unwittingly or not depending on what you believe, became the MIC's and Pentagons best friend and paved the way for Bush's adventures overseas with tons of military hardware suitable only for land wars and occupations rather than countering the Soviet missile threat as was his stated intention.

Fri, 10/31/2014 - 15:08 | 5399389 froze25
froze25's picture

In celebration of Holloween, I will be firing up the Lazarus machine and raising Barry Goldwater from the Dead to run for President in 2015.

Fri, 10/31/2014 - 10:13 | 5398161 geekz_rule
geekz_rule's picture

good post, thank you!

Fri, 10/31/2014 - 10:13 | 5398162 geekz_rule
geekz_rule's picture

good post, thank you!

Fri, 10/31/2014 - 12:11 | 5398644 livefreediefree
livefreediefree's picture

rw2late. You: During Reagan’s presidency, US government debt tripled from one to four trillion dollars, the greatest percentage increase of US debt in history.

From (Warning: XLS file) OMB's "Historical Tables", specifically Table 7.1—Federal Debt at the End of Year: 1940–2019

1981: $994 billion; 1989: $2.867 billion
1982: $1,137 billion; 1990: $3.206 billion.

I trust you can do the subtraction.

Gov't debt didn't reach 4 trillion until 1992.

A civics lesson. During Reagan's 8 years, Democrats controlled the House of Representatives. According to the Constitution, all spending bills are initiated in the House. Therefore, Democrats are 100% responsible for the debt during Reagan's Presidency, just as Republicans since 2010 are responsible for the debts incurred during Obama's Presidency.

Fri, 10/31/2014 - 12:29 | 5398698 Tall Tom
Tall Tom's picture

"...all spending bills are initiated in the House. ...Republicans since 2010 are responsible for the debts incurred during Obama's Presidency."

 

You mean that the Republicans are responsible for FUNDING, Financially Supporting (which is SUPPORTING)  ObamaCare???

 

And then they tell me that there is a difference between the two parties...

 

Why I am so shocked...

Fri, 10/31/2014 - 13:11 | 5398853 livefreediefree
livefreediefree's picture

Yea, Tall. Republicans are responsible for funding Obamacare. Ain't that the shits? Not conservative Republicans, mind you, just Republicans.

It is Inside the Beltway conventional wisdom that the Dems beat the Pubs when the Pubs tried to shut down the gov't. After all, gov't is the end-all and be-all, isn't it, particularly to the Authoritaran Progressives who control the MSM. The Republicans realized they were being painted by the MSM as complete idiots, so, what did Pubs do? Become supine. As you noted, among other things, fund Obamacare.

Milbank is a faithful Progressive. His column Conservatives are finally right: Obama is not a dictator. He’s a bystander. pinpoints the sole reason for our political malaise: Obama, particularly, has done almost nothing during his political career except hone and craft his ability to spew meaningless political rhetoric. All politicians succumb to this illness/addiction.

What is the Pub's message this election: We're not Obama. What is the Dem's message this election: We're not Republicans.

Pols realize that, if they try to do anything, they'll be criticized for it. Better to do nothing and attack their opponents.

Are political ads this year even more and information-content-less than they've been in the past? Maybe. But maybe the meme that MSM Progressives are pushing that this election is about nothing (Sorry, girls and guys, but it's about your prime Progressive, Obama, and he is toast, you Progressive cocksuckers [ie, Progressive MSM males have a deep, abiding bromance with Obama, to the point where they crave to give him a bro-job]) is somewhat correct.

Why is nothingness front and center? Because the only solution to our problems is to undo what politicans have done starting somewhen at the end of the Clinton administration. The only solution is to cut gov't by half, which means reducing entitlements drastically, which means rebellion on the part of the lazy tens of millions who depend upon gov't for their total existence, which means the end of many politician's term of office.

We're fucked. Either the pols solve the problem directly, or reality will.

Fri, 10/31/2014 - 13:54 | 5399056 ucde
ucde's picture

[ deleted ] 

Fri, 10/31/2014 - 15:12 | 5399410 froze25
froze25's picture

I will wait for reality, the only Pol I believe would do anthing is Mr. Paul, and as much as I like him I don't think the establishment would let him in, in fact I think if he would win the primary he would be killed or sabotoaged from within to make sure he wasn't pres.

Fri, 10/31/2014 - 23:39 | 5400853 livefreediefree
livefreediefree's picture

Yea, Paul merits some attention, but he (like Cruz and Scott Walker) don't have the necessary "stage presence", as some conservative pundit said (I think Tarnato). After the supermodel Obama, the idiots who vote may want another Hollywood-spawned idol.

Fri, 10/31/2014 - 09:18 | 5397894 youngman
youngman's picture

It looks like to me a snake swallowing its own tail....it works for awhile..but it ends bad

Fri, 10/31/2014 - 09:22 | 5397907 Hamm Jamm
Hamm Jamm's picture

Sad world we live in

Fri, 10/31/2014 - 09:23 | 5397908 NEOSERF
NEOSERF's picture

WOW...so this would be like me writing checks to myself and cashing them at a faster rate each week...good strategy.  WHY outside of Japan threatening all other nations with the fallout of their collapse WOULD ANY BOND TRADER EVER BUY JGBs AGAIN?

Fri, 10/31/2014 - 09:25 | 5397921 NoDebt
NoDebt's picture

Well, given that all private-sector trade of JGBs has effectively ceased, there is only one set of buyers:

Banks that buy them to sell them back to the Bank of Japan.  Its a fully closed system now.

Fri, 10/31/2014 - 09:29 | 5397948 Cognitive Dissonance
Cognitive Dissonance's picture

In some circles they call that incest.

Fri, 10/31/2014 - 09:44 | 5398022 numapepi
numapepi's picture

... or a circular fireing squad.

Fri, 10/31/2014 - 10:17 | 5398182 IANAE
IANAE's picture

...or... ponzi

Fri, 10/31/2014 - 14:23 | 5399186 ThroxxOfVron
ThroxxOfVron's picture

I see it a little differently.

Not incest.  -Incest would imply that they are fornicating with a sibling...

It is more a case of: we told them to 'GO FUCK YOURSELF.' one time too many, and they took us up on the offer!

Fri, 10/31/2014 - 10:50 | 5398326 Duck and Cover
Duck and Cover's picture

JGBS

Fri, 10/31/2014 - 09:28 | 5397945 gswifty
gswifty's picture

You stole my comment, even though you said it first.

Fri, 10/31/2014 - 09:23 | 5397913 Sages wife
Sages wife's picture

From the title I was expecting some awesome photo-shop.  Don't really need it for that chart.  All in.

Fri, 10/31/2014 - 09:23 | 5397914 NoDebt
NoDebt's picture

"and the scale of its buying could fuel concerns it is underwriting deficits of a nation with the heaviest debt burden"

No.  Surely not.

Fri, 10/31/2014 - 09:27 | 5397941 DeadFred
DeadFred's picture

I wonder what part of buying 100% of issue was giving them pause?

Fri, 10/31/2014 - 09:31 | 5397957 Cognitive Dissonance
Cognitive Dissonance's picture

The part about losing all plausible deniability?

Fri, 10/31/2014 - 09:37 | 5398001 NoDebt
NoDebt's picture

It doesn't matter what they say any more.  The lies only persist for the benefit of the truly stupid and naive. 

Fri, 10/31/2014 - 09:42 | 5398015 Cognitive Dissonance
Cognitive Dissonance's picture

As long as the financial community feels the system can be gamed and profits made this will continue. Faith and belief is not conditional upon right or wrong....or even sustainability.

Just profit and loss.

Fri, 10/31/2014 - 14:27 | 5399206 ThroxxOfVron
ThroxxOfVron's picture

"As long as the financial community feels the system can be gamed and profits made this will continue.  "

^^^ THAT ^^^ IS THE PROBLEM.

As long as the 'financial community' is not checked from sucking up whatever they can lay their hands on this will go on until something unpinning the very foundation of economic activity breaks catastrophically.

Fri, 10/31/2014 - 09:24 | 5397916 vegas
vegas's picture

What it means for the people of Japan is easy to answer: Someday, you are all fucked and whatever money you think you have will evaporate from hyper-inflation. Add to this a below 1.0 Birth/Death ratio and the future of Japan, Inc. isn't very rosy.

 

www.traderzoo.mobi

Fri, 10/31/2014 - 09:24 | 5397918 oudinot
oudinot's picture

The US equity market won't become a bear market until there is a blow off top.

I see that happening right now.

I would suspect by the end of the year, or a latest the first quarter of 2015 the US equity market will be in a bear market.

Fri, 10/31/2014 - 09:53 | 5398072 Pool Shark
Pool Shark's picture

 

 

The timing of all this one week before the midterms is also a bit suspect...

 

Fri, 10/31/2014 - 09:26 | 5397919 LULZBank
LULZBank's picture

It means, its BoJ's turn to take one for the team.

And BoJ can do this for as long as the JPYUSD exchange rate is maintained within acceptable levels, otherwise they go Zimbabwe over night.

Fri, 10/31/2014 - 09:25 | 5397920 Archetype
Archetype's picture

"or risk becoming a failed nation". Like this ever stopped the central planning beast in any nation? Hell, they are competing who can fail the most in the shortest amount of time.

 

I really don't care anymore. We all know that the SHTF sooner or later, no point in analysing anything when you allready know the final result.

Fri, 10/31/2014 - 09:25 | 5397922 mastersnark
mastersnark's picture

Finally...some good news. No possible way this can have unintended consequences. 

Fri, 10/31/2014 - 09:31 | 5397958 Hamm Jamm
Hamm Jamm's picture

LULZ

full speed ahead, captain !

Fri, 10/31/2014 - 09:48 | 5398044 HardlyZero
HardlyZero's picture

Japan following Zimbabwe.

What will go on in Europe now ?

US will idle.

Fri, 10/31/2014 - 09:26 | 5397926 Keltner Channel Surf
Keltner Channel Surf's picture

 

 

The contrast of Banzainomics
with the science of plate tectonics:
Terms like “global deformation,”
impacts from “rotation”
Is it merely a matter of phonics?

Fri, 10/31/2014 - 09:27 | 5397940 Rehab Willie
Rehab Willie's picture

This is more like Kamikazenomics than Bonzainomics.

Japan should do the world a favor and commit seppuku already.

Fri, 10/31/2014 - 09:29 | 5397943 firstdivision
firstdivision's picture

Who ordered the fresh Gazillyen?

Fri, 10/31/2014 - 09:40 | 5398011 numapepi
numapepi's picture

I predict the Gazillyen will mutate into a Godzilliyen.

Fri, 10/31/2014 - 09:29 | 5397947 Yen Cross
Yen Cross's picture

  That statement about the BoJ only holding 20% of the Japanese bond market is extremely misleading. Japan has the largest pension fund in the world and they hold massive quantities of JGB's.

  Comparing the JGB market to the Gilt market is a joke! The 10 year gilt currently yields 2.25% not .46% like the ponzified 10 year JGB. The UK bond market is also much smaller. Japan is FUBAR... Who's going to buy a 10 year bond yielding .46% except the Japanese .gov.

Fri, 10/31/2014 - 13:39 | 5398990 Marco
Marco's picture

Ehh, the pound lost a structural 10% of it's value during the 2008 crisis ... with the kind of moves currency make on a yearly basis in todays environments pretending yields make any difference at all is just part of the gambling superstitution of the currency speculators.

Fri, 10/31/2014 - 15:13 | 5399400 itstippy
itstippy's picture

"Who's going to buy a 10 year bond yielding .46% except the Japanese .gov?"

Tyler posted the Japan.gov illustrated informational releases a long time ago - the only way for a Japanese male to get laid is by holding lots of JGBs.  Japanese women throw themselves at guys who hold JGBs.  They will fling off the kimono and let you have your way, so long as its on a bed of JGBs.

Unfortunately, if the BoJ buys ALL the JGBs there will be no way for a Japanese male to get laid, and the birth rate will go to zero.

Fri, 10/31/2014 - 09:30 | 5397950 ekm1
ekm1's picture

Japan has a plan:

 

Eliminate retirees, LITERALLY.

 

Abe is a nationalist. They are trying to have old people die faster and I am not exaggerating one single bit

Fri, 10/31/2014 - 09:35 | 5397989 LULZBank
LULZBank's picture

I know what you mean.

Check out this report.

Fri, 10/31/2014 - 09:41 | 5398019 Toolshed
Toolshed's picture

Too funny!! Do you have his cell # ?

Fri, 10/31/2014 - 09:47 | 5398037 LULZBank
LULZBank's picture

Naah man, couldn't risk it. His boyfriend was too possessive.

Fri, 10/31/2014 - 09:52 | 5398070 HardlyZero
HardlyZero's picture

Build retirement condo villages in the warm, sunny, and rural Fukushima !

Some move-in homes available now ! 

Dismal.

Fri, 10/31/2014 - 12:58 | 5398818 shovelhead
shovelhead's picture

Such a sad end to Mr. Miyagi.

Pawned his classic cars for a dress.

Fri, 10/31/2014 - 09:29 | 5397953 NoWayJose
NoWayJose's picture

Full monetization - Japan is leading, but it is inevitable in the US... And yet, gold and silver are on sale!

Fri, 10/31/2014 - 09:40 | 5398012 Toolshed
Toolshed's picture

People seem to underestimate the state's (any state) need to manage the peasant's perspectives. It absolutely guarantees the destruction of the sheeple. Got gold? Also, notice the sudden lack of ebola headlines? Notice the impending US elections? Coincidences?

Fri, 10/31/2014 - 09:49 | 5398048 LULZBank
LULZBank's picture

Fuck the Morons, they need it, they want it, they infact demand it.

They fall for it everytime.

Fri, 10/31/2014 - 09:55 | 5398078 HardlyZero
HardlyZero's picture

How long will this Weimar or Zimbabwe style last ?

1 year, 2 year, 5 year, 10 year, 15 year, 20 years ?

Fri, 10/31/2014 - 10:20 | 5398195 LULZBank
LULZBank's picture

Nothing lasts forever and that is not the point.

What you do in the meanwhile is what decides the winners and the losers.

Fri, 10/31/2014 - 09:31 | 5397959 chinaboy
chinaboy's picture

From Jingoism to extream Keysianism.

Fri, 10/31/2014 - 09:31 | 5397963 Oldballplayer
Oldballplayer's picture

We have gone from "correction" top new all time highs in two weeks.

I know I wasn't the best student in my economics class, but seem to get the impression that is not a good thing.

 

Fri, 10/31/2014 - 09:33 | 5397966 tritumi
tritumi's picture

cost me $30k

gained me ¥400 man?(no two byte characters allowed?)

 

like i noted earlier, kuroda saving abe's bacon.  until...

Fri, 10/31/2014 - 09:39 | 5398002 numapepi
numapepi's picture

Never cook bacon while naked.

Fri, 10/31/2014 - 09:43 | 5398018 tritumi
tritumi's picture

shabu shabu eliminates splatter

boil 'em, danno

Fri, 10/31/2014 - 09:31 | 5397971 CerpherJoe
CerpherJoe's picture

This is the type of suicide that takes everyone down.

Fri, 10/31/2014 - 09:35 | 5397985 moneybots
moneybots's picture

"What The BOJ's Shocking Announcement Really Means"

 

That the BOJ is sub contracting QE for the FED.

Fri, 10/31/2014 - 09:44 | 5398023 tritumi
tritumi's picture

contracting as in 

 

a disease

Fri, 10/31/2014 - 13:06 | 5398843 DonutBoy
DonutBoy's picture

That is exactly right.  The yen is a reservce currency.  As it gets shorted the dollars gets plowed into the S&P 500.  The Fed has outsourced QE.

Fri, 10/31/2014 - 09:35 | 5397993 wagthetails
wagthetails's picture

seems logical

Fri, 10/31/2014 - 09:40 | 5398008 gatorengineer
gatorengineer's picture

They face the same dilema now as my wife, what do you buy when there is nothing left?

Fri, 10/31/2014 - 09:50 | 5398046 VW Nerd
VW Nerd's picture

Fiat currency chasing fiat securities.  Mix with lots of leverage and lies and we have achieved economic nirvana.  Why am I nervous?

Fri, 10/31/2014 - 09:49 | 5398050 Kina
Kina's picture

so why are China and Russia buying gold at a record pace???

Fri, 10/31/2014 - 12:41 | 5398740 fishwharf
fishwharf's picture

Because they know the value of real money.  We should all be doing the same.  The banksters manipulating the price of PMs downward are doing us a favor.

Fri, 10/31/2014 - 09:51 | 5398061 Kina
Kina's picture

when a stock markets only relevant correlation is money printing you have the beginnings of Zimbw

Fri, 10/31/2014 - 09:50 | 5398062 franciscopendergrass
franciscopendergrass's picture

Is this the financial version of baseball's steroid era?  This like bonds hitting 73 in a single season.  With use of any PED, there are side effects.   When are tge dide effects going to kick in?

Fri, 10/31/2014 - 10:14 | 5398168 user2011
user2011's picture

US tried to bring down Russia and China because they are the threat to the reserve currency. How they do it ? First they must beat Russia, that has the advance tech, by killing it's energy base economy. Next with yuan is getting louder and louder, it is letting japan to lower the currency to boost the manufacturing and sales.

US push down commodity prices, hurting Russia but benefiting japan imports. Now, Japan will reposition itself to compete against China in the exports by lowering the yen value.

With these one two punch, we are officially in a economic war prior to the military one.

Fri, 10/31/2014 - 14:56 | 5399346 cornflakesdisease
cornflakesdisease's picture

You have it wrong about China.  The US and China are #1 trading partners.  They are joined at the hip.  Japan has been throw under the bus by Dollar, Inc.

Fri, 10/31/2014 - 10:17 | 5398177 Kina
Kina's picture

Hardly any good for the US economy

Fri, 10/31/2014 - 10:27 | 5398210 rejected
rejected's picture

If everybodies buying........ who's selling?

If corporations are buying their own stocks back where are the shares everybodies buying originating?

 

 

Fri, 10/31/2014 - 10:35 | 5398256 yogibear
yogibear's picture

First Japan with a currency crisis, then the US.

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