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The Experiment that Will Blow Up the World
Submitted by Pater Tenebrarum via Acting-Man blog,
The BoJ Goes Even Crazier
It has been clear for a while now that the lunatics are running the asylum in Japan, so perhaps one shouldn’t be too surprised by what happened overnight. Bloomberg informs us that “Kuroda Jolts Markets With Assault on Deflation Mindset”.
The policy hasn’t worked so far, in fact, it demonstrably hasn’t worked in Japan in a quarter of a century. Therefore, according to the Keynesian mindset, we need more of it. Mr. Kuroda therefore delivered a surprise spiking of the punchbowl that immediately impoverished Japan’s consumers further by causing a sharp decline in the yen:
“Today’s decision to expand Japan’s monetary stimulus may be regarded as shock treatment in the central bank’s effort to affect confidence levels. Bank of Japan Governor Haruhiko Kuroda’s remedy to reflate the world’s third-largest economy through influencing expectations saw the yen sliding and stocks climbing.
Kuroda led a divided board in Tokyo in a surprise decision to expand unprecedented monetary stimulus. Bank officials hadn’t provided any hints in recent weeks that additional easing was on the cards to help reach the BOJ’s inflation goal. Kuroda, 70, repeatedly indicated confidence this month that Japan was on a path to reaching his 2 percent target in the coming fiscal year. Just three of 32 economists surveyed by Bloomberg News predicted extra easing.
“We have to admit that this is sort of a second shock — after we had the first shock in April last year,” said Masaaki Kanno, chief Japan economist at JPMorgan Chase & Co. in Tokyo, referring to the first round of stimulus rolled out by Kuroda in 2013. Kanno, who used to work at the BOJ, said “this is very effective,” especially because it comes the same day as the government pension fund said it will buy more of the nation’s stocks.
(emphasis added)
So why is there allegedly a “need to combat the deflation mindset”? Below is a chart of the recent increases in Japan’s CPI.
In actual practice, it matters little how they have come about – the fact that CPI was inter alia boosted by a hike in consumption taxes does not alter the fact that every consumer in Japan is now getting fewer goods and services for his income and savings than before. No consumer is going to a shop and saying to himself “the fact that things are now vastly more expensive than before somehow shows we are still in deflation, because it has happened for transitory reasons”. All he knows is that he is getting less for his hard-earned money. Mr. Kuroda is evidently not moved by such considerations.
Japan’s CPI is recently growing at a 3.2% annual rate. Obviously, this means one must “combat the deflation mindset” – click to enlarge.
Bloomberg’s article continues along precisely these lines:
“A decline in demand following April’s sales-tax increase and the tumble in oil prices are putting downward pressure on prices in Japan. Today’s decision came hours after a government report showed that core inflation eased to the slowest pace in six months in September.
The 3 percent gain in core consumer prices — the BOJ’s main gauge — was just 1 percent with the effects of April’s sales-levy hike stripped out.
The BOJ today reduced its estimate for the core consumer price index, which excludes fresh food and increases to sales tax, to 1.7 percent for the fiscal year through March 2016, from 1.9 percent previously. The bank kept its forecast at 2.1 percent for the following year.
The central bank won’t hesitate to act again if needed, Kuroda said, pointing out there’s still room for additional measures. The BOJ acted as skeptical views mount over the effect of quantitative easing, according to Citigroup Inc. economists Kiichi Murashima and Naoki Iizuka. “If the impact of today’s action on the economy and prices proves limited, the impact on financial markets may also prove short-lived,” they wrote in an e-mailed note.
The above is a corollary to the recently heavily propagated idea that falling oil prices are somehow “bad” for oil consuming countries because they might lead to lower prices! You can read this nonsense in every statist rag, from the Financial Times to the Economist. If this doesn’t prove how utterly absurd the basis of today’s central bank policies is, nothing ever will. These people have taken complete leave of what was left of their senses.
Although it shouldn’t be necessary to say this, here is a reminder: rising stock prices are not “proof” that things are fine. If that were the yardstick by which to measure the “success” of central bank money printing, the best performing economies in the world would be those of Venezuela, Argentina and Iran.
BoJ credit, as represented by the asset side of its balance sheet. Still not enough! – click to enlarge.
Kuroda’s Policy Will End in A Catastrophe
In order to explain why the pursuit of Kuroda’s policy is edging ever closer to a catastrophic outcome, we have to delve a bit into the details of Japan’s monetary data. In spite of the BoJ’s “QE” reaching record highs, it mainly creates bank reserves and furthers carry trades. The economy sees no private credit growth so far.
Commercial banks in Japan continue to shrink the stock of fiduciary media – this is to say, they are reducing outstanding credit, which makes more and more unbacked deposit money disappear. Hence, Japan’s money supply growth has recently decline to a mere 4.3% year-on-year, as the rate of contraction in outstanding fiduciary media (i.e., uncovered money substitutes) has accelerated to 9.4 annualized in spite of the BoJ’s pumping.
The reason is a technical one: contrary to the Fed, the BoJ buys most of the securities it acquires in terms of its “QE” operations directly from banks – this creates new bank reserves at the BoJ, but no new deposit money. By contrast, the Fed buys only from primary dealers, which are legally non-banks (even though most of them belong to banks). This creates both bank reserves and deposit money concurrently. The BoJ’s actions can only directly inflate the money supply to the extent it buys securities from non-banks, e.g. when it buys stocks in REITs to prop up the Nikkei.
Below is a chart showing the annual growth rate of Japan’s narrow money supply M1, which is essentially equivalent to money TMS (it comprises demand deposits and currency).
Japan’s 12-month money supply growth has declined to 4.3%, in spite of the BoJ’s pumping – click to enlarge.
In short, the effectiveness of the BoJ’s pumping depends on the extent to which commercial banks are prepared to employ additional bank reserves to pyramid new credit atop them and thereby create additional fiduciary media. Japan’s banks are doing the exact opposite, mainly because there simply isn’t sufficient demand for credit. Why would anyone borrow more money, given Japan’s demographic situation?
However, one result of this is that an ever larger portion of Japan’s money supply actually consists of covered money substitutes – deposit money that is “backed” by standard money. Covered money substitutes have grown by more than 77% over the past year.
Bank reserves can be transformed into currency when customers withdraw cash from their deposits, hence to the extent that deposit money is “backed” by bank reserves, it ceases to be a form of circulation credit. The narrow money supply in total now amounts to roughly 595 trillion yen; of this, roughly 139 trillion yen consist covered money substitutes and 83.4 trillion yen consist of currency (outstanding banknotes in circulation). Thus the stock of fiduciary media has shrunk to 372.6 trillion yen.
Japan: currency plus demand deposits = M1 = true money supply – click to enlarge.
And yet, in spite of Japan’s money supply growing much slower than money supply in both the US and the euro area, the yen continues to implode:
The yen’s plunge is accelerating – click to enlarge.
The yen’s ongoing collapse suggests that Kuroda will eventually get his inflation wish, as import prices continue to rise. In fact, Japan recently regularly reports trade deficits, which is inter alia a result of the plunge in the yen’s external value. Currently, this is offset to some extent by the decline in commodity prices, but given that commodities are by now extremely cheap relative to financial assets such as stocks and bonds, it becomes ever more likely that this offset will eventually reverse.
An era of trade deficits has begun in Japan, concurrently with the decline in the yen – click to enlarge.
The question is though, why is the yen falling so much if Japan’s money supply isn’t expanding at a very strong rate? We believe the answer to this question is to be found in the following statistics:
Gross government debt to GDP – Japan is the undisputed public debt king of the developed world – click to enlarge.
It is well known that Japan has a very high public-debt-to GDP ratio. Even with the recent economic upswing, its budget deficit for the current year is projected to clock in at more than 7% of GDP – the latest in a string of huge annual deficits. What is less well known is the ratio of public debt to tax revenues, which is actually the more relevant datum:
Government debt relative to tax revenues – click to enlarge.
We conclude from this that the markets are pouncing on the yen because they are forward-looking: the BoJ is monetizing ever more government debt and this is expected to continue, because the public debtberg has become too large to be funded by any other means.
In spite of the relatively low money supply growth this debt monetization has produced so far, it also creates the perverse situation that an ever greater portion of the government’s outstanding stock of debt consists actually of debt the government literally “owes to itself”.
On the surface, this monetarist wizardry suggests that one can indeed “get something for nothing” – but that just isn’t true. Deep down, market participants know that it isn’t true – so even though they are celebrating the promise of more liquidity by sending Japanese stocks soaring, they are also creating a fault line – and that fault line is the external value of the yen.
Among the industrialized welfare states, Japan is the one that is closest to government bankruptcy. Even with interest rates at record lows, the proportion of debt growth that is caused by mounting debt servicing costs alone has begun to rise in recent years due to the sheer size of the public debt outstanding. In other words, the government is by now in a so-called “debt trap”.
It has only been able to avoid more grave repercussions so far because Japan has run a current account surplus for a long time, and and only very few foreign investors therefore own JGBs. Japan’s own state-owned financial institutions such as the Post Bank and the state-owned pension fund have invested a large part of the population’s savings predominantly in JGBs.
And yet, the seeming calm rests on what appears to be increasingly misplaced confidence. All that is needed to blow the entire scheme to smithereens is an event that leads to a cracking of this confidence. Once a critical mass of economic actors becomes convinced that the plan is indeed to “make the public debt disappear” by monetization, and given what markets have done so far, it seems increasingly likely that it is the yen that will crack first. However, the sign that the ship is actually capsizing will be when JGB values begin to plummet in spite of the BoJ’s buying of government debt.
The growing amount of bank reserves piling up as a corollary to the BoJ’s exploding holdings of JGBs are like tinder waiting for a spark to set it off. Since Japan’s financial institutions hold large amounts of JGBs as ‘risk free’ assets augmenting their capital, their solvency will come into doubt should JGBs begin to decline in value. This is likely to happen should the fall in the yen’s external value get out of control. In that event, large portion of the covered money substitutes sitting in accounts may actually be converted into currency by panicked depositors. Then Mr. Kuroda will be reminded of the old saying “be careful what you wish for”.
Conclusion:
Japan’s aging population needs rising prices like a hole in the head. The more “successful” Mr. Kuroda becomes in forcing prices up, the less money people will have to spend and invest. The economy will weaken, not strengthen, as a result. The advantages the export sector currently enjoys are paid for by the entire rest of the economy. moreover, even this advantage is fleeting. It only exists as long as domestic prices have not yet fully adjusted to the fall in the currency’s value.
If one could indeed debase oneself to prosperity, it would long ago have been demonstrated by someone. While money supply growth in Japan has remained tame so far, the “something for nothing” trick implied by the BoJ’s massive debt monetization scheme is destined to end in a catastrophe unless it is stopped in time. Once confidence actually falters, it will be too late.
Haruhiko Kuroda believes the economy is a machine, and he just needs to pull, the right levers.
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If the Japanese or any other country really wanted inflation, they know that all they have to do is print a lot of money and mail out checks. ( The Obama Economic Stimulus Plan sent out two $250.00 checks stimulus checks in 2009 for a total of $13 billion.)
The Japanese are not sending out checks because they do not want inflation. They are just saying they want inflation for public consumption. What is really going on is that the Japanese are so desperate to keep financing their government spending that they are accelerating the ruse of issuing bonds, then turning around buying those same bonds, then turning those bonds into money to pay for their government spending. Yes it would be simpler for the Japanese government to just print money but then the public would be confronted with the bare truth. A little camouflage is still working, all over the world. After all look at how well the public bought into the 4 Trillion dollar QE ruse. For at least 90 more days the US dollar and bonds are the safest haven in the world thus gold priced in US dollars will continue under pressure.
The timing question for when we go over the edge boils down to: will the free markets do it or will one government capitulate and starts the deflationary run from bad debt, snowballing at possibly lightning speed with everything being electronic these days. At some point the markets are sure to be closed down by the Banksters after right after the Banksters have properly positioned themselves.
We'll see.
Blessed is the one who reads aloud the words of this prophecy, and blessed are those who hear it and take to heart what is written in it, because the time is near. Rev 1:3
Printing money to fund jobs/economic activity is the solution to all our problems. They just need to give the money to the little people instead of the rich. Then cancel excess money that is pooled at the hands of the rich periodically.
There is no longer any need for tax/fee nor debt.
Nothing has worked for the BOJ.
Kuroda won't say it but he is now hell-bent on inflating away the debt.
Same old central bank game.
I can't read the hieroglyphics but I suspect it's something like fish,rice,radioactive discount rice...
Lot's of Japanese own physical gold......Americans.....not so much.
The icon picture of Kuroda captures the true essence of central banking, pure fucking evil.
@Danno: I agree.
However, they are going to get inflation, someday. Now, I wonder who is going to hit the brakes when inflation starts to rampage?
Germany, Switzerland, USSA/GB?
And is inflation really going to rampage? Or is it going to slowly expropriating the savers over the next 25 years?
Can't have that!!
They must cripple savings and money value combined with French Socialist type taxes to infinity. But no matter what the ruling elite must not get touched - it's in the hidden Monopoly Bank Rules..
Karl Marx - "There is only one way to kill capitalism - by taxes, taxes, and more taxes"
It was Lenin. In The Economic Consequences of the Peace, Keynes quoted Lenin as saying "the best way to destroy the capitalist system is to debauch the currency."
And the central bankers are doing it.
Great Idea! I'll just stay home and not work because I'm paid if I produce or not.
Gotta love Central Bank Communism.
It works <till it doesn't>
Ebola will fix this problem.
Gosh that sounds really easy mister. Can you teach me?
The clock is ticking!
In 1984 while attending the Wharton School, I attended a workshop with a very young Jeremy Seigel where he taught us all that "Stocks for the Long Term" was a mantra we should all carry forward until infinity. Ten years later we were touring the Fidelity Investments Boston office when the head of their "quant" department remarked that "Stocks are a buy until at least 2015 when, based upon the aging of the Boomers, that demographic would morph from "buyers" to "sellers." -- David Pierre, at Zero Hedge
“If you add all the profits that the banks made from 1998 through 2008; in which the “ever-increasing” bonuses were paid from; 2008/2009 losses exceeded the ‘entire’ profit for those 10 years [1998 through 2008]” -- Simon Johnson, at Baseline Scenario
And the genius is the FED & Obama have filled their coffers again!
Oh really now, Danno. Obama sent out some 250$ checks? Where were mine? I remeber when Bush sent out one to me, but I wasn't even aware of any from Obama. Did you make this shit up?
usednabused: Danno, Did you make this shit up?
Here are the facts.
From Wikipedia, the free encyclopedia
"Stimulus bill" redirects here. For other uses, see Stimulus bill (disambiguation). American Recovery and Reinvestment Act of 2009 Long title An act making supplemental appropriations for job preservation and creation, infrastructure investment, energy efficiency and science, assistance to the unemployed, State, and local fiscal stabilization, for the fiscal year ending September 30, 2009, and for other purposes. Acronyms(colloquial) ARRA Nicknames The Recovery Act, Stimulus, The Stimulus Package Enacted by the 111th United States Congress Effective February 17, 2009 Citations Public Law http://upload.wikimedia.org/wikipedia/commons/2/23/Icons-mini-file_acrob...) 100% 50% no-repeat;" rel="nofollow" href="http://frwebgate.access.gpo.gov/cgi-bin/getdoc.cgi?dbname=111_cong_publi...">111-5 Statutes at Large 123 Stat. 115 Legislative historyThe American Recovery and Reinvestment Act of 2009 (ARRA) (Pub.L. 111–5), commonly referred to as the Stimulus or The Recovery Act, was an economic stimuluspackage enacted by the 111th United States Congress in February 2009 and signed into law on February 17, 2009, by President Barack Obama.
To respond to the Great Recession, the primary objective for ARRA was to save and create jobs almost immediately. Secondary objectives were to provide temporary relief programs for those most impacted by the recession and invest in infrastructure, education, health, and renewable energy. The approximate cost of the economic stimulus package was estimated to be $787 billion at the time of passage, later revised to $831 billion between 2009 and 2019.[1] The Act included direct spending in infrastructure, education, health, and energy, federal tax incentives, and expansion of unemployment benefits and other social welfare provisions. It also created the President's Economic Recovery Advisory Board.
Yeah, so? Where in there was the $250 checks you speak of? I lived through those years, and the Bush regime's also. I know when I received a $250 check and when I didn't. The ARRA didn't provide me with shit. Rather it robbed me and future generations.
Isn't "it's all Bush's fault getting a little old after 6 years ? You're right about being robbed of your future but it goes back a long long ways to the last real balanced budget of president Eisenhower.
I think he meant $250 Billion Dollar check...but those went to a select few.
Guess you're not a public employee/teacher, then. Most of that "stimulus" ended up in public union pensions!
Hey, it works for the US!
Soon we will all be millionaires!
Use your best Australian Accent..
<That's not a QE...>
<THIS is QE...>
The Defibrillator Paddles hit the 80 year old ruled Porridge and Coffee Market (clear!)
ZimBucks, Obamaphones and you can keep your $850,000/year medicare..
Oh yah - you didn't build it.
Von Firstenberg!
ah crap. I am only Maximus Segundus.
Nope, I think Incontinentia Buttocks is more appropriate.
On a long enough timeline, if you predict every six months or so that the world is about to end as we know it due to a particular monetary policy, you will eventually nail it.
All they need is a sandwich board. I have read 20 articles about Japan spanning 15 years that say the exact same thing and they always predict imminent doom. It's all fake and Japan is exploiting the total lack of reality in the world economy.
To be fair, the longer this continues the closer they are to being right.
I predict that the world will end in the next few months. Thanks for the inspiration!
There's that. That and we aren't French, which is nice.
Yes, I am sure that the fallout from Dubai's debt crisis will wipe out everything, or maybe it will be the Jefferson County's bankruptcy that will take us back to the stone age. And then we have Fukushima, too.
Anytime now ...
Ain't that the truth.
The last kamikaze
http://youtu.be/lXEH28wUxVw
Elderly Japanese can always go to Thailand and get murdered
http://www.bangkokpost.com/learning/learning-from-news/439363/japanese-t...
With an aging population, high inflation, trying to compete with China, South Korea, Indonesia, energy insufficiency, Fukushima's ever increasing poisoning, military tensions with China, Japan has very few things going that will save its future. So they have embarked on a Kamikaze strategy to take their insanity to its ultimate limit. When you have already lost everything, what more can you lose?
The questions is not whether Japan will blow up but how much of the Western banking system will collapse with it.
Kamikaze strategy for the general population, more great riches for the guys at the top. And when the plan eventually "fails" (or as seen by the guys at the top, when it finally succeeds in crushing the middle class once and for all and creating a new de facto royalty class), the guys holding the gigantic bags of loot will have a hearty laugh.
"Gigantic bags of loot" - offshore investments in tangible assets. The Japanese, the Americans, the Chinese - they're all at it.
I'm waiting for the Yen note with "Divine Wind" printed on it.
That avatar picture always makes me think that the guy is some kinky fuck who is paying a girl to insert a hair brush into his rectum.
You would have to accept that they are either figuring the good ol' US of A will come riding to the rescue or they are already in bed with the Chinese. One way or the other, even the rich Japanese will get owned by someone. They are hosed unless whomever it is happens to be quite benevolent.
Sounds like Kuroda agrees with the Mugabe approach to central economic planning. It will end the same way.
[quote]
Once confidence actually falters, it will be too late.
[/quote]
More like "DENIAL!" Everyone's hoping more trading stamps will pay for their upkeep!
World recession in 3 2 1! Its going to be a long cold winter!
Japan has long been the model which the rest of the world will follow. Unfortunately, the rest of the world will use an accelerated version destined to plunge it into a deflationary vortex from which no country will escape. The Inflation vs Deflation debate is being won by the deflationists.
http://www.globaldeflationnews.com/inflation-vs-deflation-part-1which-on...
The only words I can think of to describe the effects of this policy are financial nuclear warfare on one's own population. The effects will be utterly catastrophic and ultimately cascading through interlocking financial systems worldwide.
If one syringe of heroin doesn't make you happy, you obviously need another one.
Heroin addiction is perfectly sustainable, until you're dead.
I prefer Opium, in all honesty. It has a beautiful smell and needles creep me out.
Heroin? One time is too many; 1,000 isn't enough.
QE, Japanese style, is just camouflage for the repudiation of pension obligations in Japan and the confiscation of savings accumulated by the older generation via Inflation. It's also a de-facto tariff on imports (and export subsidy) via a lower Yen.
Thus the Authorities in Japan will attempt to accomplish via monetary policy what simply cannot be achieved in Japanese-style democracy nor within the context of WTO/OECD.
It's kind of like a fat ex-Sumo wrestler who, when told by his doctor to reform his habits, lose weight, go to the gym, give up beer etc. instead buys a carton of amphetimines and diet drinks. Reforming labor markets, agriculture, Yakuza, the bloated retail sector etc. in Japan is a generational project and would be very painful. QE seems easier and has the support of quack Western economists. So why not?
Thsi will merely lead to another episode of "Zaitech" like we had before the last bubble in Japan, wherein businesses and individuals find it easier to speculate on stocks than invest in worthy business projects. And the fat ex-Sumo is still headed for a heart attack.
I remember you from early ZH, Cap, and always appreciated your contributions to the comment threads. I just had to look, didn't realize you've been commenting for awhile now, it seems like I hadn't seen your name for quite some time. In any event, good to see you around these parts again, there's too few of you guys running around here now.
-A ZH Lurker
Thanks Grifter! I had a job that didn't permit financial commentary, so I couldn't post a lot for obvious legal reasons.
Does this mean I should buy a PlayStation 4 to help the japanese economy out?
If you are going to do this, buy all government bonds with printed money, why wouldn't the government temporarily set income tax to 0%, issue bonds to cover the loss income tax revenue, and then print money to buy the bonds? In the US that would provide middle class tax payers with a few dollarinos for consumption.
Three main purposes of taxes imposed by any government as far as I can determine: 1) remove cash from circulation to control booms 2) create an income stream from the slave population (this seems to be one feature bond purchasers like the most) 3) increase control over the slave population by fear and selective interpretation of tax laws.
Whats not to like?
Mostly 3) there.
Who would benefit from that?
Yep. That's why not.
When has any policies from any government been about helping the peons. Policies and Laws are always about fleecing the sheeple for the benefit of the establishment. The establishment pigs will never have enough. Once the pigs have stolen all the slaves have thru policies and laws they will turn on each other. What a farce government is, government is nothing but an Animal Farm.
The problem with this very typical analysis is simply this: the author never questions whom it is sustainable for.
The slough of charts and finance speak is laughable. The reason these rhetorical devices exists is to confuse the public with rational analysis in an irrational landscape. All academia exists to confuse and placate (psst, don't tell the academics, they depend on their verbosity to make a living).
Just as Austrian economics is used as the white to Keynes black, we are left arguing over rational economics and fantasy economics, while the reality is something all together different: it is survival in a predatory environment. Therefore, rules cease to exist, except as a means to create control and favor one group over another.
The monetary environment REQUIRES the continued expansion of credit and debt or else it falls apart. Thus, deflation is the bogeyman, because it calls into question all valuations of assets and eliminates the accumulation of debt and credit. To say it cannot go on forever is a huge joke. The Elites control the information desemination process, did no one else see the consumer confidence numbers? Are they not at odds with real spending, wage and production numbers? Duh?
The questions to be asked are easy: one, how much labor and production do the Elites need to maintain and improve their standard of living? The answer may be more difficult, but we may eventually see it in the numbers being culled and the regions they are being culled from. Two, at what point is asset control and ownership realize a maximum return in the event of a monetary reset? Three, what would be the ultimate framework for a new ruling paradigm which would satisfy the serfs anger and financial loss while maintaining popular approval?
Everything which leads us away from a rational discussion of how we interpret liberty and receive a just value for our production while retaining ownership of individual wealth is a lesson in confuscation and confusion.
I get what you are saying and agree. Mostly. There are a couple problems. They cannot absolutely control the human psyche. They can manipulate it very well but absolute control means no unforseens. Confidence can be lost. The longer this goes the more complex it becomes and the more likely an outside event will step in and break the confidence machine.
That and we have nukes. Nukes can be a real game changer in the right/wrong hands.
"Haruhiko Kuroda believes the economy is a machine, and he just needs to pull, the right levers."
As long as critics continue to agree that counterfeit is money, racketeering is banking, and stealing is lending, etc., who is going to stop him?
After all, why would anyone want to stop the "banks" "from "lending" "money?"
The BOJ is temporarily fixing Japan's "Minsky moment" with the same technical fix that caused it in the first place. The Nikkei has already signaled "crack-up boom." When the BOJ bonds reverse, as pointed out int he article, then it really is over.
The only question in my mind is: "Who's turn is it to be in the barrel after Japan?" I'm guessing the UK, 'cause they got printers too!
Whilst we All remain filled with tremendous anxiety regarding Iran acquiring ' le bomb' as eloquently explained and simply graphed by that great humanitarian NetaNUTjobie to CONgress, Kuroda appears just as articulate in that photo, taking a leaf out of NUTjob's book to simplify Japan's 'financial' WMD's.
I for one am with the Amurikan GLOBAL WAR AMBASSADOR John McStain on this one, with the ONLY solution left open to us; to BoBoBo Bo bomb Iran.
FUCKING IMBECILES
Don't worry there Israel will have CNN prime time coverage for the April Bombing Runs.
Full debt monetization in Japan. With several TBTFs in Japan, the demise of the current fiat paradigm is carved in stone. When this will completely blow up is anyones guess. Few months, couple of years at best... Fireworks coming up soon, financial hara-kiri. Japan fate is a roll model for the rest of the world. Good luck to all.
It isn't really an experiment, when the outcome is already known.
If you want Inflation RAISE THE INTEREST RATES AND LET THE GOVERNMENT DEBT FOLD.
<it's so simple>
This is Japan's Defibrillator Moment.
That is not what is wanted and is only a ruse. They want to continue to print "money" and then exchange this counterfeit for the products of other peoples labor. This is the modern slave market (uh, i mean labor market).
AE 9/11 Truth researchers plan lawsuit to seek release of 500,000 documents held by FEMA, NIST
"The BOJ is temporarily fixing Japan's "Minsky moment" with the same technical fix that caused it in the first place. "
The US Federal Reserve advised BOJ blows up the Yen first (thanks to the Fed's grand infinite printing experiment) and then the US dollar implodes down the road.
When the US dollar free-falls and crashes all the money-printing Keynesian economic professors can be fired.
Fired? Firing squad maybe more appropriate...
" it comes the same day as the government pension fund said it will buy more of the nation’s stocks."
The Fed and BOJ can buy everything. It kills a rational market and expands imbalances well beyond correctable.
The market their creating was the old Soviet Union or North Korea. Eventually all these government supported companies crowd out the smaller inovative corporations. The government decides which succeed and which fail.
Yes, I think that's where we're heading. There's this assumption amongst many market commentators that the market is somehow going to resume operation at some point. But there's nothing stopping the Fed buying Yen in vast quantities if it should start declining too rapidly, thereby pushing down the price of USD at the same time; meanwhile, the banks are exchanging bad assets for QE'd money and then are buying more and more real assets. At some point they will own practically everything.
Unless they completely commandeer economies, they won't be able to keep a lid on inflation, though. But so what? If inflation takes off, people will be forced to sell their assets just to meet their day-to-day expenses; and who will be there to rescue these poor souls? Why, the banks, of course - who, with their unlimited counterfeit debt money, will never be in a position of being unable to 'help'.
Neo-feudalism. It's what's for dinner (and breakfast and lunch).
Surprise to who?
Japan is still a country where teenage girls can afford to buy Prada handbags. Kuroda has a long way to go in impoverishing his people.
Whores in all countries have excess disposible income...
According to Barron's Online:
http://online.barrons.com/articles/barrons-up-down-wall-street-tokyo-thr...
What markets didn’t know and didn’t expect was that Japanese officials would move so dramatically to try to spur that nation’s flagging recovery. Specifically, the BOJ upped its goal for the expansion of its monetary base, to 80 trillion yen ($720 billion) from ¥60 trillion to ¥70 trillion, a move the central bank’s governor, Haruhiko Kuroda, said is aimed at ending Japan’s “deflationary mind-set.” As a result of the plan to print more yen, the Japanese currency weakened to nearly 112 to the dollar from just under 108.
Meanwhile, Japan’s $1.1 trillion pension fund said it would shift its portfolio strongly toward equities—allocating 25% each to domestic and foreign stocks, up from 12% each—while trimming domestic bonds to 35% from 60%. In gambling terms, this is going all in on Abenomics, as the stimulus plan is called, after Shinzo Abe, Japan’s prime minister.
This is truly a dazzling example of 21st century government finance. The government runs a deficit covered by IOUs, or bond borrowings. The central bank buys those bonds to fund the budget shortfall and also purchases bonds sold by the pension plan, all with reserves it creates out of thin air. The pension fund uses the newly printed yen it receives from the BOJ for its bonds to buy claims against the future earnings of private industry—that is, common stocks.
Those are the financial impacts. In the real world, the effect is to make Japanese exports cheaper and to export deflation to Japan’s trade partners.
Japan, and everyone else too, will soon learn the first rule of holes!
The Bank of Japan can buy 25% of all the outstanding debt overnight, and retire it. Markets: what'cha gonna do about that, if they did? Answer: nothing.
Debt instruments can be sold for cash any time. All the holders of Treasuries and JGB's can sell their bonds at anytime. 5 minutes from now, 50 days from now. They can turn their debt holdings into cash anytime.
The central banks can also go into the markets, and bid on government debt by offering cash.
So, monetizing debt is clearly not a problem as has been AMPLY DEMONSTRATED for several years now.
The debt of small nations matters. The debt of large nations doesn't. If Japan owed its debt to another planet, then maybe it would matter.
Again, the FED can announce next week it will never sell the bonds it has accumulated, and can retire it or forgive it. Voila, the debt is gone.
Yes I know, everyone here is gonna say no wait that is wrong. No, you are wrong.
GG
""So, monetizing debt is clearly not a problem as has been AMPLY DEMONSTRATED for several years now.""
Nonsense, and monetisation of debt is why Japan is doomed. They monetise all excess cash due to intense nationalism, xenophobia, racism, and a non-immigration policy.
They would rather die as a culture than accept anyone non-JP into their nation on a permanent basis.
Putting all savings in JCB is another way of keeping ''Japan for Japanese""
Fortunately for others they will demonstrate that the punch bowl cannot be drunk from, forever.
When Chinaman see US prin dorrars jus to buy tings den Chinaman decide no accept dorrars anymore. How dat work ow for you?
This is a Zero Hedge story that might actually have legs.
Hard to believe Japan is going to make it through the next year or two without having a major monetary meltdown, and with its status as the world's third largest economy, that's going to shake ordinary folks' faith in what we call 'money' to the core.
This isn't a third world country like Zimbabwe or some monetary meltdown from "ancient history" like Weimar - this is coming to you RIGHT NOW, from the first world. When the fiat ground below us moves so dramatically, "Inquiring Minds - Like Me!" are going to notice, and the implication for other currencies like the dollar is going to dawn on many of them.
And while it may take 235% debt-to-GDP or whatever to get the ball rolling in Japan, many will realize how precarious a position other countries are in as well, particularly issuers of the world's reserve currency.
At first I was rike, "Rook out above!"
And then I was was rike, "Rook out berow!!!"
Seriously though, does anyone really believe all of this is accidental?