Something Big Is Coming: Bernanke To "Secretly" Meet With Kuroda; "Helicopter Money" On The Agenda

Tyler Durden's picture

Two years after Paul Krugman sat down with Abe to tell him how to run monetary (and to a lesser extent fiscal) policy, Abenomics lies crushed in a steaming pile of discredited Keynesian economics, with the "deflation monster" once again ruling the land, wages have failed to sustain any material move higher, the economy finds itself in yet another pre-recessionary slump, and most importantly, the Nikkei has plunged 25% from recent highs as a result of the surge in the Yen driven by the complete collapse in BOJ credibility - which is now a ward of the G-7 and is not allowed to make any independent monetary decisions without US Treasury preapproval - which has pushed Japan's currency back to levels higher than when Krugman made his visit.

So what is Japan to do facing what may be an economic dead-end? Why even more of the same, and just to make sure Japan does not deviate from the monetary course of righteousness, this time not Krugman but the godfather of everything that is wrong with modern monetary policy, Ben Bernanke, will make sure of it.

But first, to give the impression that Japan's decisionmaking process is still "independent", officials from the Ministry of Finance, Financial Services Agency and the Bank of Japan will meet Friday at 9:30 a.m. to exchange views including on how the government should respond to the yen's appreciation, Reuters reports.

The last time they met was on June 25, shortly after Britain voted to leave the European Union, a decision that jolted financial markets and boosted investors' demand for the safe-haven yen. Since then the USDJPY has plunged by 600 pips, and was straddling 100, a key psychological level for the BOJ. In other words, the meeting was a failure.

So perhaps to assure that this time there are no "errors", none other than Citadel's most prominent employee, and the former Fed chairman himself, Ben Bernanke will make a casual visit to Japan, where he will meet with both Abe and the Bank of Japan governor, Haruhiko "Peter Pan" Kuroda. From Reuters:

Former Federal Reserve Chairman Ben Bernanke will have talks in Tokyo next week with officials including Prime Minister Shinzo Abe, government sources said.

 

Bernanke, who led the Fed through the global financial crisis in 2008, will be in Japan next week. It has been arranged for him to meet officials including Abe and Bank of Japan Governor Haruhiko Kuroda, according to a government official speaking on condition of anonymity.

 

Bernanke is expected to discuss Brexit and the BOJ's negative interest rate policy with Abe and Kuroda, the official said.

What may have prompted this unprecedented meeting between a "private citizen" (aka Brookings blogger and Citadel analyst) and a head of a central bank? Reuters specualtive conclusion is stunning:

Some market players speculate Kuroda might decide, in a surprise, to provide "helicopter money" - a term coined by American economist Milton Friedman and cited by Bernanke, before he became Fed chairman, when talking about how central banks might finance government budgets as a way to seek to fight deflation.

 

The BOJ governor has repeatedly denied that the BOJ would adopt such a policy, saying it is as an "impossible" option under current law separating the government's role in fiscal policy from the BOJ's in monetary policy.

To be sure, Kuroda lying on the record would not exactly be unprecedented: recall just one week before the BOJ unleashed NIRP what Kuroda said:

 

 

Followed, of course, by this:

 

 

So is it time? Is Bernanke about to unleash the next, and final, monetary policy evolutionary step, one which launches "helicopter money" in Japan, and if successful, brings it across the Pacific to the US?

We don't know, but if anyone is still holding on to USDJPY shorts, now may be a good time to quietly close them out, because if we are right, and a "helicopter money" is about to be served for the first time in modern history, things are about to get very volatile, very fast.

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cdevidal's picture

If the govt handed you helicopter money would you spend it?

Jayda1850's picture

The bigger question is would PM dealers actually accept it?

knukles's picture

Only until it becomes worthless.

froze25's picture

Japan will be the first domino to fall.

nope-1004's picture

Low interest rates and helicopter money do only one thing:  They bring future consumption to the present.  So now after zero interest rates and the possibility of helicopter money to "stimulate", what happens in a year or two?  Bernanke buys AND delivers our groceries?

 

"Hey grocery boy....."  lmao

 

And one other thing:  Aren't we out of the financial crisis?  If so, doesn't the 'hero' who fought the battle and won get honored in public, instead of called back in for service?

Bernocchio, you're a failure and a liar.

Dormouse's picture

Benjamin Shalom Bernanke, I wonder who he really works for.

Dental Floss Tycoon's picture

{{{Don't}}} {{{know}}} {{{but}}} {{{I}}} {{{can}}} {{{guess}}}

SofaPapa's picture

Because Weimar (v 1.0) worked out so well...

DownWithYogaPants's picture

Helicopter money will likely come with MANY STRINGS ATTACHED.

.......example:  No gun purchase allowed.

Likely it will be electronic and not convertible into cash.  Will probably have expiration date.  The skies the limit !!!!

Troy Ounce's picture

 

Good one!

What about signing a contract that you will never, never kill a banker or politician, directly or indirectly?

Difficult one isn't it? Choice is almost impossible!

Colonel Klink's picture

Just do like they do.  Lie!  Then blast them in the fucking face.

Mcguyver's picture

They already beta tested it with Vw diesel owners in emission scand --- I recieved 1000 bucks on two cards one could be spent in dealer the other anywhere.

RafterManFMJ's picture

Helicopter currency is fungible; so I can't spend it on ammo? Ok, I'll use to to buy gas and groceries, and the currency saved just might go to a case of green tip....

U4 eee aaa's picture

"Likely it will be electronic and not convertible into cash."

Ironic statement

Sam.Spade's picture

By definition, 'Helicopter Money' is any transfer that is the economic and political equivalent of kicking bundles of cash out of a hovering helicopter to a waiting crowd below.  To meet this criteria, among other requirements, it must obviously use cash and be anonymous.  What you describe may be some form of money transfer, but it is NOT 'Helicopter Money' because it does not meet either of these two criteria.

Definitions matter.  The Banksters have gotten away with murder by playing switcharoo with them and getting the rest of us to accept it.  Don't make the same mistake.

But you are correct in that Helicopter Money is very unlikely to occur for several reasons.  First, it would transfer equity from the uber-wealthy to the general population, and second, it would also shift political power because of the anonymous nature of the transfer.

OpenThePodBayDoorHAL's picture

So what's the "helicopter money" trade? I get long gold and long USTs. Long soft commodities? Long iPhones?

Suleyman's picture

Bring future consumption to the present - I call it capital consumption.

 

cdevidal's picture

I'm with knuckles. I think I'd trade it in for chickens and ducks until it's worthless.

giovanni_f's picture

you've got to hurry. once a complex phase transition sets in, edible chickens are one of the first items to vanish in a black hole

 

RafterManFMJ's picture

All chickens are edible. If you're hungry enough, boots become a delicious base for stew.

And after the chickens are depleted, the pigeons are next.

Deathrips's picture

"Must keep fiat money print moving to keep slaves working for the chosenn ones Koroda"

Bernanke

 

FUCK YOU BERNANKE!

Herd Redirection Committee's picture

Social Credit, motherfuckers...

Anything else is just Central Banking By the Elites, for the Elites.

JamesBond's picture

I suspect permenant monitization of Japan's national debt is on the table.

 

jb

divingengineer's picture

If they are giving it away for free it is already worthless. 

Consuelo's picture

As long as those Scheisse dollars remained 'legal tender', they'd be FORCED to accept it...

BennyBoy's picture

Helicopter money will be going to banks and cronys.

Screw the people!

Sam Clemons's picture

It will come to the peasants, but only because we owe the banks and cronies and then it goes back to them to keep the game going.

ATM's picture

It will come to us peasants last like it always does. Those who are connected always get the printed money first and are able to buy things before the big rise in prices. They get the assets we get the inflation.

SwapThis's picture

US has HM now, EBT=HM.  Need more?  bring in immigrants and give them all EBTs etc

cougar_w's picture

H$ will go straight into government, esp. police and military, and it will buy protection for the elites.

Lady Jessica's picture

Precisely.

As far as I can tell this will just achieve monetary velocity for its own sake (it should also, in a sane world, continue to devalue the currency but we are quickly learning it's no longer that simple).

They don't care where this money vectors to, so it will most likely end up in the wrong hands.

Yes the ponzi is about to be put on life support but this could still go on for decades as long as we look out for bed sores and keep the diaper clean.

Ah, the wonders of faith in fiat.

gmak's picture

Pay down debt. Let the banks eat the inflated paper.

BandGap's picture

Zero out as much debt as possible, maybe even all of it.

Buy 4 more chickens, expand the coop.

ironicmerman's picture
ironicmerman (not verified) cdevidal Jul 7, 2016 1:21 PM

Didn't the government send out checks during the financial crisis for stimulus?  I spent it...by putting it straight into savings.

SofaPapa's picture

"If the govt handed you helicopter money would you spend it?"

Anyone with a brain will take what is given and as quickly as feasible trade it for items that contain practical value.  We are a very short step now from popular awareness that fiat is worthless.  I have connections in Peru where they went through hyperinflation in the 90s.  When it happened, they said they took what they were given and converted it literally within hours (as long as travel time to the trading place took) into something, anything that had value.  This will be no different. Japan is close to the tipping point, and the links are too tight that the dollar will not soon follow.  We're getting closer to the endgame every day now.

debtor of last resort's picture

In Weimar Germany the women went to their husbands work at lunchtime to pick up their wages and buy groceries with it the same day.

OpenThePodBayDoorHAL's picture

People in Argentina were driving over to Uruguay and buying Mercedes and driving them back home. Cross-border "capital" flow on wheels.

OilCaptain's picture

Depends upon what kind of helicopter it came from and what kind of helicopter it could buy.  If I got a Chinook full of benny bucks that's different than say a Kiowa-load.

Paul Kersey's picture

Mortgage rates in Japan are 1.5%, and, even with a shrinking population, real estate sales have really picked up. I expect US mortgage rates to follow Japan's down, and the bubble will expand, and the refi biz will go crazy. The banks will be making bank. Don't underestimate the power of central banks, when it comes to goosing the economy.

Paul Kersey's picture

Abenomics is far from a total bust:

 

"Despite domestic and global economic headwinds, interest in Japan’s real estate sector continues to swell. New investors have been attracted by its low borrowing cost, high return outlook and more recently, as a safe harbour from global economic volatility.

Direct commercial real estate sales between 2013-2015 in Tokyo were more than double volumes seen in the preceding three-year period. The city remains global investors’ favourite investment destination among Asian cities followed by Shanghai, according to JLL’s latest Investment Intensity report.

“Favourable funding terms, strong overall international investment position, large current account surplus and deep and liquid financial markets have made Japan a very established and safe investment destination. Further to this, the return outlooks are among the best in the region, with above trend rental growth expected in most asset classes over the next few years” says Nicholas Wilson, Capital Markets at JLL Japan.

Japan’s negative interest rates
Foreign investors made up 22 percent of property acquisitions by volume last year – the highest share since 2007, according to Japan Real Estate Investment Update. Tokyo was – for the third year running – ranked the number one market of choice in the Asia-Pacific for investors in the Emerging Trends in Real Estate Asia Pacific 2016 by the Urban Land Institute and PwC; Osaka ranked fourth."

Citium's picture

The fact that "fuck you Bernanke" wasn't the first comment shows just how much ZH has changed. *sign*

divingengineer's picture

I have no doubt that taxes my wife and I pay will be handed out to others, but not us.

So, the question is non sequitir. 

Man-Bear-Pig's picture

I'd be buying AR15 lowers, ammo and magazines.  All of which are sure to appreciate.

knukles's picture

The only thing worse would be to have Paul Krugman as trusted advisor.

Nobody For President's picture

Are they going to meet on Ben's private jet on the Tokyo taramac ?

10mm's picture

Why not Yellen?

chinoslims's picture

TheI Japanese don't like dealing with women