On Friday, courtesy of a Deutsche Bank report laughably titled Helicopter Money 101, we showed how to trade the coming helicopter money paradrop that will be provided by central banks in the very near future. When asking the question of who would be the first to try it, one of the first central banks that comes to mind (both Deutsche's and ours) would be the Bank of Japan. To date, the BoJ has tried everything in order to increase inflation (or simply to generate any, for that matter), and boost their economy. Everything that is, except for helicopter money (giving money directly to the government or citizens and bypassing all current institutions acting as middle men).
Yesterday according to Bloomberg, BoJ governor Haruhiko Kuroda said that he isn't thinking about using so-called helicopter money, and that the notion contradicts the law.
"In advanced nations nowadays, fiscal policy is determined by the government and the parliament while monetary policy is decided by the central bank, which is separate from government and parliament," Kuroda told lawmakers in the Japanese Diet. "Deciding and implementing these things together would contradict the current legal framework. So unless the existing legal framework changes, helicopter money isn’t possible, and we at the Bank of Japan aren’t thinking about it at all."
If you read the end of that carefully, you'll want to revisit our article on how to trade the coming helicopter money (here). First, we'll start with the fact that Deutsche Bank already has an answer on how to work around the "current legal framework", and it's called simply getting the legislature's approval. Something tells us that given all of the insane things he has been doing to date, Shinzo Abe can conjure up enough support to tweak the current laws in order to allow the BoJ to directly fund the government - in order to "stimulate" the economy of course.
The fact that Kuroda fell back on this weakest argument against helicopter money instead of saying something like "oh, it's absolute lunacy and only Krugman-following idiots who want hyperinflation would attempt it", was all the tell we needed.
The DB table in question:
That, or simply use Japan's increasingly more disastrous earthquakes as a signal from god that the BOJ has a carte blanche to shower its long-suffering (and mostly old) people with money.
Secondly, and perhaps this is more of the dead giveaway that helicopter money is just around the corner for Japan, is that whenever Kuroda flatly denies that something is not going to happen, it virtually assures its passage in the immediate future. Just recall what happened back in January when he told everyone that NIRP wasn't on the table... one week before he unleashed NIRP.
And January 28:
Bottom line, the question isn't if the BoJ will be the first central bank to implement helicopter money, the question is when.