TOKYO — In its first policy steps under its new governor, Haruhiko Kuroda, the Bank of Japan announced Thursday it would seek to double the amount of money in circulation over two years, initiating a bold bid to end years of falling prices and dispelling market fears that Mr. Kuroda might fail to follow up his recent tough talk with concrete action.
The central bank said it would aggressively buy longer-term bonds and double its holdings of government bonds in two years, in effect doubling the money in circulation in the process. The bank will aim for a robust 2 percent rate of inflation “at the earliest possible time,”? it said.
“This is monetary easing in an entirely new dimension,”? Mr. Kuroda said following the bank’s decision.
It would be nice to have an analysis before hand predicting the effects based on the various competing theories. People tend to be better manipulating facts to fit their theories after the cards are on the table.
This will be a great way to find out once and for all if this sort of "money printing" actually leads to inflation.
I'm sure that right now there is a whole gaggle of Japanese Peter Schiff-type market commentators furiously banging out blog entries and special "Yen Will be Worthless!!!" editions of their newsletters.
I just sort of have a wait and see attitude. Reality has a way of unfolding in surprising ways.
Q: “Do you have funny shaped balloons?”
A: “Not unless round is funny.”
I'm not sure the comparison across countries is relevant. If it works in Japan it may not work in the U.S. The Japanese economy and culture is much different than that of the U.S. They have much different views on saving, spending, government spending priorities, etc.
I fail to see how any of this inflation rhetoric and actions are any different than any of the other inflation rhetoric and actions of the past 20 years. While Japan has slowly restructured its private sector over time, I'm unclear if it is now a vibrant, non-export oriented economy that can stand on its own two legs. Otherwise, the BOJ gobbling up even more bonds directly from the MOF isn't going to change anything in the real economy anymore than the Fed does.
"All generous minds have a horror of what are commonly called 'Facts'. They are the brute beasts of the intellectual domain." -- Thomas Hobbes
Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet. I should not be considered as legally permitted to render such advice!
clacy wrote:
Well at least we'll have a test run to see of the MMT'ers are correct. The USA will have an idea of how our easy money policy will work out.
As investors in the US and western world, we'll have a prime example of how to invest when our time comes.
Just so that everyone is clear, the MMT view is that this policy will have little effect on inflation and little effect on growth. An MMTer would not endorse what the BoJ is doing. They would just call it a distraction.
Last edited by melveyr on Thu Apr 04, 2013 9:11 pm, edited 1 time in total.
everything comes from somewhere and everything goes somewhere
