Forbes writes that Japan is about to show Ben Bernanke and Draghi what real quantitative easing looks like. Governor Haruhiko Kuroda of the Bank of Japan “announced an aggressive expansion of the central bank’s asset purchase program in an effort to reverse two decades of deflation and produce a targeted 2% annual rate of inflation. The BoJ announced that it will boost its buying of Japanese government bonds by 50 trillion yen ($520 billion) per year and begin buying bonds with maturities of up to 40 years. “Total expansion of the monetary base will be about 10% of Japan’s gross domestic product.”
That is 47 percent larger than anything Ben Bernanke has ever tried. “To put that into perspective, the Federal Reserve’s $85 billion in monthly purchases of U.S. government bonds and agency-backed mortgage securities amount to 6.8%” ZeroHedge writes, “Japan’s QE is the equivalent of the Fed monetizing $200 billion per month.”
The Guardian is ecstatic. At last, someone realized that all government has to do fix the economy is create more money.
British policymakers have more reason than most to learn from Japan’s bold monetary moves. George Osborne threatens austerity policies to last until 2018 and the Office for Budget Responsibility always forecasts recovery two years away. Britain is facing its own lost decade….
Desperate times call for desperate measures. Japan has suffered 24 years of low growth and outright falls in prices. … Japan’s central bank has announced a policy of what is describes as a massive increase in creating money.
Robert Lenzner of Forbes says “’QE will go on forever and it’s going to mean a very long and powerful bull market for stocks,’ the former chairman of a major trust bank in New York told me today over lunch.” He went on to breathlessly describe the efforts of Central Bankers all over the world to save us from hard times.
the Bank of Japan disclosed it would copycat the Fed– and double its monetary base and holdings of Japanese government bonds over the next 2 years. Talk about playing catch up ball. It took the Fed 4 years to triple its balance sheet– and it’s clearly not through yet….
China, as well, desperately trying to fend off a slowdown that could lead to social unrest, has already increased the money supply by 60 trillion remimbis, the equivalent of $10 trillion dollars. This $10 trillion in Chinese currency means that over the past 4 years monetary credit in China has ballooned to 116% of Chinese GDP.
This follows on the heels of a European Central Bank announcement that it will “step up its campaign to stabilise the euro, forestall a new credit crunch and shore up troubled banks by flooding the markets with hundreds of billions’ worth of easy money for the second time in two months.”
Japan. The Fed. The ECB. China.
Saved. We’re saved. We’re about to be hit by a tsunami of money such as never been seen in all human history. Forget the million. Forget the billion. We’re talking trillions and trillions of dollars, euros, yen and remimbi. “Shoot, a fella could have a pretty good weekend in Vegas with all that.”
The only question is, why didn’t we do it sooner? Here comes the Bank of Japan.
There’s only one niggling problem. If this doesn’t work, what do they do for an encore?