Posted on 02/22/2022 2:04:14 PM PST by Browns Ultra Fan
My Kuroda!
Forbes has an interesting article on the Japanese “miracle” entitled “The $5 Trillion Inflation Time Bomb No One’s Talking About.”
It’s taken nine years and the Bank of Japan supersizing its balance sheet to the $5 trillion mark, but Asia’s second-biggest economy finally has some inflation.
Officials in Tokyo are realizing the hard way, though, that it’s best to be careful what you wish for as bond yields spike.
Granted, the gains in consumer prices Japan is reporting are negligible compared to those in the U.S. and China. And inflation is still a good distance from the BOJ’s 2% target. Still, the 0.5% rise in consumer prices in January year-on-year is already unnerving the bond market. It followed a 0.8% jump in December and marks the fifth straight month of increases.
The worry is that Japan’s inflation is the “bad” kind. Haruhiko Kuroda was hired as BOJ governor in March 2013 to end deflation. Kuroda unleashed tidal waves of liquidity. That drove the yen down 30%, generated record corporate profits and sent Nikkei 225 Average stocks to 31-year highs.
Despite a staggering balance sheet with a -0.10 bps policy rate, Japan has only 0.5% inflation.
And Japan’s yield curve is negative at 3 year tenor and less.
How is it that Japan has virtually no inflation with negative rates but the USA has 7.5% inflation with a 0.25% target rate? Could it be the USA undertook massive fiscal spending related to COVID and reduced energy sources in an effort to go “green” that led to 7.5% inflation??
My Kuroda!
Good governments don’t go on wild, wasteful spending sprees and shut off energy sources.
(Excerpt) Read more at confoundedinterest.net ...
Japan’s debt was pretty low, so it had a lot of room to borrow money, although I’m not saying that it should have done that. Government’s should not borrow money as much as possible. I’m just saying that, unlike the US, it could better afford to borrow $5 trillion.
“The worry is that Japan’s inflation is the “bad” kind.”
As opposed to the “worse” kind?
Think what we could accomplish if we could even score two of those three.
Great point.
The U.S. undertook massive fiscal spending under Obama, and then it increased as much again under Trump. It never ends.
Well it can’t let rates go up or the budget implodes, just like us
Near zero immigration and yet Japan is outperforming every other G7 nation
Proud to say I have a daughter, brother and their families whom Japan values highly, pays well and has awarded permanent residency.
China, Japan, and South Korea have proved to my satisfaction is diversity is weakness, not strength.
Homogenous societies possess pride.
Balkanized countries have strife.
“Japan’s debt was pretty low...”
You must be dreaming. Japan has had huge public debt for decades, way over their gdp.
From Wikipedia... “the Japanese public debt is estimated to be approximately US$12.20 trillion US Dollars (1.4 quadrillion yen ), or 266% of GDP, and is the highest of any developed nation. 45% of this debt is held by the Bank of Japan. “
Read later.
I thought it was lower than that.
They are extremely picky.
All true and good points. Also birthrate in Japan is very low, which reduces demand on goods and services.
Spoken like a true Gaijin LOL.
true, but the birth-rate of native-born American whites has also dropped like a stone. Of course, the more “productive - wink-wink” members of society are breeding like mice.
The sale of bonds was easy, they were purchased by the Japanese. They are upside down. We should study them, because we are heading that way quickly. Bidens people say of course we aren’t in trouble. We are the worlds reserve currency, and have no problem selling our debt. Same thing Japan has done, we print up money, then sell the bonds back to the printers.
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