Japanese bank governor Haruhiko Kuroda makes history with monetary blitz

The Bank of Japan has launched the most daring monetary experiment of modern times, aiming to double the money base within two years to overpower deflation and catapult the economy out of slump.

The blast of money is expected to reignite the yen “carry trade” and flood global markets with up to $2 trillion (£1.3 trillion) of pent-up savings, giving the entire world a shot in the arm.

tonydartford: Most countries can now make what every other country can make so how do you get market share? 50 years ago the West made the goods now all countries make the goods. Mass production techniques means  there is over supply in everything. Do we buy a mobile phone every week and throw it away just to keep things going? Or create thousand more useless apps?  Our government is into building more houses, does this create wealth? I look at all the so called leaders and none of them know what to do. In the 1940s we went to war killed half the population and   smashed everything up and rebuilt it. Do we need to do the same thing again?

armchairnavigator:  yes we do. you cant grow forever and for some reason that i have never fathomed, all companies need to keep growing. that means occasionally they need to all be collapsed.

tonydartford:  But when they fail the governments prop them up saying they are too big to fail. All the bail out over the last 70 years have come to haunt us.

TruthDestroysWorlds: How can this ever be classed as an 'experiment'? I mean, this has been done on oh so many occasions, and ALWAYS the outcome has been the same. Face it folks, nothing good can come of this in the long run, in fact it will be quite the contrary, in that it will be highly destructive.

andycfc: " I mean, this has been done on oh so many occasions, and ALWAYS the outcome has been the same" Yep bugger all.

lunatic-viking-marauder:   A large part of this article is dealing with what happened last time. "in the 2003-08 cycle, the money leaked into everything from Australian “Uridashi” bonds and Icelandic debt, to London property. " Is just one quote. Clearly it makes quite a lot happen.

andycfc:  Carry trade yep, dont disagree but thats not what TDW is on about… I know him well lol Not sure the carry trade will work this time when you have most of the world debt adverse. Time will tell on that but i am skeptical.

lunatic-viking-marauder: I have no idea what will happen, but something will. You can't just inject that kind of cash and have no result, either it goes into a bubble somewhere or it trashes the currency.

andycfc:  Nah they are just upping the monetary base which will always require someone to borrow and thats the trouble with monetary policy…works for a certain amount of time but you get to the point of saturation… where we are now.  This wont work and then they will start whittering on about negative rates again.

paulweighell: Nay lad: Zimbabwe Germany pre-WW2 French revolutionary government to name the easy three…

andycfc:  Neon flashing light that you dont know what you are talking about… what next "government credit cards"  seriously paul i thought you were better and a decent argument but thats poor.

timwinfrance: This, surely is "Emperor's New Clothes" stuff.  Can nobody recognise that this level of money printing will inevitably end up in inflation, and I don't mean "a nice 2%" to get the economy moving. Debt of 245% of GDP is unprecedented in a mature industrial economy like Japan's.  And we are only seeing the start of this "easing".   Japan's ability ever to repay such debt can only be met through monetary inflation - you only have to study history.  It's default or inflate.  Those are the only two possibilities.  Maybe not this month or this year even, but inflation is inevitable. Can nobody see this? In the meantime, we are into an era of beggar-my-neighbour competitive currency devaluation.  Who can get to the bottom first?  Japan is making a pretty good fist of it in the first round of this fight. It will be a horror story.

SB_UK: Sounds right. But there's a real feeling to the ongoing collapse - that there's a very specific trajectory to it - where the final stage is QE/currency devaluation putting on a head of steam. What we'll eventually end up with is paper money which has the value of the paper it's printed on.

herpaderp:  it's already breaking: http://www.zerohedge.com/news/2013-04-05/it-beginning-biggest-jgb-price-collapse-over-10-years-triggers-tse-circuit-breakers

Gerard Schmidt: Ssshhh X-Factor is on… ;-)

Hal Horvath:  If you think US 1970s style inflation is bad (and it is)… just learn (effortful) what would happen if Japan's central bank did nothing to counter the debt-deflation spiral it has been sinking into.   Japan, Germany, other nations have had deflation before (early 1930s), and  then…some serious change came.

devonfrance: The World's central banks are printing like Weimar not because they are clever but because they don't know what else to do and  have nothing to lose,  any alternative is even worse than printing trillions.

kaiten: “At some point, yields could spike”, he said. That´s a nonsene. How could yields spike when BOJ esentially owns the market? They can set whatever yield they wish, even if government debt reaches 10 000% of GDP. 0,0001% yield, anyone? The risk is inflation and sudden loss of faith in yen. Which again means inflation. Of course, Japan is in a deflationary grip so they could, with a little luck, find a middle way, but that´s highly questionable. I mean, Cyprus confiscated deposits through tax, Japan will do via inflation (and destroy the middle class in the process). There´s just no free lunch. 

kom: No central bank can buy everything when sh*t happens. Even they will learn this truth. They can go broke too.

andycfc:  "They can go broke too" Oh give over kom you know thats garbage its impossible.

paulweighell: Give over Andy, governments and their CBs become bankrupt with monotonous regularity. In theory they can print but it don't help… Zimbabwe: "farms quickly became unproductive and unprofitable and could no longer supply the Zimbabwe economy with essential foodstuffs. Mugabe ordered unfettered printing of new banknotes as the principal means of combatting rising prices, thus devaluing the currency further and further" Germany: "In May 1921, price inflation started again and by July 1922 prices had risen 700%. The Reichsbank continued printing new currency, although more slowly than the rate at which prices were rising. In fact, all through this period the issue of currency proceeded at a fairly smooth steady rate, while the price index moved up in great surges, interspersed by periods of stability. After July 1922 the phase of hyperinflation began. All confidence in money vanished" France:   "the French revolutionary government printing a flood of assignats, John Law flooding France with debased money" . . .

andycfc:  So what have we got in common with those countries paul?   could they have been political problems per chance?  you know losing a war?  weimar check…  Zimbabwe after a war, political turmoil check  France "revolutionary" government give you a clue?  pfft give it up you havent a clue on the causes of hyperinflation… they are not monetary they are political usually (and the monetary ones are invariably debts in foreign currency)  you just blew it with your examples… zimbabwe & weimar are the econ blog version of Godwins law.

stephenmarchant: As Max Keiser of RT televsion put it: "a firing squad standing in a ring". Whilst the Central bankers engage in a race to the bottom many ordinary people will see the value of their fiat wealth seriously eroded. There is no 'exit strategy' for any of these central banks with yields already at historic lows and Govts unwilling to pay the political price of shrinking public spending. We are truly in unchartered waters and the Tsunami of debt and trillions of funny money sloshing around is going to cause havoc in currency markets. This is the beginning of the end of Fiat currency and in the absence of a 'Bretton Woods' type international agreement for a currency peg we will see growing protectionism with bilateral trade agreements backed by gold and/or tangible commodities. Within nations we may see growing black economies as people lose faith in Govt and financial institutions.  Desperate Govts may indeed resort to directly plundering saving deposits and private pension funds. As for property the mansion tax is the least of concerns as one may see health , unemployment payments and other state services set as a charge against peoples' estates.

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