Tag Archives: QQE

You don’t have to take my word for it. QE doesn’t work and it never has. That’s not just my assessment, pull out any chart of interest rates for wherever gets the misfortune of having been wasted with one of these LSAP’s. If none handy, then just read what officials and central bankers write about their own programs (or those of their close and affectionate counterparts). After nearly a decade of Abenomics in Japan, the latest Japanese Prime Minister Fumio Kishida...

Fear of the ultra-inflationary aspects of fiscal overdrive. This is the current message, but according to what basis? Bigger is better, therefore if the last one didn’t work then the much larger next one absolutely will. So long as you forget there was a last one and when that prior version had been announced it was also given the same benefit of the doubt. Most people don’t like looking to Japan mainly because it is too depressing; unless one is an Economist who...

Japan Finance Minister Taro Aso, who is also Deputy Prime Minister, caused a global stir of sorts back in early June when he appeared to express something like Japanese racial superiority at least with respect to how that country was handling the COVID pandemic. For a country with a population of more than 126 million, the case counts and mortality rates suggest something in the nation’s favor. Total reported coronavirus cases didn’t top 100,000 until the end of...

After the Diamond Princess cruise ship docked in Tokyo with tales seemingly spun from some sci-fi disaster movie, all eyes turned to Japan. Cruisers had boarded the vacation vessel in Yokohama on January 20 already knowing that there was something bad going on in China’s Wuhan. The big ship would head out anyway for a fourteen-day tour of Vietnam, Taiwan, and, yes, China. Three days in, news reached the Diamond that the Communists had closed down the affected region....

So, you’re convinced that low rates are powerful stimulus. You believe, like any good standing Economist, that reduced interest costs can only lead to more credit across-the-board. That with more credit will emerge more economic activity and, better, activity of the inflationary variety. A recovery, in other words. Ceteris paribus. What happens, however, if you also believe you’ve been responsible for bringing rates down all across the curve…and then no recovery....

After years of futility, he was sure of the answer. The Bank of Japan had spent the better part of the roaring nineties fighting against itself as much as the bubble which had burst at the outset of the decade. Letting fiscal authorities rule the day, Japan’s central bank had largely sat back introducing what it said was stimulus in the form of lower and lower rates. No, stupid, declared Milton Friedman. Lower rates don’t mean stimulus they mean monetary policy has...

Can we please dispense with all notions that monetary policy works? Specifically balance sheet expansion via any scale asset purchase programs. Nowhere has that been more apparent than Japan. Go back and reread all the promised benefits from BoJ’s Big Bang QQE that were confidently written in 2013. The biggest bazooka ever conceived has fallen short in every conceivable way. Starting with the fact QQE remains ongoing approaching its seventh birthday. Over here in...

With China closed for its National Day Golden Week holiday, the stage was set for Japan to steal the market spotlight. If only briefly. The Bank of Japan announced last night that it had had enough of the JGB curve. The 2s10s very nearly inverted last month and BoJ officials released preliminary plans to steepen it back out. Japan’s central bank says that it might refrain from buying JGB’s at the long end. This is upside down from when YCC was first attached to QQE...

For a lot of people, a recession is two consecutive quarters of negative GDP. This is called the technical definition in the mainstream and financial media. While this specific pattern can indicate a change in the business cycle, it’s really only one narrow case. Recessions are not just tied to GDP. In the US, the Economists who make the determination (the NBER) will tell you recessions aren’t always so...

Last April, monetary officials in Japan were publicly contemplating ending asset purchases under QQE. This April, they are more quietly wondering what other financial assets they might have to buy just to keep it all going a little longer. I’d suggest something like the clouds passing over the islands or the ocean water surrounding them. Nobody would notice either way and it would be equally as effective. Before the...