Japan has been in a two decade long recession. They have 50% more debt as a percentage of GDP than any developed country on earth. They have a rapidly aging population. They have no energy resources. But their central bank does have a printing press.
The master plan announced overnight by their Janet Yellen – Kuroda – is to buy 8 trillion to 12 trillion yen ($108 billion) of Japanese government bonds per month. This means the BOJ will now soak up all of the 10 trillion yen in new bonds that the Ministry of Finance sells in the market each month. This is all being done to reduce the value of the Yen and create inflation.
The central bank is already the largest single holder of Japan’s bonds, and the scale of its buying could fuel concerns it is underwriting deficits of a nation with the heaviest debt burden. The BOJ could end up owning half of the JGB market by as early as in 2018. This is the act of a desperate crazy man. He has set in motion a series of events that will lead to the collapse of Japan. It will be a failed state. It will become a modern day Weimar Republic.
“Bank of Japan Gov Kuroda, laughing like a James Bond villain who knows it’s too late to stop his plan from unfolding.” – Patrick Chovanec
Kuroda is an evil genius. He has single-handedly driven the Japanese stock market up 1,000 points in 7 hours and ignited stock markets around the world. The world is saved. He has proven that the world can be saved by printing trillions in new fiat currency and using it to buy stocks and bonds. Why didn’t we think of that? What could possibly go wrong?
I was reminded of another chart I once saw. Those Germans were in a bit of a pickle after World War I. Their central bank also provoked a stock market rally with the same master plan.
I’m sure the Japanese will successfully save their economy by printing yen at hyper-speed and using it to buy their ever increasing amount of public debt and as much stock as they can get their wily little hands on. Hyperinflation is so old school. No chance of it happening in the land of the setting sun. Right?
