I guess this is good. At least, in terms of honesty. I’d rather someone be upfront about it instead of the serial dishonesty about it that comes from China and the rest of the lunatics.
Of course, I don’t understand the continuation of the insanity. How many times to you have to go to the well and bring up an empty bucket before you understand the well is dry?
Back towards the end of September, I wrote about Japan doubling down on stupid on the race to the bottom with more QE. An election in Japan was held since then. Amazingly, the challenger won, in part, by running on the platform that Japan isn’t printing fast enough! Japan’s next premiere, Shinzo Abe, is demanding higher inflation. Yes, that’s right, he’s demanding the loss of buying power for his people. And, they elected him. More than that, he’s overtly discussing currency manipulation, and asserting control over the Bank of Japan.
Abe said he will pick someone who agrees with his views on the need for bolder monetary easing to succeed BOJ Governor Masaaki Shirakawa when his term expires in April next year.
“At this month’s policy meeting, the BOJ said it would examine (setting an inflation target) at its next meeting” in January, Abe said on television on Sunday.
“If it doesn’t, we’ll revise the BOJ Law and set up a policy accord with the central bank to agree on an inflation target. We may also seek to have the BOJ held accountable for job growth.”
He wants the BOJ to share with the government a binding 2 percent inflation target, double the central bank’s current goal, and ease policy “unlimitedly” to achieve it. There is no specific time frame.
Some central bank policymakers, notably the conservative Shirakawa, have been reluctant to set a 2 percent inflation target in a country which has been mired in grinding deflation for more than a decade. But they may have little choice but to meet Abe’s demand given explicit threats to the BOJ’s independence.
“Countries around the world are printing more money to boost their export competitiveness. Japan must do so too” to keep the yen from rising, Abe said. “It makes a big difference whether the yen is at 80 to the dollar, or at 90 to the dollar.”
I do enjoy the candor. There are a couple of problems with this muddled thinking. First of all, inflation doesn’t create a good economy. Often, inflation is a sign of a growing economy, but inflation, in and of itself, doesn’t do anything but decrease the value of the currency. Just because you have inflation doesn’t mean you’re doing anything right. In fact, it’s an indication that you’re doing something wrong!!! 2%? What’s that going to do? If one wants to see how well that works out, just look to the UK. There, they’ve got 2.7% inflation and negative economic growth. Abe seems to wish to replicate this…… success?
Another problem with this insanity is that Abe is pretending Japan hasn’t really participated in the QE of the world. Good heavens! They just got through with QE9 and now they’re going to have QE10! It’s no small feat, but in relation to the size of the economy, Japan is printing faster than the US!
Metals, physical assets, and durable goods continue to look good. Be careful on the asset purchases in that inflation does relate to property taxes.
Right about at the 1:40 mark is what will happen when the music stops.
And, it will be repeated until there are no chairs left.