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Thread: Bank of Japan roll the dice

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    Politics.ie Member Sync's Avatar
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    Default Bank of Japan roll the dice

    Bank of Japan unveils aggressive easing - FT.com

    The Bank of Japan will aim to double the monetary base over two years through the aggressive purchase of long-term bonds, in a dramatic shift.

    Haruhiko Kuroda on Thursday announced his arrival as central bank governor with a “new phase of monetary easing”, a move that comes after Prime Minister Shinzo Abe told the bank to target a 2 per cent rate of inflation.

    The BoJ said it would boost Japan’s monetary base from Y135tn ($1.43tn) to Y270tn by March 2015, mainly by buying more long-term government bonds. That will raise the average remaining maturity of its holdings from about three years to seven years, keeping downward pressure on yields all along the curve.
    The main aim here is to increase inflation, Japan's been suffering from sustained deflation for over 2 decades. It's an effort to jump start investment/borrowing in the Stock Market and business sectors.

    It also has the effect though of artificially decreasing the value of Yen (As seen by it's sudden drop this morning). It's already down 3% against the dollar. The US market will make for interesting viewing today.

    The 2 consequences of this are:
    1. You're running the risk of sparking a trade/currency war with the US and China who will understandably be ticked by this
    2. If I'm in Japan and I can now get lots of money at a very low interest rate, I'm going to invest it OUTSIDE Japan where I can benefit from the currency drop.

    It's a hell of a gamble all told, but the last 20 years have failed miserably so the feeling appears to be that the risk is worth it.
    I'm living in America, and in America, you're on your own. America's not a country. It's just a business. Now f***ing pay me.

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    If only there was a regional war that they could get involved in,

    Wait, WHAT?

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    Dylan2010
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    just when Japanese retirees would like to start spending their savings. Its a deposit theft by stealth

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    Quote Originally Posted by Dylan2010 View Post
    just when Japanese retirees would like to start spending their savings. Its a deposit theft by stealth
    Shure is. Low interest rates and high inflation just wipes out savers spending power. If you are a Jap get spending soon while your money is still worth something, why this policy was announced? Nothing better to stimulate economy than this 'Use it or Lose it' scam.

    Its just another example of bankers screwing the suckers who have saved all their life. Savers in Cypress got a much better deal!
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    Politics.ie Member RobertW's Avatar
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    Dylan2010
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    Quote Originally Posted by opinions View Post
    Shure is. Low interest rates and high inflation just wipes out savers spending power. If you are a Jap get spending soon while your money is still worth something, why this policy was announced? Nothing better to stimulate economy than this 'Use it or Lose it' scam.

    Its just another example of bankers screwing the suckers who have saved all their life. Savers in Cypress got a much better deal!
    it will also backfire, if they start hollowing out their savings, interest rates will rise anyway. The Japanese central bank is not bigger than the market, they can only push against "open doors".

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    Politics.ie Member Sync's Avatar
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    Quote Originally Posted by opinions View Post
    Shure is. Low interest rates and high inflation just wipes out savers spending power. If you are a Jap get spending soon while your money is still worth something, why this policy was announced? Nothing better to stimulate economy than this 'Use it or Lose it' scam.

    Its just another example of bankers screwing the suckers who have saved all their life. Savers in Cypress got a much better deal!
    This really isn't the bankers for once. It's the govt man's decision. The use it or lose it idea isn't terrible tbh, but the way they've done it will just incentivise flight of capital unless they add on barriers on external investment or added tax breaks/enticements for domestic investment i.e become more protectionist.
    I'm living in America, and in America, you're on your own. America's not a country. It's just a business. Now f***ing pay me.

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    Quote Originally Posted by Ribeye View Post
    If only there was a regional war that they could get involved in,

    Wait, WHAT?
    They should stick to fighting the Russians -

    Battle of Tsushima - Wikipedia, the free encyclopedia
    Once your ability to function within society depends on a government controlled ID card then you are no longer a free citizen.

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    Dylan2010
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    I havnt followed the Japan story in a while but essentially the gov was able to borrow cheap because the people were such prolific savers (and translated by the numptys on RTE as they are borrowing from themselves so there is no problem) , now demographics will take over and the same peeople will start running down their savings. The Debt to GDP is over 200% and if the gov need to borrow from abroad they will not be able to borrow for long at 1%. Imagine what every 1% rise in interest rates will do to state finances when debt to GDP is over 200%

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    Politics.ie Member Spanner Island's Avatar
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    Quote Originally Posted by Dylan2010 View Post
    just when Japanese retirees would like to start spending their savings. Its a deposit theft by stealth
    It was always going to happen...

    There aren't enough young people in Japan to support the retirees...

    And Japan ain't the only place that's the case...

    Europe is heading there fast too...

    I think the current retirement generation are going to have to accept they're going to have to contribute at some stage to fixing the mess we're all in...

    Public opinion will swing away from keeping pensioners immune soon enough... and particularly in relation to the Ahern generation who expect the rest of us to keep them in the lifestyles to which they've become accustomed and obviously think they're entitled...

    There's gonna be far less tolerance of the 'We've worked hard and paid our taxes and deserve to be left alone' pensioner whinge in the years to come... and particularly when the generation that wrecked this country become the pensioner generation...
    Last edited by Spanner Island; 4th April 2013 at 01:35 PM.

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