Tag Archive: QQE

You Don’t Have To Take My Word For It About Eliminating QE

2021-10-24

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2021-10-24

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.

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August Avoids Zero In JGB’s

2021-09-28

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2021-09-28

Central banks and their staffs have long been accused of trying to hide inflation. This allegation had been a staple of their critics, those charging reckless monetary policies for creating “too much” money that had allegedly been causing price imbalances all over the financial map.

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Nine Percent of GDP Fiscal, Ha! Try Forty

2021-02-25

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2021-02-25

Japan CPI, 2006-2021
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.

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Deflation Returns To Japan, Part 2

2020-11-23

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2020-11-23

Japan PMIs, 2018-2020
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.

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Looking Ahead Through Japan

2020-06-30

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2020-06-30

Japan Industry & Commerce, SA 2013-2020
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.

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From QE to Eternity: The Backdoor Yield Caps

2020-06-04

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2020-06-04

Japan - JGB, 1986-2019
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...

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There Was Never A Need To Translate ‘Weimar’ Into Japanese

2020-05-17

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2020-05-17

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.

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What Happens When Central Banks Buy Stocks (ETFs)? Well, We Already Know

2020-03-13

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2020-03-13

Japan Machine Tool Orders, 2010-2020
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.

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ISM Spoils The Bond Rout!!!

2019-10-03

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2019-10-03

Federal Reserve Empire States Manu. Index, 2004-2019
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.

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Effective Recession First In Japan?

2019-05-16

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2019-05-16

Japan Real GDP, 2008-2019
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 straightforward.

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What Tokyo Eurodollar Redistribution Really Means For ‘Green Shoots’

2019-05-02

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2019-05-02

TIC - US Banking Data
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.

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Something Different About This One

2019-02-22

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2019-02-22

China Retail Sales, Automobiles 2001-2018
In Japan, they call it “powerful monetary easing.” In practice, it is anything but. QQE with all its added letters is so authoritative that it is knocked sideways by the smallest of economic and financial breezes. If it truly worked the way it was supposed to, the Bank of Japan or any central bank would only need it for the shortest of timeframes.

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Lost In Translation

2019-02-08

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2019-02-08

Japan - JGB's 2016-2019
Since I don’t speak Japanese, I’m left to wonder if there is an intent to embellish the translation. Whoever is responsible for writing in English what is written by the Bank of Japan in Japanese, they are at times surely seeking out attention. However its monetary policy may be described in the original language, for us it has become so very clownish.

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Economics Is Easy When You Don’t Have To Try

2018-12-11

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2018-12-11

Japan GDP, Quantitative and Qualitative Easing, Jan 2008 - Mar 2018
The real question is why no one says anything. They can continue to make these grossly untrue, often contradictory statements without fear of having to explain themselves. Don’t even think about repercussions. Even in front of politicians ostensibly being there on behalf of the public, pedigree still matters more than results.

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And Now For Something Completely Different

2018-05-20

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2018-05-20

Japan Real Gross Domestic Product, Jan 2008 - 2018
Back in February, Japan’s Cabinet Office reported that Real GDP in Japan had grown in Q4 2017 for the eighth consecutive quarter. It was the longest streak of non-negative GDP since the 1980’s. Predictably, this was hailed as some significant achievement, a true masterstroke of courage and perseverance. It was taken as a sign that Abenomics and QQE was finally working (never mind the four years).

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Transitory’s Japanese Cousin

2018-05-01

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2018-05-01

Inflation in Japan, Jan 2011 - Apr 2018
Thomas Hoenig was President of the Federal Reserve’s Kansas City branch for two decades. He left that post in 2011 to become Vice Chairman of the FDIC. Before that, Mr. Hoenig as a voting member of the FOMC in 2010 cast the lone dissenting vote in each of the eight policy meetings that year (meaning he was against QE2, too). This makes him, apparently, the hawk of all hawks.

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The Best ‘Reflation’ Indicator May Be Japanese

2018-04-04

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2018-04-04

Japan Industrial Production, Jan 2008 - 2018
Japanese industrial production dropped sharply in January 2018, Japan’s Ministry of Economy, Trade, and Industry reported last month. Seasonally-adjusted, the IP index fell 6.8% month-over-month from December 2017. Since the country has very little mining sector to speak of, and Japan’s IP doesn’t include utility output, this was entirely manufacturing in nature (99.79% of the IP index is derived from the manufacturing sector).

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The Global Burden

2017-04-12

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2017-04-12

Germany 2-year Bund Yield 2009-2017
Bundesrepublik Deutscheland Finanzagentur GmbH (German Finance Agency) was created on September 19, 2000, in order to manage the German government’s short run liquidity needs. GFA took over the task after three separate agencies (Federal Ministry of Finance, Federal Securities Administration, and Deutsche Bundesbank) had previously shared responsibility for it.

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Systemic Depression Is A Clear Choice

2017-04-05

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2017-04-05

Japan CPI, Jan 2010 - 2017
Looking back on late 2015, it is perfectly clear that policymakers had no idea what was going on. It’s always easy, of course, to reflect on such things with the benefit of hindsight, but even contemporarily it was somewhat shocking how complacent they had become as a global group.

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True Cognitive Dissonance

2017-03-04

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2017-03-04

Inflation In Japan 2011-2016
There is gold in Asia, at least gold of the intellectual variety for anyone who wishes to see it. The Chinese offer us perhaps the purest view of monetary conditions globally, where RMB money markets are by design tied directly to “dollar” behavior. It is, in my view, enormously helpful to obsess over China’s monetary system so as to be able to infer a great deal about the global monetary system deep down beyond the “event horizon.”

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