Did Japan Just Prove that Central Banks Are Out of Ammo?
By: Graham Summers
GoldSeek.com
Monday, 25 January 2016
The world has yet to fully digest what is currently happening in Japan.
Japan is the global leader for Keynesian Central Banking insanity. The ECB and US Federal Reserve began implementing ZIRP and QE after 2008. The Bank of Japan has been employing both ZIRP and QE since 2001.
Put simply, by the time the Great Crisis of 2008 rolled around, the Bank of Japan had nearly a decade’s experience seeing what QE, ZIRP, and the like could accomplish.
On top of this, the Bank of Japan has been the single most aggressive Central Bank post-2008. In 2013, it launched a single QE program equal to roughly 25% of Japan’s GDP (the Fed’s largest program was less than 10% of GDP).
As if this wasn’t insane enough, the Bank of Japan then expanded the program, not because it was working, but because doing so would result in its models appearing more accurate.
In short, the Bank of Japan crossed the Rubicon long ago as far as monetary insanity goes.
Which is why it’s critical to note two things:
1) The Head of the Bank of Japan, Haruhiko Kuroda has admitted Japan’s “potential” GDP growth is 0.5% or less.
2) The Bank of Japan just boosted its ETF purchases but not its bond purchases in response to Japan re-entering a recession.
Regarding #1, this is an implicit admission that QE doesn’t generate GDP growth. Anyone who’s studied QE knew this already, but it’s an incredible admission from a Central Banker. These are the people responsible for instilling confidence in the system.
The Rest…HERE
