April 5, 2013 – Money Spigot Opens Wider: Japan Unveils an Aggressive New Policy, Echoing the Fed and Other Central Banks. The Bank of Japan’s (BOJ) new leaders delivered on their pledge to radically overhaul its strategy to revive Japan’s economy, unveiling a package of easy-money policies Thursday so aggressive in scale and tactics that it surprised investors. Pictured above, the size of country debt and current actions. For example, the U.S. has debt greater than $10 trillion and is “On Hold amid Cuts.” The target rate in the U.S. is ¼ percent. Access the chart here:
Japan’s central bank will double its holdings of government bonds and the amount of yen circulating in its economy, joining major central banks that since the financial crisis have been testing the limits of their powers in a grand—and some say risky—experiment to stimulate the sluggish global economy.
As the Bank of Japan embraced more easy money, the European Central Bank and Bank of England left their relaxed monetary policies unchanged Thursday, and some U.S. Federal Reserve officials have begun talking about when to end its $85 billion a month in bond buying.
Shares in Tokyo were fueled by the BOJ moves, with the Nikkei stock average up more than 3% by midday Friday, after having gained 2.2% Thursday.
Editor’s Note: U.S. stock markets have been pushed to unsustainable levels by the same easy money policies. This will end badly for the U.S. and the world.
The Bank of Japan’s new tactics echo moves by the Fed: aggressive buying of long-term securities accompanied by clearly stated targets and backed by bold talk of commitment from the central bank chief. The goal is to push down long-term interest rates, spurring consumers and businesses to borrow more, spend more and invest more. (Credits – By PHRED DVORAK, JON HILSENRATH and BRIAN BLACKSTONE for The Wall Street Journal).
The Master of Disaster