Category Archives: Japanese bond market

Explaining Japan’s deflation 2016: the cause is not just the consumption tax hike

Did Abenomics successfully save Japan from deflation? Not really. Will quantitative easing and negative interest rates by the Bank of Japan (BoJ) make it better in the future? Not very likely.

The BoJ is no longer controlling the monetary policy of the Japanese economy. The central bank has already taken all the effective options, and thus the room for expansion of easing is quite limited. There is something that decides the monetary policy instead of the central bank.

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Japan’s finmin Aso supports the debt monetization by the Bank of Japan

This is somewhat old information but surely illustrates what Japan thinks of quantitative easing. The following is a video of the Japanese financial minister Taro Aso in 2010 explaining why Japan’s huge public debt is not a problem:

In this video, Mr Aso asserts that Japan will not go bankrupt despite the huge public debt because debt monetization will clear all of it. This was when the Liberal Democratic Party was not ruling the parliament, and thus he was perhaps more frank to talk about what he actually thinks of the debt.

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