by Pater Tenebrarum
A Litany of Failures
It was widely expected that the BoJ would announce something this week after it promised to perform a comprehensive review of its monetary policy. It certainly did deliver a major tweak to its inflationary program, but its implications were seemingly not entirely clear to everybody (probably not even to the BoJ).
[…] There were many reasons for the BoJ to review its policies. For one thing, they have killed the bond market. Trading volume in JGBs has collapsed, and by pushing yields all along the curve to zero or lower, insurers and pension funds are increasingly in dire straits. Moreover, the BoJ’s purchases of ETFs have made it an outsized shareholder in many listed Japanese corporations. This is tantamount to introducing socialism by the back door.
Last but not least, these policies are simply not working – not by the standards of the planners themselves and not even in the short term (that they cannot possibly work in the long term probably doesn’t need to be belabored). This shouldn’t have surprised anyone, since they haven’t worked in Japan for 26 years running. Why should that suddenly change? The BoJ has not even been able to hit its absurd consumer price inflation target: