3/20/2024

"The Exit from quantitative easing" is started

Yesterday, the negative interest rate was cancelled by BOJ. Mass media seemed to get carried away with that news announcing we were at the exit of enormous quantitative easing. But the new interest rate is up to only 0.1%. BOJ could never increase it more since, owning over 500 trillion JPY of the national bond and over 50 trillion JPY of ETF, it could have the financial condition worsened with higher interest rate. The president of BOJ, at the press conference regarding this "exit" policy, has mentioned of the inheritance of financial burden from the quantitative easing of different dimention. 

BOJ and our government deem the economy in our country still in deflation and they would continue easing. There seems no choice for them other than going on montary financing. They would carry on monetization whether the economy may go further to inflation or not. JPY is getting much weaker against most of currencies since this exit decision by BOJ.

I am afraid, with inflation letting to go on, the government may be intending to substantially reduce the astronomically cumulated the governmental debt. They say there are 3 ways to cancel the national debt. One is default to refund the debt. The 2nd is to begin war. Letting inflation go on is the 3rd manuver. This last one might be what the government is aiming at.

This change in the finance in the country may torment people, especially people in poverty and living only with pension. It is a question that this problem won't be discussed in mass media or in the internet.

My father's generation had to go for war. People in my generation had not come across with such a tragedy, I always thought. This economical/financial mess may be comparable to the war, even though it won't directly expose our lives to danger. But who knows it may happen.

It is too strange people seem not to have understood what was going on and they are too optimistic talking about the possible rise of interest rate with their deposits at bank etc.  
 

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