A critical moment due to concerns about the Bank of Japan's fiscal finance!
The article that appeared in Bloomberg today on the 6th is interesting.
Bank of Japan normalization and avoidance of fiscal finance by announcing compression of government bonds holds-Former Director Yamamoto
Bank of Japan normalization and avoidance of fiscal finance by announcing compression of government bonds holds-Former Director Yamamoto
This is an interview article for Mr. Kenzo Yamamoto, a former director of the Bank of Japan, and it sounds an alarm that if government bonds held in large quantities by the Bank of Japan are not compressed, this will become de facto fiscal finance.
Fiscal finance indicates that the government issues a large amount of government bonds in order to resolve budget deficits, and the central bank prints money and directly undertakes them. If you do this, it will cause currency turbulence and cause the worst inflation, so it is prohibited by the fiscal law.
Director Yamamoto has pointed out that in order to return the current level of ownership to what it was in normal times, the amount is such that new purchases must be suspended for 9 years.
The Bank of Japan has explained that large-scale government bond purchases are to achieve the 2% price target, but if balances cannot be compressed during normalization, “it is fiscal finance.” While the will for fiscal reconstruction is not visible in politics, it is expected that pressure on the Bank of Japan to buy government bonds will intensify again in a situation where the economy deteriorates. In order to avoid such a situation, he stated that showing balance compression policies early is “natural for a central bank involved in quantitative easing.”
The Bank of Japan has bought large amounts of government bonds with zero interest rates and has done something close to fiscal finance.
If this becomes a situation where it appears to be a temporary deficit or excess debt due to the cancellation of negative interest rates or interest rate hikes, that is the cost of the Bank of Japan's policies. The world is sounding the alarm that they have lost their trust and that yen will be sold ⇒ yen depreciation...
If this becomes a situation where it appears to be a temporary deficit or excess debt due to the cancellation of negative interest rates or interest rate hikes, that is the cost of the Bank of Japan's policies. The world is sounding the alarm that they have lost their trust and that yen will be sold ⇒ yen depreciation...
The reason that supported Japan's current stock prices and living standards is due to Abenomics and the Bank of Japan's mitigation policies, so I think criticism from one direction should be avoided, but it is also self-evident that the price of feeling good is going around.
In the near future, the dollar and yen will probably return to the 130 yen range due to the cancellation of negative interest rates and the reduction in US interest rates, but the Bank of Japan's costs and the Japanese government's costs should definitely hit in the future, and after all, if we think about the future on a 10-year basis, I think the direction of depreciation of the yen will be inevitable.
Gold and BTC are abnormally expensive now, but if you think about it over a span of 5 to 10 years, only Japanese people should buy gold and BTC! Maybe that's it.
Of course, even if you don't force yourself to go to gold or BTC, I feel that if you don't distribute your assets firmly with US stocks or overseas assets, it will be bad if you wait a little longer with Japanese yen assets in anticipation of an immediate appreciation of the yen.
Of course, even if you don't force yourself to go to gold or BTC, I feel that if you don't distribute your assets firmly with US stocks or overseas assets, it will be bad if you wait a little longer with Japanese yen assets in anticipation of an immediate appreciation of the yen.
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