Ben controversy on FB

[Deep Blue]

The ultimate owner is not really relevant to the point? The bonds need to be repaid to whoever owns them - foreigners, banks, wealthy indivduals, corporations... whoever. Unless you are saying the MoF can default on their JGB's because tbey are mostly owned by Japanese? If so, I would rather not be around to see what happens if they tried this!

As I understand it, about half is owned by the Bank of Japan - technically independent, but in practice....

Political economist Prof Mark Blyth puts it this way, if you lend yourself the money to buy a house, how much do you really owe?

Given that more than 90% of the debt is held domestically, it's a really different position to the US or other countries.

So why doesn't the Bank of Japan simply buy up all the JGBs then? Problem solved. No more debt burden.....

For that matter, why doesn't the Federal Reserve buy up all the UST's? US debt issues all gone. Time for Sleepy Joe to spend even more money!

Same for the Bank of England and gilts.... easy peasy solution to any fiscal constraints.

[TokyoWart]

The ultimate owner is not really relevant to the point? The bonds need to be repaid to whoever owns them - foreigners, banks, wealthy indivduals, corporations... whoever. Unless you are saying the MoF can default on their JGB's because tbey are mostly owned by Japanese? If so, I would rather not be around to see what happens if they tried this!

As I understand it, about half is owned by the Bank of Japan - technically independent, but in practice....

Political economist Prof Mark Blyth puts it this way, if you lend yourself the money to buy a house, how much do you really owe?

Given that more than 90% of the debt is held domestically, it's a really different position to the US or other countries.

So why doesn't the Bank of Japan simply buy up all the JGBs then? Problem solved. No more debt burden.....

For that matter, why doesn't the Federal Reserve buy up all the UST's? US debt issues all gone. Time for Sleepy Joe to spend even more money!

Same for the Bank of England and gilts.... easy peasy solution to any fiscal constraints.

See the link below for an explanation of why that would not solve the problem. When a central bank buys government debt it creates reserves which are also effectively a government obligation. If they cancel both the government debt and the reserves it would contract the money supply and put enormous strain on the fractional reserve banking system that we all live under.

https://www.bqprime.com/opinion/central ... no-panacea

[Deep Blue]

As I understand it, about half is owned by the Bank of Japan - technically independent, but in practice....

Political economist Prof Mark Blyth puts it this way, if you lend yourself the money to buy a house, how much do you really owe?

Given that more than 90% of the debt is held domestically, it's a really different position to the US or other countries.

So why doesn't the Bank of Japan simply buy up all the JGBs then? Problem solved. No more debt burden.....

For that matter, why doesn't the Federal Reserve buy up all the UST's? US debt issues all gone. Time for Sleepy Joe to spend even more money!

Same for the Bank of England and gilts.... easy peasy solution to any fiscal constraints.

See the link below for an explanation of why that would not solve the problem. When a central bank buys government debt it creates reserves which are also effectively a government obligation. If they cancel both the government debt and the reserves it would contract the money supply and put enormous strain on the fractional reserve banking system that we all live under.

https://www.bqprime.com/opinion/central ... no-panacea

Thanks… I was being sarcastic, but I guess it didn’t come across well! Like I mentioned earlier, Japan can’t default on JGBs without bankrupting every bank and insurance company in Japan. I guess a Japanese default would make the GFC look like a storm in a teacup by comparison.

What is going on in China now shows that having your debt owned by foreigners might actually make default a much more politically acceptable option… Evergrande and Country Garden are current for their domestic bonds… but have failed to repay the international bonds held by non-Chinese entities.

[TokyoWart]

Thanks… I was being sarcastic, but I guess it didn’t come across well! Like I mentioned earlier, Japan can’t default on JGBs without bankrupting every bank and insurance company in Japan. I guess a Japanese default would make the GFC look like a storm in a teacup by comparison.

Sorry, I need some coaching in order to recognize sarcasm

[sutebayashi]

Some points in that article that struck me:

> When governments run budget deficits, they are not borrowing money; they are creating it. If they create too much, inflation will result.

That’s Japan, and many a western democracy.

> If inflation does threaten, policymakers can tighten both monetary and fiscal policy; if the fiscal authorities don’t do their bit, independent central bankers can compensate by hiking interest rates even more.

This part is starkly not Japan!

Inflation has been above target for months now, and yet they are still printing more and more yen, while the government thinks it needs to spend more money than ever.

They certainly have shown that they can just print more. But that’s the reason I am negative on the value of the yen, and wish they would change course. After craving the “cruelest tax of all” for so long, it doesn’t seem they are in a hurry to get it under control, and if the truth be known, it might be regarded as an effective way to reduce the real value of the debt, should they inflate faster than spending increases.

One concern I do have is that, at some point, things might get to a point where they say, “sorry residents of Japan, but to recapitalize, we will need to confiscate half of your investments”. This is i think an unfounded fear, but a fear nonetheless.

[RetireJapan]

One concern I do have is that, at some point, things might get to a point where they say, “sorry residents of Japan, but to recapitalize, we will need to confiscate half of your investments”. This is i think an unfounded fear, but a fear nonetheless.

That is one reason I own 0.3 Bitcoins

[TokyoBoglehead]

One concern I do have is that, at some point, things might get to a point where they say, “sorry residents of Japan, but to recapitalize, we will need to confiscate half of your investments”. This is i think an unfounded fear, but a fear nonetheless.

That is one reason I own 0.3 Bitcoins

You could have 3 of these bad boys instead. They might be more fun (and safer) to hold.

download.jpg (6.74 KiB) Viewed 1709 times

[RetireJapan]

You could have 3 of these bad boys instead. They might be more fun (and safer) to hold.
download.jpg

I was kind of joking with the BTC thing. I do have some pirate gold though (157g): https://www.retirejapan.com/blog/gold/

[Deep Blue]

You could have 3 of these bad boys instead. They might be more fun (and safer) to hold.
download.jpg

I was kind of joking with the BTC thing. I do have some pirate gold though (157g): https://www.retirejapan.com/blog/gold/

Just imagine how much foregone profits gold bugs have lost wasting their time "investing in" (I prefer the term speculating in) gold.... an asset that not only has zero yield but actually costs you money every year to store.

For anyone with any reasonable time horizon (10 years+) their allocation to gold or silver should be exactly 0%. Everything in low cost equity trackers and diversify into low cost bond funds as your investment horizon shorterns.

[TokyoBoglehead]

You could have 3 of these bad boys instead. They might be more fun (and safer) to hold.
download.jpg

I was kind of joking with the BTC thing. I do have some pirate gold though (157g): https://www.retirejapan.com/blog/gold/

Just imagine how much foregone profits gold bugs have lost wasting their time "investing in" (I prefer the term speculating in) gold.... an asset that not only has zero yield but actually costs you money every year to store.

For anyone with any reasonable time horizon (10 years+) their allocation to gold or silver should be exactly 0%. Everything in low cost equity trackers and diversify into low cost bond funds as your investment horizon shorterns.

Not Your Keys, Not Your Crypto. Not in your safe, Not your gold. (Sorry couldn't resist).

I do not think anyone was being too serious here. However, there are many excellent reasons to own physical gold. I am not sure how many of those are legal though.