RetireJapan

Bit of a wonky financial question, but I'm curious what others think about Kuroda's now 9-year experiment with monetary easing (unlimited bond purchases, yield curve control). He has never deviated from showing determination to keep up the ME until inflation reaches 2%, but at this point it seems to me like a fool's errand and that he's just keeping this up because he's come too far to back down (he has less than a year left as head of the BoJ).

I've always felt that Japan is just too stuck in a deflationary mindset for this tactic to work (demographics being what they are), but I'm happy to be proven wrong. Anyone have thoughts?

If inflation hits 2%, and it looks like that might be possible, it certainly won't have been because of Kuroda. The bigger effect his policies seem to have had is ingraining a sort of moral hazard that has distorted the free markets but is now taken for granted. Kind of like how pachinko players know the payout ratios of the machines are manipulated, and yet persist in playing because they know some of the machines are fixed to pay out more. So the game is no longer a fair game, it's just a matter of finding the right coattails to ride on.

It’s a fascinating experiment for sure. With inflation starting the move combined with the yen weakening, I think we’re in for an adventure. It seems like there are a number of academics that try to portray an economy in a simple fashion. The BOJ (and the Fed/US Gov’t) are playing with fire in my mind. It’s been 9 years; inflation doesn’t appear simple to control as they’ve spent 9 years getting it to move. Now what happens if it goes the other way? Do they think they can regain control by raising rates (and making all of that debt more expensive to service)? I believe the theory Japan is following is that if they keep the debt internal to the county it’s sustainable; you can’t default on yourself. So why don’t all countries do this?

It’s interesting to watch. I’m a bit concerned, well more than a bit, as I don’t think they can control economics they way they think they can with charts and graphs. Perhaps I’ve read too many doomsday articles the last few weeks about the yen but the data is a bit frightening. The US and Euro are tightening and removing money while Japan continues to print. The yen gets weaker and imports rise in price. I’m trying to find the investment opty here

I agree with your take. Kuroda tries very hard to project steadfastness and calm, but what he's doing is actually unprecedented and very risky, and as you say, they think they can control the economic system more than they actually can IMO.

My concern at this point is that Kuroda/the BoJ are both out of touch with the very real pain their policies are causing and also unwilling to lose face now that they've come so far. "If we just stick with it a little longer..." tends to become increasingly ineffective after such a long period of trial and error.

mighty58 wrote: ↑Mon Apr 25, 2022 10:31 am If inflation hits 2%

Inflation was 2.2% in March already (if you remove the exceptional "mobile carrier discount" from the 1.7% official CPI).

I recommend watching this YouTube video https://youtu.be/QiOB3L94N2g for a quick summary on why BOJ seems to be continuing the way it is. It covers the extent of problems facing the Japanese economy as well. Very eye-opening.

The guy presenting is a popular comedian turned YouTuber, his videos cover tricky topics and he explains them in a simple to understand way. Your Japanese needs to be about intermediate and above, cause he uses some tricky/ technical vocab too.

He also talks about FIRE and how to invest in index funds, and also some social problems I’ve long wondered about but never got round to trying to find a book that could explain it.

Ax6isB wrote: ↑Mon May 02, 2022 3:13 am It’s a fascinating experiment for sure. With inflation starting the move combined with the yen weakening, I think we’re in for an adventure.
It’s interesting to watch. I’m a bit concerned, well more than a bit, as I don’t think they can control economics they way they think they can with charts and graphs.

I’m trying to find the investment opty here

What do you think will happen? Stagflation? Recession?

Definitely looking for the investment op here myself.
Am converting some CDN to JPY, and moving that converted amount to NISA since some funds are also cheaper now compared to a few months ago.

NASCIjpn wrote: ↑Sat Jun 11, 2022 7:50 am

Ax6isB wrote: ↑Mon May 02, 2022 3:13 am It’s a fascinating experiment for sure. With inflation starting the move combined with the yen weakening, I think we’re in for an adventure.
It’s interesting to watch. I’m a bit concerned, well more than a bit, as I don’t think they can control economics they way they think they can with charts and graphs.

I’m trying to find the investment opty here

What do you think will happen? Stagflation? Recession?

Definitely looking for the investment op here myself.
Am converting some CDN to JPY, and moving that converted amount to NISA since some funds are also cheaper now compared to a few months ago.

Sorry for the long delay getting back to this.

I have no idea what will happen and I’ve been wrong just about as often as I’ve been right investing in it. I shorted the yen once and that worked. Tried again and it didn’t.

I’ve invested in a few US listed JP companies and some works and some fails and reinforces my current moves to put more money into indexes. For example my NISA, is just slim and some real estate etf I’m quite perplexed at this point but that makes it interesting.