{"id":18635,"date":"2016-03-08T16:13:31","date_gmt":"2016-03-08T21:13:31","guid":{"rendered":"http:\/\/olduvai.ca\/?p=18635"},"modified":"2016-03-08T16:14:05","modified_gmt":"2016-03-08T21:14:05","slug":"never-go-full-kuroda-nirp-plus-qe-will-be-contractionary-disaster-in-japan-cs-warns","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=18635","title":{"rendered":"Never Go Full-Kuroda: NIRP Plus QE Will Be Contractionary Disaster In Japan, CS Warns"},"content":{"rendered":"

Never Go Full-Kuroda: NIRP Plus QE Will Be Contractionary Disaster In Japan, CS Warns<\/a><\/h3>\n
In late January, when Haruhiko Kuroda took Japan into NIRP, he made it official.<\/div>\n
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He was full-everything. Full-Krugman. Full-Keynes. Full-post-crisis-central-banker-retard.<\/p>\n

In fact,\u00a0with the BoJ monetizing the entirety of JGB gross issuance as well as buying up more than half of all Japanese ETFs and now plunging headlong into the NIRP twilight zone, one might be tempted to say that Kuroda has transcended comparison to become the standard for monetary policy insanity.\u00a0<\/strong><\/p>\n

The message to DM central bank chiefs is clear:\u00a0You\u2019re either \u201cfull-Kuroda\u201d or you\u2019re not trying hard enough.<\/strong><\/p>\n

But as we\u2019ve seen, the confluence of easy money policies are beginning to have unintended consequences. For instance, it\u2019s hard to pass on NIRP to depositors without damaging client relationships so banks may paradoxically raise mortgage rates to preserve margins, the\u00a0exact opposite<\/em>\u00a0of what central banks intend.<\/p>\n

And then there\u2019s the NIRP consumption paradox, which\u00a0we outlined on Monday<\/a>: if households believe that negative rates are likely to crimp their long-term wealth accumulation, they may well stop spending in the present and save more. Again, the\u00a0exact opposite<\/em>\u00a0of what central bankers intend.<\/p>\n

In the same vein, Credit Suisse is out with a new piece that explains why\u00a0simultaneously pursuing NIRP and QE is likely to be contractionary rather than expansionary<\/strong>\u00a0for the real economy in Japan.<\/p>\n

\"\"<\/p>\n

In its entirety, the note is an interesting study on the interaction between BoJ policy evolution and private bank profitability, but the overall point is quite simple: pursuing QE and NIRP at the same time will almost certainly prove to be contractionary for the Japanese.<\/p>\n

Here\u2019s how the chain reaction works.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Never Go Full-Kuroda: NIRP Plus QE Will Be Contractionary Disaster In Japan, CS Warns In late January, when Haruhiko Kuroda took Japan into NIRP, he made it official. He was full-everything. Full-Krugman. Full-Keynes. Full-post-crisis-central-banker-retard. In fact,\u00a0with the BoJ monetizing the entirety of JGB gross issuance as well as buying up more than half of all […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[12836,124,4513,202,1708,452,534,558,10141,1389,661,662,10388,4318],"class_list":["post-18635","post","type-post","status-publish","format-standard","hentry","category-economics","tag-2s10s","tag-central-banks","tag-credit-suisse","tag-deflation","tag-fractional-reserve-banking","tag-japan","tag-monetary-policy","tag-negative-interest-rates","tag-nim","tag-nirp","tag-qe","tag-quantitative-easing","tag-yield-curve","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18635","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=18635"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18635\/revisions"}],"predecessor-version":[{"id":18637,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/18635\/revisions\/18637"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=18635"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=18635"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=18635"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}