{"id":8579,"date":"2015-05-29T06:00:06","date_gmt":"2015-05-29T11:00:06","guid":{"rendered":"http:\/\/olduvai.ca\/?p=8579"},"modified":"2015-05-29T06:00:06","modified_gmt":"2015-05-29T11:00:06","slug":"why-the-bank-of-japan-cant-stop-a-sudden-collapse-of-the-yen","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=8579","title":{"rendered":"Why the Bank of Japan Can\u2019t Stop a Sudden Collapse of the Yen"},"content":{"rendered":"

Why the Bank of Japan Can\u2019t Stop a Sudden Collapse of the Yen<\/a><\/h3>\n

On Friday morning\u00a0in Tokyo, the Nikkei stock index was up again, at 20,600, highest in 15 years. Since \u201cAbenomics\u201d has become a common word in December 2012, the Nikkei has soared 128% on a crummy economy, terrible government deficits, and an insurmountable mountain of government debt. This 10-day run of straight gains, or 11-day run if Friday plays out,\u00a0is the longest glory streak since February 1988 when Japan was in one of the craziest bubbles the world had ever seen.<\/p>\n

The subsequent series of crashes had the net effect that the Bank of Japan became engaged in propping up the stock market not only by pushing interest rates to zero and dousing the market with money via waves of QE, but also by buying equity ETFs and J-REITs.<\/p>\n

Prime Minister Shinzo Abe has made asset-price inflation his top priority. Under pressure from the BOJ and the government, state-controlled entities \u2013 such as the Government Pension Investment Fund with \u00a5137 trillion in assets \u2013 are dumping Japanese Government Bonds into the lap of the BOJ and are buying stocks with the proceeds.<\/p>\n

Foreign hedge funds have jumped into the fray, which is the hot money that can evaporate overnight. But fear not, every time the Nikkei drops 100 points or so, the BOJ starts buying, or creates the perception that it\u2019s buying, and within minutes, stocks shoot back up. It\u2019s part of the BOJ\u2019s relentlessly communicated policy to inflate asset prices come hell or high water.<\/p>\n

And hell or high water may now be on the way.<\/p>\n

Ultimately, monetary policies hit the currency. So the yen has sagged about 35% since Abe took over. On Thursday in Tokyo, it hit \u00a5124.3 to the dollar, the lowest since December 2002. Friday morning, after some jawboning by the government and the BOJ,\u00a0it recovered\u00a0a smidgen.<\/p>\n

 <\/p>\n

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

Why the Bank of Japan Can\u2019t Stop a Sudden Collapse of the Yen On Friday morning\u00a0in Tokyo, the Nikkei stock index was up again, at 20,600, highest in 15 years. Since \u201cAbenomics\u201d has become a common word in December 2012, the Nikkei has soared 128% on a crummy economy, terrible government deficits, and an insurmountable […]<\/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":[1265,951,1036,2022,452,5807,572,2629,4254,4255,1478],"class_list":["post-8579","post","type-post","status-publish","format-standard","hentry","category-economics","tag-abenomics","tag-currency","tag-currency-collapse","tag-fx","tag-japan","tag-monetary-collapse","tag-nikkei","tag-tokyo","tag-wolf-richter","tag-wolfstreet","tag-yen"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8579","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=8579"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8579\/revisions"}],"predecessor-version":[{"id":8580,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/8579\/revisions\/8580"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8579"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8579"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8579"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}