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PIMCO's Bill Gross believes BOJ easing risks creating a rout in the yen. G-7 countries may not tolerate it. Much more depreciation is needed "to get even close to 2% inflation," he added.
It hasn't before so why now. At risk is heading it higher, not lower.
Kuroda says now's not the time to worry. "I'm not concerned that longterm interest rates could spike or asset market bubbles will emerge. I don't have any intention of financing government spending."
How many times before have we heard grand plans? How many rosy scenarios turned sour? How many bad endings followed? In the late 1980s, BOJ policy escalated asset and property prices. It did so to unprecedented levels.
Market crashes, rolling recessions, weak recoveries, malaise, deflation, and dangerous deficits followed. Kuroda's heading into unchartered waters. Hindsight may make him wish he never tried.
Market analyst Graham Summers calls Japan the ultimate monetization failure. For two decades, BOJ measures failed. Stagnation characterizes Japan's economy.
Economic activity and employment haven't improved. No matter. Kuroda wants to do more of what hasn't worked. He'll spend 7 trillion yen monthly buying bonds.
Doing so is "complete and utter insanity, especially since there is literally not one single instance in history in which debt monetization has produced economic growth."
At risk is eventual inflation. Kuroda's plan to fight deflation and stimulate growth may backfire. Rising costs already affect food, fuel and other necessities.
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