Mr Khan said:
In some cases it's an important tool. Japan currently needs the kind of massive quantitative-easing the US is going through, for one. |
Yes and no...
Japan is a country essentially built for QE.
As it is... Japan seems like a patient in a coma, that's getting painkillers until it's inevitable death.
I can't really see a way out for the Japanese.
The Japanese have really low government bond rates... largely due to two main factors.
1) The Japanese are savers... and conservative savers at that. Your average Japanese person saves a lot of money... and are more then willing to put it in mild government bonds with weak yields.
The problem? The Japanese are getting old. The percentage of old people spending their bonds is going to greatly increase... and it won't be on lush consumer goods. It will be on the needs and other stuff they are buying now why they work. Essentially bond yields are going to go up... with zero bonus to the economy.
2) Japanese Pension funds - They buy a LOOOT of Japanese government bonds.
The Problem? Well old people getting old for one, like above. Additionally, they buy TOO MANY government bonds. Espiecally the government owned pension funds. The Pension funds don't really have the growth they're supposed to be having. Which means either
A) The government will have to make up the difference and sell more bonds to cover the debt (and raise yields) or run deficits (and raise yields.)
B) The government will have to cut benefits. Causing the elders to increase their bond spendign and selling. (raising yields.)
Something like 2017-2020 don't be surprised if Japanese rates start to wobble and we see BIG issues then. Espiecally if a big disaster hits.
There really doesn't seem to be much choice for them sadly... as the US pushes Japan through QE through our own useless QE that drives up the Yen.
