Wednesday, August 13, 2014

Master Baiter>BoJ

Yellen may run the most important central bank in the world, but if fiat money is the discussion, you cannot leave out the men in Japan who jerk the lines of the yen pole in the waters of global currency. I could paraphrase a quote that the emperor might speak, but I don't want to intrude on cultural boundaries or hurt sensitive feelings. However, it might sound like this, "if the enlightened one smiles his favor upon you, the world is your oyster."
The Bank of Japan wrote the book on devaluing currency. For more than a decade money managers made millions by working the
Carry Trade
It is so easy for the rich to get richer that I want to scream. This is how you become a millionaire. You borrow yen with a Japanese loan of 2%. You take the money and then, you buy US Treasuries at 5%. Out of the 3% profit, you pay off the Japanese loan. You can't pull this B.S. with gold!
The Japanese didn't have to purchase yen in the market, money managers did it for them. This kept their local economy stable after their stock market bubble burst in 1989. Deflation was then and still is today, their biggest concern.
We can learn many things by studying the Japanese. If I wasn't Italian, I would consider them the most gifted culture. There is something within their nature that allows them to engineer things into smaller sizes. For example, they copied many auto improvements by American companies. Some might say that they stole ideas without regard to patents. Then again, one might argue that their design is original because the end result is vastly different from the original idea. I don't want to go off the theme because their fiat bankers are just as crooked as any in the field of currency. My point was that as a culture the Japanese study the competition and then, develop their own model.
stands for Government Pension Investment Fund. This is where the Japanese citizen saves for retirement and this culture is probably one of the best when it comes to saving for a rainy day.  Within the framework of funds within Japan, there are three leading money centers. The leader places its bet. The other two soon follow, although no one declares that the other influenced their decision.
Dear reader, we are talking big, big bucks or yen or euros, moolah, whatever. The three funds just sold Japanese bonds and now are buying Japanese equities to the tune of one-half trillion dollars(multiply 102 by half-a-trillion for the actual number). This figure is larger than the whole economy of Mexico!
predicted for the prime minister that a weak yen would boost exports just like it did in the 70s. This action would grow the economy. The central bank printed enough yen to match the confetti at Times Square on New Year's Eve. The yen has declined by 16% since Abe took office. The data gives pause. The unexpected happened at Fukushima. Japan dropped nuclear for oil. The bill comes every month just like you and me from our utility company. The Japanese fuel bill rose by $1.56t($15b)just in the first quarter! Even though exports grew the overall effect is in the negative column. In fact, industrial production is lower than it was two years ago. Here is something that the fiat central Japanese bank did that mimics ours. They have lost jobs! The Japanese have lost over one million jobs in the past decade. You see all this devaluation causes producers to seek the copy cats in other governments who find still another way to manipulate their currency. Have you heard the latest!
is going digital! That's right! They are taking fake money to a new level, the Matrix of Money! Glad I don't work there. Meanwhile, back in Japan before Abe came into office the yen rose and manufacturers outsourced jobs to cheaper Asian countries due the the yen's rise by 34%. The only plus in the BoJs plan was in inflation. That's right just like our Fed. The people suffer with higher prices while all the leaders say there is no inflation. Abe's plan for inflation has worked, but a country that lives for exports, not so much.
Bottom line when the fishing pole of the yen clears the muddy waters of international currency,
Japan's deficit is now over 200% of GDP. It is hard to grow an economy when the purchasing power of your currency is declining. You cannot burn your candle from both ends. Japanese households just like American families suffer in their standard of living with high food and energy prices. By the way Abe increased the national sales tax by 37% to help with government revenues. I hope Obama does not read that last line.
End the Fed!