market-ticker.org / By Karl Denninger / Posted 2013-01-22 07:36
You knew it was going to happen.
Japan adopted an “official” 2% inflation target. At the same time the so-called “independent” BOJ said it will begin open-ended money-printing starting in January of next year, when it will begin buying a total of 12 trillion Yen of government bonds monthly.
This is about $135 billion in dollars, more or less, per month — or about $1.6 trillion annually.
The market initially spiked on this, but then people started to contemplate: This is a fiscal devaluation of about 22% annually!
That’s well beyond eating the seed corn and into the realm of burning the furniture — and perhaps the wallpaper.
The impact of this policy on the common Japanese citizen is going to be catastrophic and will lead to the collapse of the economy and government. This is not speculation; it is mathematically certain. We are talking about a “fiscal operation” that is approximately three times what our government is doing, and the impact here has been horrifying, boosting unemployment and pressing firmly into the neck of Americans while driving food stamps and other social “program” demand to the moon.
The impact in Japan will be nothing short of cataclysmic, which leads one to wonder: Are they really that dumb or is this a promise that nobody intends to actually keep?
The market seems to believe the second — for now. I don’t blame traders either — it doesn’t take long for me to pull out my trust HP12c and figure out the fiscal impact, nor to do a back-of-the-envelope on what this will do the common Japanese citizen. There aren’t enough non-radioactive sticks left in the country to hand out for tongue-biting protection on this deal — short of an intent to wind up in a hot war (probably with China) my only reaction to this announcement is “You must be lying — or nuts!”