{"id":113986,"date":"2014-04-22T17:58:43","date_gmt":"2014-04-22T17:58:43","guid":{"rendered":"http:\/\/rinf.com\/alt-news\/?p=113986"},"modified":"2014-04-22T17:58:43","modified_gmt":"2014-04-22T17:58:43","slug":"enough-already-g-20-us-tell-bank-japan-end-quantitative-easing","status":"publish","type":"post","link":"http:\/\/rinf.com\/alt-news\/editorials\/enough-already-g-20-us-tell-bank-japan-end-quantitative-easing\/","title":{"rendered":"Enough Already: The G-20 and the US Tell the Bank of Japan to End Quantitative Easing"},"content":{"rendered":"

Mike Whitney\u00a0<\/strong><\/p>\n

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It looks like QE is going to end with a whimper instead of a bang.<\/em><\/div>\n<\/div>\n
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The bigwigs in the G-20 have put the kibosh on Japan\u2019s money printing extravaganza. While most analysts expect the Bank of Japan (BoJ) to announce more \u201ceasing\u201d in the days ahead to counter weakening economic data and droopy stock prices; it\u2019s not going to happen. Why? Because the big boys have told the BoJ to knock it the hell off, that\u2019s why? Here\u2019s the scoop from the Japan Times:<\/em><\/p>\n

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\u201cDespite lingering market pressure on the Bank of Japan to take further easing steps, its Group of 20 counterparts might not welcome the central bank\u2019s next move.<\/p>\n

With concern mounting about how the BOJ\u2019s unprecedented purchases of government bonds and risky assets will impact global markets, the G-20 finance chiefs might pressure the BOJ in the near future to clarify how it will phase out the deflation-busting measures\u2026<\/p>\n

Japan Bank for International Cooperation Gov. Hiroshi Watanabe said additional BOJ easing measures would not be supported by the United States, which is gradually reducing its own bond purchasing program.<\/p>\n

\u201cI\u2019m not sure whether it is good for the United States and Japan to look in much different directions,\u201d Watanabe, a former vice finance minister for international affairs, said in a meeting with reporters earlier this month. \u201cI don\u2019t think the United States will support\u201d further BOJ easing.\u201d (\u201cExperts urge BOJ to draft exit strategy<\/a>\u201c, Japan Times)<\/p>\n<\/blockquote>\n

Repeat: \u201cadditional BOJ easing measures would not be supported by the United States.\u201d<\/p>\n

In other words, \u2018Stop what you are doing\u2026NOW\u201d.<\/p>\n

Of course, the BoJ could resist and defend its independence, but how likely is that? That would suggest that the BoJ doesn\u2019t get its marching orders from Washington, which it does, just like everyone else in the western banking cartel. So what\u2019s probably going to happen is this: BoJ chief Haruhiko Kuroda will come up with a number of goofball excuses for winding down the policy to conceal the real power-dynamic behind the decision. But the truth is obvious, Washington has ordered the BoJ to stop printing, and dad-gum-it, Japan is going to fall in line\u2026or else. That\u2019s how things work in this-here empire.<\/p>\n

But why the sudden turnaround, after all, Abenomics has been around for more than a year and none of the bigshots at the Fed or the G-20 ever spoke up against it. Everyone seemed to think that QE was the greatest thing since sliced bread. Now Watanabe and Co. want to slam on the brakes and return to more conventional policies. Why? Let\u2019s take another look at the article in the Japan Times and see what they say:<\/p>\n

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\u201cIn light of the side effects of the radical program, which could also take a toll on the global economy, the BOJ must map out an exit strategy from what it calls \u201cquantitative and qualitative monetary easing,\u201d pundits said.<\/p>\n

Some central banks have created a framework for avoiding the adverse impact of such policies, former BOJ Deputy Gov. Kazumasa Iwata said in a recent interview. \u201cThe BOJ also ought to set certain conditions and mechanisms toward the normalization of its current policy.\u201d (Japan Times)<\/p>\n<\/blockquote>\n

Hold on there, partner. What\u2019s all this talk about \u201cadverse impact\u201d \u201cradical program\u201d, and QE \u201ccould take a toll on the global economy.\u201d This is the first time any of the so called experts have whispered a word about adverse effects from QE. Up to now its all been rosy projections, green shoots, and silver linings. You mean there could be unintended consequences from printing up more than $10 trillion in funny money and shoving it into financial systems around the globe?? Is that what this is all about? Here\u2019s more:<\/p>\n

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\u201cIf the current large-scale monetary easing policy were to be protracted or such policy strengthened by additional measures, the associated side effects would instead outweigh the positive effects, and this would undermine economic stability in the long run,\u201d BOJ Policy Board member Takahide Kiuchi said last month\u2026\u201d (Japan Times)<\/p>\n<\/blockquote>\n

So the toffs think QE is actually dangerous. Well why didn\u2019t someone think of that five years ago when the Fed first launched this bonehead program? You mean, central banks have been flying by the seat of their pants with absolutely no freaking idea the impact their wacko policies could have on the global financial system? Doesn\u2019t that seem a tad reckless to you, dear reader, or am I just overreacting? Here\u2019s more:<\/p>\n

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\u201cSome experts have expressed caution that the BOJ may draw international criticism if it takes additional credit easing measures that could have strong side effects without preparing an exit strategy\u2026<\/p>\n

On Tuesday, after the BOJ decided to leave its aggressive monetary easing policy in place, Kuroda said further easing was not on his mind. \u201cWe are not currently thinking about additional easing\u201d because the economy is steadily on course to attain the 2 percent inflation target by spring 2015, he said.\u201d (Japan Times)<\/p>\n<\/blockquote>\n

Kuroda is the biggest loonybin on the planet. Take my word for it. The man deserves a place of honor next to Greenspan in the Pantheon of Crackpot Bankers. The man knows absolutely nothing about economics. Seriously. Under Kuroda, Japan\u2019s GDP has shrunk to the size of an acorn, wages have dropped for 21 months straight, consumer confidence is in the toilet, 2 percent inflation is nowhere in sight, and Japan debt has ballooned to the size of a small galaxy. Still, they keep this loser at the helm because stock traders love his sorry ass. It\u2019s pathetic. Only now, the Fed and Co. are planning to shut down Kuroda\u2019s little counterfeiting operation leaving him with nothing to do except dodge brickbats from angry reporters. Good riddance.<\/p>\n

Keep in mind that reducing asset purchases by the Fed (\u201ctapering\u201d) has already wreaked holy hell on the emerging markets which are still experiencing capital outflows and (potential) currency crises. And, the funny thing is, the Fed hasn\u2019t even started trimming its $4 trillion asset pile yet, let alone raised rates! So, just imagine, for a minute, what\u2019s going to happen when the BoJ stops printing at the same time the Fed starts to pare-down its balance sheet. That\u2019s the nightmare scenario, because the supply of financial assets is going to skyrocket and send stock prices off a cliff. Did someone say \u201c1929\u00e2\u20ac\u00b3?<\/p>\n

Uh huh. As it happens, there have been a few experts who have spoken out against QE. The MSM has simply made damn-sure they don\u2019t get the airtime they need to voice their skepticism. Take, for example, William White, the former chief economist of the Bank for International Settlements, which is considered the central bank of central banks. Here\u2019s how White slammed QE in a recent interview:<\/p>\n

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\u201cThe honest truth is no one has ever seen anything like this. Not even during the Great Depression in the Thirties has monetary policy been this loose. And if you look at the details of what these central banks are doing, it\u2019s all very experimental. They are making it up as they go along. I am very worried about any kind of policies that have that nature\u2026<\/p>\n

Today, the Fed still acts as if it was in crisis management. But we\u2019re six years past that. They are essentially doing more than what they did right in the beginning. There is something fundamentally wrong with that. Plus, the Fed has moved to a completely different motivation. From the attempt to get the markets going again, they suddenly and explicitly started to inflate asset prices again. The aim is to make people feel richer, make them spend more, and have it all trickle down to get the economy going again. Frankly, I don\u2019t think it works, and I think this is extremely dangerous\u2026<\/p>\n

The fundamental problem we are still facing is excessive debt. Not excessive public debt, mind you, but excessive debt in the private and public sectors. To resolve that, you need restructurings and write-offs. That\u2019s government policy, not central bank policy. Central banks can\u2019t rescue insolvent institutions. All around the western world, and I include Japan, governments have resolutely failed to see that they bear the responsibility to deal with the underlying problems. With the ultraloose monetary policy, governments have no incentive to act. But if we don\u2019t deal with this now, we will be in worse shape than before\u2026\u201d (\u201cChief Economist Of Central Banks\u2019 Central Bank: \u201cIt\u2019s Extremely Dangerous\u2026 I See Speculative Bubbles Like In 2007<\/a>\u201c, zero hedge)<\/p>\n<\/blockquote>\n

This is really brilliant analysis and it covers QE\u2019s main flaws, so let\u2019s summarize. White says:<\/p>\n

1\u2014QE is entirely \u201cexperimental\u201d and that central banks are \u201cmaking it up as they go along.\u201d<\/p>\n

Check.<\/p>\n

2\u2014There\u2019s no longer any need for \u201ccrisis management\u201d. (after 6 freaking years!) The Fed is merely \u201cinflating asset prices\u201d. (aka\u2014Bubblemaking)<\/p>\n

Check, again.<\/p>\n

3\u2014Most important: The essential problem has NOT been fixed. Government policy still supports the zombie banks and other financial institutions which have not been nationalized, not been restructured, and are still sucking the life out of the real economy. These lumbering mastodons need to be euthanized so their debt-pile can be eliminated, their books cleared, and the economy reset. QE has merely perpetuated the problem by providing the means by which these institutions can continue to roll over their debts at zero cost to themselves creating the illusion of solvency. The US is following the same path as Japan into deflation and severe economic stagnation.<\/p>\n

Check, check, and more check.<\/p>\n

That sums it up perfectly. The only thing he left out was that QE has been the biggest wealth shifting scam in history. The sooner they give this program the ax, the better.<\/p>\n

MIKE WHITNEY<\/strong><\/em>\u00a0<\/strong>lives in Washington state. He is a contributor to\u00a0Hopeless: Barack Obama and the Politics of Illusion\u00a0(AK Press).\u00a0Hopeless is also available in a\u00a0Kindle edition.\u00a0He can be reached at\u00a0fergiewhitney@msn.com<\/a>.<\/em><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Mike Whitney\u00a0 It looks like QE is going to end with a whimper instead of a bang. The bigwigs in the G-20 have put the kibosh on Japan\u2019s money printing extravaganza. While most analysts expect the Bank of Japan (BoJ) to announce more \u201ceasing\u201d in the days ahead to counter weakening economic data and droopy […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[461],"tags":[],"class_list":{"0":"post-113986","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-editorials"},"_links":{"self":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/113986","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/comments?post=113986"}],"version-history":[{"count":0,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/posts\/113986\/revisions"}],"wp:attachment":[{"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/media?parent=113986"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/categories?post=113986"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/rinf.com\/alt-news\/wp-json\/wp\/v2\/tags?post=113986"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}