Japan Unexpectedly Starts Printing More Money As Debt Interest Rates Rise

[Economy 52,842]

https://www.bnnbloomberg.ca/boj-acts-to-slow-rising-bond-yields-with-unscheduled-buying-1.1978037

 

While much of the Western World is Dealing with Bond Yields of 3% to 5%... highly indebted Japan is panicking that their 10 year bond yields hit 0.77%

 

The Central Bank of Japan started bond purchases of its own Countries Government to prevent rates from going up too much too fast

 

Japan is the worlds most indebted Nation where even a 0.1% increase in rate result in a lot of extra interest rate expenses. In addition their economy is unaccustomed to interest rates much above 0 after decades of on and off delation and negative interest rates pushed by its central bank

[Red 99,106]

Sounds like me when I was a child and did not get why the government did not print more money to solve all the problems 

[Economy 52,842]

24 minutes ago, Red said:

Sounds like me when I was a child and did not get why the government did not print more money to solve all the problems 

I mean most do print some to some extent 😅 as much as they can get away with without major consequences anyway

[CELINE 747]

This is also because the Yen is really dipping hard. Yet the BOJ is still hesitant to fully intervene. I wonder if they're going to wait on it.

[bionic 50,111]

they should just raise taxes

[Economy 52,842]

1 hour ago, CELINE said:

This is also because the Yen is really dipping hard. Yet the BOJ is still hesitant to fully intervene. I wonder if they're going to wait on it.

Its funny... normally QE should devalue your currency not increase it. I wonder if theres fear of a financial meltdown in Japan or sovereign debt crisis and so the averted fears of trying to keep bonds lower actually helped their currency

 

All i know Japan is in a bit of a pickle. Should they ever actually lift economic growth and their interest rates go above essentially 0... can they handle it without a total meltdown?

 

No Country in the past ever got a debt of over 200% of GDP and remained stable. Japan kinda has the all time record there. How high and how long can they sustain it and keep it that way?

 

Obviously i dont have the answer as theres lots of variables at play but for the worlds sake i hope they hold it together. A collapse in the worlds 3rd largest economy would be pretty catastrophic

 

The European version of a debt crisis was bad enough when it was just Greece, Portugal, Spain and Italy which all combined is still smaller than Japans economy

[Economy 52,842]

55 minutes ago, bionic said:

they should just raise taxes

They do have higher household savings than most countries at least...

 

But shifting wealth from private sector (businesses and households) to government can be more delicate than the otherway around (deficit spending & stimulus)

 

Their taxes are already not super competitive. They could further hurt investment and/or potentially trigger a recession which may at least in the short term hurt their revenues further

[CELINE 747]

1 hour ago, Economy said:

Its funny... normally QE should devalue your currency not increase it. I wonder if theres fear of a financial meltdown in Japan or sovereign debt crisis and so the averted fears of trying to keep bonds lower actually helped their currency

 

All i know Japan is in a bit of a pickle. Should they ever actually lift economic growth and their interest rates go above essentially 0... can they handle it without a total meltdown?

 

No Country in the past ever got a debt of over 200% of GDP and remained stable. Japan kinda has the all time record there. How high and how long can they sustain it and keep it that way?

 

Obviously i dont have the answer as theres lots of variables at play but for the worlds sake i hope they hold it together. A collapse in the worlds 3rd largest economy would be pretty catastrophic

 

The European version of a debt crisis was bad enough when it was just Greece, Portugal, Spain and Italy which all combined is still smaller than Japans economy

I think the lack of productivity due to an aging demographic is clearly one of the main factors here as well. They need to solve that urgently as it will eventually help the Yen in terms of Trading and exports. It's either they relax their Immigration policy or go fully automated by 2030. 

As for their debt, they're going to keep accumulating and then paying it up. It's a scary cycle to be in. Plus their tight policy probably saved them from a collapse but stagnated the economy. Yet they still hold ground by being the third largest economy to this day. 

However, Japan's monetary control is more flexible than the countries within the EU. Therefore, if a collapse is nearing they can make drastic changes if they want to.