One of the Biggest Money Printers, the BoJ, Stopped Printing Money

All eyes are on the Fed, which will follow. ECB also getting nervous. Other central banks are way ahead.

By Wolf Richter for WOLF STREET.

The Bank of Japan is one of the top three QE monsters in terms of the absolute amount of assets it purchased. The Fed and the ECB round out the trio. The BoJ started QE over 20 years ago, and went hog wild under Abenomics, which became the economic religion of Japan in 2013. But the era of Prime Minister Shinzo Abe ended in September 2020, and Abenomics is now finished. What’s left of it is that the BoJ now holds about half of the huge pile of the central government’s debt.

But QE has ended. The BoJ’s overall assets stopped growing, and its holdings of government bonds have started to decline.

As of the BoJ’s balance sheet dated September 30, released on Thursday, total assets declined to a still monstrous ¥724 trillion ($6.4 trillion), below where it had been in May 2021:

While the Fed has been jabbering about tapering its asset purchases for months and will likely start tapering later this year, and while the ECB is starting to waffle about its QE and is waiting for the Fed to make its move, the BoJ ended QE quietly, regardless of its announcements to the contrary.

The tapering of its purchases of government securities started a year ago and was completed at the end of 2020, in line with the end of Abenomics. Since then, its holdings have slowly dropped. By the end of September, they were down to ¥528 trillion ($4.7 trillion), the lowest since July 2020!

These government securities are by far the largest category of assets on the BoJ’s balance sheet and amount to about 73% of its total assets. The category consisted of ¥503.5 trillion of Japanese Government Bonds (JGBs) and ¥24.5 trillion of short-term Japan Treasury discount bills.

Every third month, long-term JGBs mature and come off the balance sheet, after which the BoJ purchases new JGBs to replace the redeemed JGBs. This causes the three-month zigzags (red line). The three-month moving average (green) smoothens that out and clarifies the trend:

Stock ETFs, Japanese REITs, corporate paper, and corporate bonds were the most hyped part of the BoJ’s QE activities – “most hyped” by the big market players because the idea was to use this to pump up share prices or halt sell-offs. But it now accounts for only 6.7% of total assets. They’re each listed separately on the balance sheet, but they’re so small that I lumped them into one figure.

The BoJ stopped adding to them in February 2021, and the balance has remained roughly level. At the end of September, the balance ticked down to ¥48.4 trillion, the level first reached in January 2021:

Loans are the second largest item on the BoJ’s balance sheet. They more than doubled from March 2020 through March 2021. Their growth comes in spurts, with the biggest jump in September last year. After five months of little growth, the balance at the end of September rose to ¥138 trillion, accounting for 19% of total assets.

These loans include the pandemic-stimulus Special Funds-Supplying Operations, which account for about half of the loans, and the Bank’s Loan Support Program to stimulate economic growth and bank lending.

All combined, total assets in September were below where they’d been in May, meaning roughly flat for six months. Here is the close-up:

Among the global money printers, in terms of sheer volume, the three monsters that really count are the Fed, the ECB, and the Bank of Japan.

A core reason for QE was the “Wealth Effect,” as the Fed calls it, which is central bank doctrine: To inflate asset prices to make the wealthy (the asset holders) even wealthier so that they might spend some of this free money they got from asset price inflation.

By purchasing assets, mostly bonds, central banks pushed up bond prices, along with all other asset prices, and therefor push down long-term yields, which makes financing cheaper and encourages leverage.

But the Bank of Japan has ended it. The Fed will likely start tapering its asset purchases this year and be done with it by mid-2022. The ECB is also talking about reducing its asset purchases.

Smaller central banks that had QE programs have either already ended their asset purchases or are starting the process of ending them.

The first central banks in developed economies have already raised their policy interest rates:  the Czech National Bank (three hikes, by a total of 125 basis points), the Bank of Korea (by 25 basis points), the National Bank of Poland (first rate hike, by 40 basis points), the Central Bank of Iceland (3 hikes, total 75 basis points), the Reserve Bank of New Zealand (by 25 basis points), and the central bank of Norway (by 25 basis points).

The consequences of these crazy policies of 0% interest rates and QE are massive global asset price inflation that risks the financial system and created the greatest economic injustice in recent history, topped off now by raging consumer price inflation. Central banks are going to pussyfoot around the lingo, and they’re not going to admit that they’re responsible for these issues, but they’re ending the money-printing orgy.

The bottom 50% need not apply. They just get to eat the soaring costs of housing. How the Fed totally blew out the already gigantic wealth disparity during the pandemic. Read... My “Wealth Effect Monitor” for the Money-Printer Economy: Holy Moly, October Update

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  147 comments for “One of the Biggest Money Printers, the BoJ, Stopped Printing Money

  1. Anton says:

    You would think the Japanese stock market would react negatively to this development but it’s seen no price moves

    • Wolf Richter says:

      The Nikkei dropped 5% since its recent high on Sep 7. Give it some time.

      • andy says:

        Wolf, biggest Chinese companies (in handreds of billions of US dollars) dropped like 40-50%, in under a year. Not that any index would show it.

        • Wolf Richter says:

          Yes, that’s a whole nuther story, as we used to say. Amazing story. But some of these big Chinese companies are traded in HK, and the Hang Seng is down something like 20% since Feb.

        • MCH says:

          Like Jeremy Irons said in Margin Call… “It’s just money.”

        • Truckman says:

          Any articles coming up soon on the Chinese property market, Wolf?
          Looks like a doozy of a crash waiting to happen..

        • Nick Kelly says:

          I’m not sure why it doesn’t rank with the Big 3, but Local governments in China have borrowed the equal of 8 trillion dollars (not in dollars) Evergrande’s 300 billion is just the tip of the iceberg and a different kind of critter, as it is a company, not a government. Every local CCP guy thought this was the way to rise: do a project: stadium, highway, complex etc. What SOE bank would (could?) say no? And lo! the GDP rose, just as it would if they were building a pyramid.

          Maybe this stat from Forbes is not filed under central bank money printing because the loans are held by SOE banks.

        • RH says:

          Let us not forget that these are linked because the Ponzi nature of Chinese real estate developers’ business model means all or most real estate developers are not going to get enough even to finish existing projects. Chinese economy also is getting pummeled due to its boycott of Australia’s coal and shortages.

          Will Chinese economy RIP? It might happen to those CCP mass murderers who created this mess. LOL

        • RH says:

          Also remember shortages, etc., are driving those developers’ costs sky high while their revenues are declining. LOL

        • Anderson Phillips says:

          There are a number of books out on various subjects with “Xi Jinping’s Thought”. Talk about a trite accumulation of banal party dogma; “ the Party is the answer to all questions”. This dictator who now has command, views this immense economy as the lab rat of the Party, not as a vibrant ecosystem that expands the scope and life experiences of a billion people. Like Stalin with the agronomist Lysenko, this madman is going to sacrifice his people’s future on the alter of ideology. Trying to run the economy with party dogma is like trying to complete a moonshot with a glow-in-the dark compass ring. As a brilliant Chinese philosopher said a thousand years ago: “handle an economy the way you cook a fish.” In other words, leave it alone.

          Now substitute the “Fed” for “Xi Jinping”; results will be similar. Show trials are next on the menu.

      • Tom says:

        The Japanese market is still largely below book value so it’s not exactly inflated yet. Yesterday I read that the bank of Japan will begin buying an unlimited number of their treasury securities when or if the interest rate on ? Yen increases above 0% it’s currently at negative .25% so they’re not having to purchase any. Do you regard this or any other currency/stock market is a safe haven from the dollar?

        • Wolf Richter says:

          In terms of exchange rates (not inflation), I’m currently OK with the dollar. I think it will continue to rise against the yen and the euro. Yields are going up, the Fed will start tapering in Nov. This will allow long-term yields to rise next year, which will be attractive to yield investors in the euro area and Japan. In terms of exchange rates, that’s looking pretty good for the dollar.

        • Wolf Richter says:

          Tom,

          “Yesterday I read that the bank of Japan will begin buying an unlimited number of their treasury securities when or if the interest rate…”

          Forgot to mention: this has been the policy since 2016 (“Yield Curve Control”) established at the time to keep the 10-year yield from dropping BELOW 0%, which it was doing at the time.

    • The rule might be that when real economic activity picks up, money is deployed, from speculative investment paper to business capital. For years the zero interest rate policy has aimed to increase real economic activity. Then the flood of fiscal spending, global yields are rising, that day arrived. In that sense companies retiring shares are probably doing the right thing, the problem is where the money was going (CEO salaries and investors). Maybe China saw the problem first, they don’t have a flexible financial system which could adapt. This probably lends credence to the sound money argument, but debt to GDP numbers are too high. It was time to make it real, and the US numbers (3.5T) seem pretty scary. On the microeconomic level I use my stimulus money to buy stuff I need, broken and worn out, tools. By analogy I have a long way to go to expand my economy, I am just doing maintenance right now, and that could mean liquidating some investments.

      • Joe Saba says:

        yet with quick 30% devaluation of fiat $dollar in 2021
        pricking the balloon won’t mean price collapse as many believe

        could have opposite effect – more devaluation(higher prices)

  2. DR DOOM says:

    Japan has the strength of a trade surplus. The squeeze is starting on the non-productive consumers and their fiat and the producers fiat. Consuming is easy. Making stuff to consume is not. The heat is on.

    • SpencerG says:

      Japan doesn’t have a trade surplus. From 2009 to 2019 they barely managed a surplus in just three years. Its trade deficits in the other years were far larger.

  3. Citizen AllenM says:

    LoL, asset deflate time.

    Which nobody expected to see, ever.

    Now, all we need is the return of the bind vigilante, and I will be laughing

    • Coffee says:

      …or the bond vigilante, but a blind vigilante would be somewhat entertaining. Daredevil comes to mind.

  4. Old School says:

    Yardeni has a good report on central bank balance sheets. The combined total is still growing and is about $30.5 trillion, but rate of growth is slowing. We will see if they can soft roll the top of the mountain to see what the market does.

    It’s coordinated between central bankers I would imagine. Total combined balance sheet only shrank a tad for about 12 months during 2018 and 2019 then covid hit.

    I would vote they will not soft land the plane.

    • Depth Charge says:

      Every single meeting of these central banker terrorists talks about “the markets.” Their main focus is stocks. They are not going to allow a stock market meltdown. It is QE INFINITY from here on out, until their hand is absolutely forced to stop.

  5. MCH says:

    You know, Wolf, it’s funny, between the money printing and the debt problems, you’d think the countries named are on a death spiral. But far from it, it seems like MMT has won out and no one cares about debt any more.

    For all the hysteria about the manufactured crisis that is the debt ceiling, what’s hilarious is that no one really wants to even talk about it any more. Not the fiscally conscious dumbos, or the adult jackasses… the debt out the wazoo is one big joke that says nobody responsible is in charge.

    • Old School says:

      I thought we would know central banks had went too far when gold spiked to $5k – 10k, as people trade fiat for something real. Maybe Bitcoin is the sign instead of gold. I read a lot of young Washington insiders have big positions in crypto and it is well represented by lobbyist in DC, so I expect favorable treatment

      Anyway I think gold plus Bitcoin maybe are in the 2% range of total assets, so not a problem for the Fed like the single digit of cash transactions. Let gold and Bitcoin jump to 10% of assets and you will see government put the hammer down on them is my guess or at least up regulation.

    • Roger Pedactor says:

      I don’t know what to think.

      MMT is dumb but supply side economics don’t seem to have much support at this point.
      I personally think that if Reaganomics had actually provided the negative income tax rates that Friedman had intended which was essentially progressive tax structure with UBI supply-side would have worked. But now it’s an amorphous blob of crappy overarching theory. But crony capitalism and faux socialism seem to rule the day (have another Ice cream Nancy, enjoy the view of the Ocean Donald) which is insane to me. The SEC seemingly has no moral compass and both tax codes and the overarching lack of meaningful regulation with interest rates superficially suppressed is anti-human. At some point gravity will pull things down. The question is when.

      • Depth Charge says:

        Calling MMT “dumb” is a gross understatement. The idea that you can just print money with no repercussions is preposterous, and the kind of people who believe in that should never hold any position of influence or power.

        • Old School says:

          Throughout history central bankers have proven they are there to fund those in power to fund wars and welfare that the people would not vote for.

          They have proven many times over that they can multitask by destroying the real economy and the savings of the people at the same time.

        • MCH says:

          @Old School

          I think this is one of the reason why the idea of cryptos is catching on at all. People really want some alternative that doesn’t include having the government decide what their work is worth or tracking their financial situation.

          That’s true no matter if they are in the US, or China, or any European countries.

          The real question is who is really running the various crypto Ponzi schemes, am really curious to see whether there will be some decision to make cryptos illegal outside of China. Because that’s one of the potential things that is slowly siphoning power away from fiat currency and the people who maintain control through them.

      • topcat says:

        Well, in fact MMT is quite logical and reasonable whilst supply side economics was just bullshit thought up by neoliberal economists who wanted to push the “trickle down” theory, or in other words, make the rich richer and the poor will get trickled on.

        • Wolf Richter says:

          topcat,

          Agree that supply side economics is bullshit. But MMT is just as much bullshit. And worse. Look at Argentina, which has practiced MMT for decades.

          Argentina’s central bank was and to some extent still is part of the Ministry of Finance. And they’ve been doing MMT for 30+ years, and look at what their currency has done, and inflation has been running at 30% to 50% a year, and it can no longer borrow in its own currency because no one wants to hold it, and they have to borrow in foreign currency, which causes the country to default every few years. There are other countries like that.

          MMT trolls always retort that these countries don’t count because MMT trolls refuse to look at reality and cling to theories that have flopped for a century now.

        • kam says:

          “MMT is quite logical and reasonable”
          Scratching an itch is quite logical and reasonable. But scratching the itch until you have a mortal wound is NOT logical or reasonable.
          Cutesy terms like MMT are just diversions to let the group at the top steal, via front-running new money and credit, from those that have a moral compass and could not believe (up until now) that government was totally corrupt and contracts, even understood social contracts, were made to be broken.
          Nobody at the bottom tier of society can move their meagre assets as fast as those at the top who get their succor from Central Banks.

        • Augustus Frost says:

          Only an economic illiterate can believe MMT actually works.

          Paying people not to work will get you exactly that, a massive labor shortage until the Ponzi scheme collapses.

  6. BuySome says:

    Wealth Effect applied to the wheels of your car results in that free flying feeling right up until you careen off the bluffs at the first hairpin turn. The Health Effect, like being jabbed twice with the needle, may result in a slower ride from deflation of those balloon tires but you’ll have a better chance of going past Dead Man’s Curve with the Corvette intact. “Your mission, should you accept it Mr. Powell, is to save those rich fools from their own vices. Ignore all matters not pertinent to your targeted instructions. This recording will self-destruct in ten seconds.” Que theme music.

  7. Desai says:

    What is the situation of inflation in Japan (not talking about asset price inflation).? This kind of money printing must have fairly high level of inflation.

    • Dave says:

      No inflation in consumer goods.

    • Old School says:

      Some say QE is deflationary as in Japan and Europe as real economy slowly dies.

      • Paulo says:

        And what is the real economy these days in any country?

        I have always encouraged young people (who asked about career planning) to think about what people really need? The list is pretty short; food, water, housing, healthcare, and those ancillary businesses that support the above. One could also add culture and entertainment which would include Wolf’s beer affection. Most consumer purchases and personal services do not make the cut, imho.

        People spending 1/2 their food budget on dining out is not sustainable, nor are 84 month car loans, extreme housing costs, expensive schooling….the list is endless.

        A shakeup is not only looming, it is inevitable. And lets toss in some rapid climate disasters for shits and giggles.

        Look at the changes after other upheavals. Shortages of workers in past produced incredible social change and opportunity for commoners. The leading economic power has lost more than 700,000 citizens to disease in 18 months, more than all of the past war casualties of their military, combined. The World economy is built on debt, all Govt runs on debt and not taxation, a huge minority live in denial of Covid 19 etc , and many live beyond their means. That rapid change is not only inevitable, it is imminent as far as I’m concerned

        Which way will it go? That is the question for individuals as they devise a landing spot for themselves and families.

        regards

        • Bruce A Forbes says:

          Agree except that there won’t be any man-made climate disasters
          Bruce

    • c1ue says:

      I lived in Japan for 3 years and visit regularly – but have not in a while (even pre COVID).
      The thing to keep in mind is: prices for everything in Japan were extremely high to start with.
      Japan runs a classic mercantilist system – so all imports are expensive due to heavy taxation. Food, energy, you name it – there is nothing cheap there of any kind.
      In addition, Japan was having negative inflation (i.e. deflation) pretty much forever after their Plaza Accord induced bubble bursting in the 90s.

      • Wolf Richter says:

        c1ue,

        Yes… one of the most lasting impressions I have during the first few weeks in Japan in 1996 was the endless series of “holy shit” moments when I looked at price tags, fees, etc.

        Japan was incredibly expensive, even in little mundane things, such as underwear, a bottle of basic Chianti (global brand you could buy anywhere), groceries, especially fruit, etc. Not to speak of rent, gasoline, and the like.

        Then incomes began to drift lower, and income from savings turned to zero, and people became very careful shoppers, and prices couldn’t rise anymore without an increase in income that never came.

        • Wellstone's Ghost says:

          I was an exchange student in Japan in 1992. I lived in Sapporo for six months. Yes, things were indeed expensive.
          I visited Japan about three years ago for the first time since I lived there in 1992. Prices were virtually identical. Maybe a slight increase, but not much.
          Fascinating.

      • Dave says:

        At the current US$/Yen exchange rate, almost all consumer goods prices in Japan are far lower than in the US.

    • eg says:

      The “inflationistas” have been crying that the sky will fall in Japan due to their “money printing” any day now — never mind that it’s been going on for more than 30 years …

      • Wolf Richter says:

        eg,

        Yes, another example is Argentina. Their central bank was and to some extent still is part of the Ministry of Finance. And they’ve been doing MMT for 30+ years, and look at what their currency has done, and inflation has been running at 30% to 50% a year, and it can no longer borrow in its own currency because no one wants to hold it, and they have to borrow in foreign currency, which causes the country to default every few years. There are other countries like that.

        MMT trolls always retort that these countries don’t count because MMT trolls refuse to look at reality and cling to theories that have flopped for a century now.

        • topcat says:

          Whenever MMT is discussed then Argentina and Zimbabwe are always hauled out as perfect examples of MMT diasters.
          Both of these countries pegged to the dollar, i.e. they were no longer sovereign currency issuers and hence fail the first test of MMT. Regardign Argentina:

          “The dollar has a formal role in the economy. It’s the currency in which real estate transactions are made, some debts are carried, and savings, if possible, are accumulated.

          But it’s also sewn into the culture, as the punchline of jokes, the theme of memes, the silent protagonist in films. And it’s become a shorthand for a shifting economic landscape, from what to expect in the grocery store aisle, to who will become president.

          “Our brains are completely dollarised,” Alejandra Covello, president of Covello Propiedades, a Buenos Aires-based real estate developer, tells Al Jazeera….

          So, please stop dragging Argentina out as an example of bad MMT. It is not.

        • Wolf Richter says:

          topcat,

          Sheesh. Get real. Argentina’s peso has NOT been pegged to the dollar in 20 years. What kind of old shit are you dragging out to troll your MMT BS? Since then, they’ve practiced MMT without peg, during which their currency collapsed by 99% against the USD. That’s the reality of MMT as practiced in real life, not in theory. That is the reality of what you’re promoting. That’s why I block MMT trolls here, and there are a whole bunch.

      • kam says:

        Classic Inflation analysis is based on prices inside a functioning economy.
        New money in our new world goes to inflation of paper, debt and real estate.
        In a country that is structured as 2 Chinese laundries across the street from each other, washing each other’s dirty clothes and the only new money going into hypothecation and rehypothecation of derivatives on the buildings and paper promises, it is hard to use classic templates on modern fraud.

  8. otishertz says:

    What’s to stop the BOJ from just forgiving all that debt it owns?

    Then poof, all assumptions out the window and the yen rises dramatically, necessitating more “emergency” printing for another 20 years.

    Imagine front running that news like the guys at the fed do.

    • Old School says:

      Just read an interview with PhD economist that used to work at Fed. These PhD economists are so arrogant withe their beliefs that they became economists to improve society and think they are not doing enough intervention in the real economy.

      Seems like it’s typical government reverse meritocracy where if you fail you get more money and power to fix your failure.

      • phleep says:

        It is so weird that people purportedly smart in economics have a blind spot where moral hazard is concerned. Don’t even get me started on the college system where I have worked. I chalk it up to growing up in that institutional setting (outside of running a business). That was LBJ’s failing too: quasi-religious faith in government, no with clue on the deep realities of a balance sheet. It is all glad-handing, kissing-up and passing around other people’s resources. Econ by definition is allocation of SCARCE resources. Too simple and clear for them to grasp, I guess.

        • Petunia says:

          phleep,

          They never mentioned moral hazard when I was majoring. Didn’t read about it anywhere on my own. The only hazard discussed was not making a profit.

      • Petunia says:

        It’s hard to improve something you never interact with. Find one phd at the fed whose ever even met a welfare mother or talked to anybody they put on the unemployment line. You won’t.

        Their world is their models and the data produced by them. They have no awareness of where their models fail. They only know welfare mothers exist and so do unemployed people because they have data to support it.

      • Twinkytwonk says:

        People need to realise that you don’t need to be clever to get a PhD. Unfortunately the majority of phd’s believe that they really are intelligent.a The only thing you need to get a PhD is perseverance.

        • Bead says:

          “The only thing you need to get a PhD is perseverance.”

          And the willingness to crawl on all fours for professors.

    • Wolf Richter says:

      There is no or next to no interest on this debt anyway – thanks to the 0% policy. The cost to the government of the newly issued debt is very low. Sure, there are some 40-year bonds out there that were issued 25 years ago, and they carry some interest. And the BOJ remits part of its earnings back to the Ministry of Finance (similar what the Fed does). There is no practical benefit for forgiving this debt.

    • Richard saler says:

      That would wipe out the assets on the BOJ balance sheet. The yen, which is backed by the B/S would collapse.

  9. Tanstaafl says:

    So, the first of the legacy moneymakers quits. The second one is prepared to, but the third (EZB) is planning to replace the current QE program with another one. So, what happens if the three spokes become less and less synchronized? And what will we burn in the winter to heat if there’s no more money to burn?

    • Mark R says:

      If one of the G3 Central Banks stops printing, then logically there should be appreciation pressure on their currency, as the number of yen notes/ yen bills increases at a slower rate than the number of Euros/dollar bills. So, ceteris paribus, we should expect JPY to rally vs. USD and especially EUR. Or perhaps more certainly, EUR to depreciate against the other two. If JPY rises, then this is historically correlated with increases in gold prices.

    • Mark says:

      “And what will we burn in the winter to heat if there’s no more money to burn?”

      The Constitution ? Weimar Boy Powell’s 70 million in paper assets ?

  10. Mark R says:

    Wolf, just a small typo, the Czech National Bank has hiked by a total of 125bps so far (25bp, 25bp, 75bp). I expect another 50-75bp this year, the latter of which would get us to the pre-COVID level of 2.25% base rates. That’s a big premium to EUR rates of -0.4% but we have the lowest unemployment rate in the EU in CZ presently (and double-digit wage growth..) CZ money supply growth (M1) is still 12% yoy. It was never as high as that in the G3 (Fed, BoJ, ECB) but is still a factor. The only cyclical brake at the moment is chip shortages. Skoda (subsdiary of VW) is slashing production from 18 Oct to year end due to the chip shortages. This hits CZ GDP and, eventually, wages. But thanks for the illuminating article: I find it especially illuminating because BoJ liquidity has underpinned market rises all the way back to 2003. Its absence (for now..) is a bear market factor.

    • VintageVNvet says:

      VERY relevant MR,,, and please keep on with your obviously well informed and paying attention point of view… thanks..
      For those of WE the Peons, now so poor we cannot even pay attention, or at least not much, WE appreciate WR’s clear graphology, AND the wide and wonderful commentariat.
      Some of WE the Peons would really and truly love to invest in something,,, but continue to hesitate with the fine print out of site and sight, and the continuing clear evidence of the ”financial assets” everywhere totally out of control and equally clearly subject to hidden manipulation at every level, SO FAR…
      Except for the oligarchy who own almost all of the ”paper,,, AKA ‘financial’ assets” in which we were used to investing in the 1950-60 era,,, and keep hoping to do so again…

  11. Sound of the Suburbs says:

    Why didn’t the Japanese use QE after their financial crisis?
    Japan saved the banks, but left the debt in place.
    QE couldn’t get into the real economy due to a lack of borrowers.
    The banks were ready to lend, but there were too few borrowers as they were struggling with the debt they had already taken on.
    This is why the Japanese used fiscal, rather than monetary policy.

    We saved the banks, but left the debt in place.
    QE couldn’t get into the real economy, but it could get into financial markets.
    The gap between economic fundamentals and the US stock market widened until it reached 1929 levels.

    This is why the Japanese didn’t do much QE until Kuroda, as they knew it couldn’t get into the real economy when people were more concerned with paying off existing debt than taking on new debt.
    Richard Koo has no idea what Kuroda is doing and has put this down to him having no central banking experience.
    Personally I think Kuroda does know what he’s doing.
    He knows QE can’t get into the real economy due to a lack of borrowers, but is using it to inflate asset prices as this is what QE does best.

    What happens when they stop?
    What goes up must come down.

  12. JanB says:

    If the central banks started to reduce their money printing to any meaningful degree, interest rates would rise.
    Neither the US, Japan nor Euro countries will then be able to pay even the interest on their debt at elevated interest rates without printing more currency.
    So they can either default or inflate. My bet is on the latter…

    • RP says:

      Exactly. I see it as a classic liquidity trap. Flood the market with cheap money, people borrow to the eyeballs, then any rise in interest rates as you said becomes unpayable.

      So what now? With qe not suppressing interest rates, they should rise throwing many to bankruptcy when they can’t repay debts. Artificially inflated assets deflate. Or they keep qe going and we get inflation.

    • Bead says:

      Inflation is fun at the beginning. Everybody feels smart. Now the have-nots want to sack St Jerome so they can get even more inflation. Make the pie higher! Sure, that will benefit the poor.

    • eg says:

      The central banks set the interest rate as a policy lever. They don’t rise or fall in relation to the amount of money being “printed.”

  13. David Hall says:

    Japan has almost no inflation.

  14. DanR says:

    I am wondering what the political fallout will
    be if $5 gas becomes the norm throughout the US. My sense is that the money printing has to stop before everyone really complains about high energy costs.

    • historicus says:

      Dan…
      and every Union you can think of is going to go on strike.
      You know, a Fed that promotes inflation is not only violating their mandate of stable prices, they are also tossing away all prior wisdoms.
      Inflation is a bane on the public. For the fully invested it is not.
      Now, who got the nod that the Fed would NOT address inflation, would NOT keep Fed Funds equal to inflation as has been the financial history, and would instead promote inflation, and fail to address an inflation that runs hot? Who could foresee such a departure and violation from prescribed monetary duty? Some did. This was an arrangement for the few. IMO. Let no crisis go to waste type arrangement.
      Provide cheap money to the federal government who then takes the money and pays the idle to be idle. Then the Fed points to the idleness and makes it a reason to keep the cheap money flowing to the federal govt to promote more idleness….and thus cheap money to keep real estate and stocks in price appreciation mode. Clever.

    • Petunia says:

      Dan,

      People have seen $5 gas before, big deal, you stay home, go out less, and now with work from home, you can really cut back. Also, I don’t think that people who drive $70K trucks/SUVs worry about the price of gas.

      • Wolf Richter says:

        The people who get hit by high gas prices are low-wage workers with long commutes due to housing costs. If you make $100 a day pre-tax and you spend $15 a day on gas, it gets tough.

        • Petunia says:

          Wolf,

          I know what it is to put your last $4 in the tank for less than a full gallon. I did it more than once and was always glad I had the few dollars to do it. My son missed school sometimes because there was not enough gas in the car for a round trip.

          My point was the economy is never geared to protect people in that situation. If it was we would all have affordable housing, a living wage, and decent healthcare.

        • Wolf Richter says:

          Yes, I got your point. I just wanted to clarify.

      • Depth Charge says:

        “Also, I don’t think that people who drive $70K trucks/SUVs worry about the price of gas.”

        How wrong you are, Petunia. These people squeal about high fuel prices every bit as much as everybody else, possibly more. The high entry price in conjunction with the operating costs have really put a lot of them in a financial bind – people who had no business buying these trucks in the first place. I submit that in order to afford a $75,000 truck, you should be making well into the 6 figures every year. That is simply not the case. In fact, there are young guys making less than $40,000 per year driving these trucks with $1,000 per month payments. It’s ludicrous.

  15. historicus says:

    “The consequences of these crazy policies of 0% interest rates and QE are massive global asset price inflation that risks the financial system and created the greatest economic injustice in recent history, topped off now by raging consumer price inflation. Central banks are going to pussyfoot around the lingo, and they’re not going to admit that they’re responsible for these issues, but they’re ending the money-printing orgy.
    The bottom 50% need not apply. They just get to eat the soaring costs of housing.”
    Bingo!!
    Central Bankers must have flunked physics…because for each action, there is an equal and opposite reaction. We see it now with the inflation that is NOT transitory but just starting. Punishing to the vast majority of this nation, yet those deciding monetary policy themselves insulated…to go with their unelected status.

    Regarding their MAX EMPLOYMENT mandate: Using the low employment rate as an excuse to keep money cheap for a government that takes that money and pays people to be idle. (See WSJ today)

    Regarding their STABLE PRICES mandate: Promoting inflation is a violation. Not dealing with 5% inflation with rate hikes is an outrage.

    Regarding their MODERATE LONG TERM INTEREST RATE mandate: Pegging long rates at record lows for 12 years is IMMODERATE.

    Following the rules would solve so much in Washington DC and at the Fed. Yet, they do not and there is no one there to call them on it.

    • drifterprof says:

      In analyzing how the government “pays people to be idle,” does the WSJ include the government allowing …

      1) the ultra rich lead idle luxurious lives by hiding their assets overseas to avoid taxes?

      2) anyone else, who need not worry about being employed, because they get enough investment returns from substantial investments in corporations which have profited by moving their operations overseas?

      There are a lot of ways to define how people are idle.

      • Bobber says:

        Correct. The really expensive fraud and crimes are committed at the top. When the top 1% owns 40% of the wealth, you have to wonder how it could possibly get that way in a free honest market.

      • RightNYer says:

        Yes, the government takes care of the poor and the rich. And the middle class pays for it at all.

      • Bead says:

        You’ll never tax investment assets. Just forget about it. Good grief, there’s all kind of moaning and groaning over limits to property tax deductions.

        The Fed got what they wanted with the “wealth effect.” The lefties happily went along with it. Some day they will discover that it’s an idiotic policy.

    • Swamp Creature says:

      I just got my quarterly statement from my BNY Mellon Treasury Securities Cash Mgmt-Wealth fund. 30 day yield was 1 basis point. They also said “Without the expense absorption in effect the 7 day yield would have been -41%”. I earned $1.69 total interest for the 3 month period on 56K. Not enough to buy a cup of coffee at Duncan donuts ($1.99 now because of inflation) . I must also add that the interest of $1.69 will be reported to the IRS and will be taxable. But I’m lucky, I won’t have to pay Maryland taxes. I should send J Powell a letter and thank him for taking away one of the income streams I was depending on to supplement my retirement.

      • Bead says:

        Bernanke, Yellen, and Powell have been candid about screwing over retirees. They don’t matter. You must bring your chips to the table and risk another 50% drop.

      • Petunia says:

        I don’t get it. You are a smart guy, so why are you giving these guys a float that costs you money. If your money was in the bank at zero interest, they would still make the float, but at least you could save the cost of filing another tax form or several tax forms. At the very least you would save your time.

  16. Ron says:

    Three ring circus,fed, Congress, House of Representatives then black rock, banks hedge funds so corrupt easy fix no more lobbyist, balance budget prosecutor illegal activity oh no one left to run country

  17. historicus says:

    Will the Fed Governor Scandal be the watershed moment?

    “The Dallas Fed has refused to say if Kaplan was shorting the market. It has also refused to provide the dates of Kaplan’s trades, despite the fact that the Dallas Fed’s own financial disclosure form requires Kaplan to provide that information. Other Fed Bank Presidents readily comply with providing the dates of their purchases and sells, as do all of the Federal Reserve Board of Governors.”

    ” Media questions are also being raised about one large trade done by the Federal Reserve Board’s Vice Chair, Richard Clarida, who sold between $1 million and $5 million in a bond fund and moved it into stock funds in February of 2020, on the eve of Fed Chairman Powell issuing a statement suggesting policy action from the Fed in response to the pandemic.”

    “But the trading by Rosengren and Clarida pales in comparison to a Fed Bank President repeatedly trading in “over $1 million” transactions in S&P 500 futures, as was done by Kaplan — not just in 2020 but since Kaplan joined the Dallas Fed in September of 2015.”

    Above quoted from Wallstreetonparade.com

    This the tip of the iceberg….for it is reasonable and likely to assume that these Fed governors did not live in a bubble, had many “friends” who just might be money managers and hedge fund operators.
    This is one mission Liz Warren has my support.

    • Petunia says:

      Liz Warren made her millions as a corporate lawyer. What exactly has she DONE, not said, since getting elected? Sorry, I remember her outrage at the GFC, but not her actions.

      • Mark says:

        Well, she did say after a private meeting with Janet Yellen :

        “I don’t think we should audit the Federal Reserve. That would indicate a lack of trust”.

        They’re all millionaires or mega millionaires – on either side of the fictitious aisle in Congress.

      • Bobber says:

        Why would you criticize the only senator that has called out the insider trading of Federal Reserve board members and is calling for Powell’s term to end? She’s also calling for a modest wealth tax to reduce harmful wealth concentration.

        Why hold her accountable for the fact that nearly all other legislators want to do nothing? Look at the bills she proposes, not what gets passed, which goes beyond her control.

        If she had her way, you can bet plenty of bank CEO’s would have gone to jail after the GFC.

        • Petunia says:

          I don’t remember one bill Warren proposed to rein in Wall Street. She is now bashing the fed to get attention, like she bashed Wall St. at the beginning of the GFC, to get attention. The GFC got her a senate seat, I expect the posturing about the fed might get her a seat at the fed table.

          Unlike most people in congress, I do think Warren understands that congress has relinquished their power of the purse to the fed. Congress doesn’t oversee the fed anymore, they rely on them to make and carry out fiscal policy. Warren might be aiming for the fed because that is where the power/money is now. If she makes it expect her to get a lot richer and us a lot poorer.

      • Augustus Frost says:

        She is virtue signaling, again.

  18. phleep says:

    Hard to juggle (1) the arrival of interest rate hikes (tipping into possible runaway massive deleveraging, by firms and investors, after the fantasy period we have been in, and so, the fall of markets) and (2) a buyers’ strike (the bottom 50 percent have no reserves). Maybe we are coming to a time of big volatility. The response for decades has been print, but what happens if that model breaks? And how fast in what form might that happen? Where to run? Stocks and cash both make me nervous.

    • historicus says:

      phleep
      Yep, the dystopia of stealing from one segment to prop the other….to pull one tent pole out to move it to another part of the tent…
      It is very likely that being in stocks could be a losing proposition…
      and holding cash a loser as well.
      The wealth creating machine really cant ….
      There could be 1/4pt raises….not enough to tame inflation…but enough to put stocks in a gentle decline. Own stocks, slow bleed. Have cash, slow bleed. All thanks to upside down, water runs uphill, plate spinning and digital minting. I wonder what the personal trades of the Fed Governors look like. Maybe that will be an indication. Any chance we can see?

    • Augustus Frost says:

      When the model breaks, the day of reckoning finally arrives.

  19. Spencer Bradley Hall says:

    Economists have dyslexia. They are running the economy in reverse. Prices are rising faster than incomes. We have negative real rates of interest. It is all by design, by befogged modeling.

    Bank-held savings are frozen. That doesn’t mean saver-holders can’t spend them, it means the banks can’t use them. Why? Because from the standpoint of the system, banks create deposits when they lend.

    As predicted in 1961, we have secular stagnation, actually, low grade stagflation.

    • historicus says:

      Central Bankers have no concept as to “exit strategies” for their brilliant plans are nothing more than subsidies, and once removed, once the crutch is yanked, all they did is undone.

      Just like trading, going in is easy, exiting is the key. This doesnt even register with them…Maybe that’s the game….bigger and bigger. Remember, Bernanke said QE was temporary….
      temporary and transitory sure last longer than advertised.

      • Spencer Bradley Hall says:

        “The income velocity of money — the ratio of GNP to Ml — has behaved differently since 1981 than it had over the previous 30 years. This paper discusses the portfolio approach to money demand, which suggests that money demand is more closely related to wealth than to current income. The portfolio theory implies that, when wealth increases relative to current income, income velocity falls, other things the same”
        https://files.stlouisfed.org/files/htdocs/publications/review/87/03/Changes_Mar1987.pdf

  20. Yancey Ward says:

    I imagine this is just a stopover on the path to a quadrillion Yen balance sheet and above. There is no way out of this corner now without stepping in the paint.

  21. Yancey Ward says:

    I am on the sidelines right now waiting to see how the Democrats get their “infrstructure” bill through both houses of Congress. I imagine Sinema and Manchin will be made offers they can’t refuse.

    • Bead says:

      Sinema is being offered camera wielding monkey mobs when she goes to the bathroom. Manchin gets serenaded on his houseboat. I expect both to dig in against the attempted intimidation. Let’s face it: Biden never had the mandate. Just like Trump never had it. So take the trillion dollars and declare victory.

  22. wkevinw says:

    “Central banks are going to pussyfoot around the lingo, and they’re not going to admit that they’re responsible for these issues”

    There is so much responsibility to go around for this, as is usually the case for big issues. The economics textbooks and “smart economists” (LOL), have been talking about the wealth effect for about 100 years. It does work in the right conditions. A necessary condition is:

    There must be a transmission mechanism for the printed money/wealth to the real economy- i.e. workers’ wages.

    If you off-shore a good fraction of the meaningful jobs (see: “economic value added”), you don’t have that transmission mechanism.

    Then you get what we have today.

    If they would not have done this, some things would have been worse. Would the whole picture be worse? Maybe not.

    • Bobber says:

      The historical reference points for monetary policy are useless at this point. They’ve crossed the line into the new paradigm of MMT.

      The new transmission mechanism is government spending, financed by QE (a.k.a. money printing). You can’t get a more direct transmission mechanism than that. Central banks won’t admit it, because they know it erodes basic economic freedoms that people desire. Instead, they roll out the new MMT policy quietly and spinelessly over time, until all other options for managing monetary policy become infeasible.

      The best alternative, of course, is to let the free market govern interest rates, investment, savings, consumer spending, etc. This means accepting a small recession every now and then, in order to avoid the big depressions that inevitably arise from excessive government stimulus and intervention. It also requires holding people accountable for their own economic decisions.

    • Jeff says:

      “some things would have been worse”. Yes, but worse for who???

      This bifurcation of the haves and have nots does not make the potential effects so obvious for the have nots.

  23. JanB says:

    I think Luke Gromen has a pretty good analysis and answer to this from a U.S. Point of view.

    Watch the interview with him by Adam Taggart on Wealthion‘s YouTube channel. Highly recommended

  24. Depth Charge says:

    Looks like I’ve been very bad. I am in permanent moderation.

  25. Seneca’s Cliff says:

    I think the Japanese have accepted the inevitable and realized they can’t print their way to prosperity. They know they will not go back to the 90’s where they owned half the U.S. But they do know they have a unified culture, a disciplined work force and an export machine of an economy. They are ready to accept a slow slide from the high energy techno-ponzi we call the first world economy back to the Tokugawa era of discipline and isolation. We here in the US may slip down towards chaos and barbarism as the ponzi ends, but as we filet our swamp carp around the campfire in our caves our filet knife will say “ made in Japan.”

    • MonkeyBusiness says:

      +1. Once we’ve run out of bullets, we’ll be importing samurai swords wholesale from Japan. Relying on blades made in China will not do.

      I definitely agree that Japan will be one of the countries that has the ability to keep muddling through, but then again you are forgetting our military bases there.

      • Petunia says:

        Japan has a lead in robotics. Those samurai swords will be attached to killing machines. I would bet on it.

    • Jeff says:

      Just because they can’t print their way to prosperity doesn’t mean they’re on a “slow slide” backwards to some preindustrial economic state.

      • MonkeyBusiness says:

        Actually everyone will be sliding backwards. Cheap energy is running out. Unless someone figures out a solution quick, sliding backwards is what we’ll do.

    • Dave says:

      Japan’s still making some progress–visible homelessness, a serious problem in the past, has vanished, and the shortage of public day care has been solved. The quality of medical care has also improved to a great extent.

    • josh says:

      Nah… this will not happen because the US will make the rest of the world pay.

    • Augustus Frost says:

      The US is a polarized and Balkanized society. It also has a notable (if not majority) of the population with expectations on minimum acceptable living standards which cannot possibly be realized longer term, though I can’t tell you exactly where that falls. (Look at comments here on part of these expectations, such as “free” benefits at someone else’s expense.)

      It’s one thing to maintain a cohesive society under this combination when the economic “pie” is expanding. It’s entirely another when it isn’t. I suspect it’s actually been shrinking for years, even though “real” GDP is (supposedly) growing. The country is actually getting poorer and the population is catching onto it.

      A lot of people have been getting or are starting to get angry about it. It’s only going to get worse.

  26. Bobber says:

    I think they will stop the money printing for a while until inflation settles down to 2%, but when economic growth slows in the future and a recession threatens, is there any doubt central banks will fire up money printing again? Next time, they won’t print as much money to avoid an inflationary spike, unless they want one. They view money printing as something that can be fine-tuned with a little practice.

    In a broader sense, it’s clear central banks want to get back to the pre-COVID economy. They think it’s plausible to manage inflation by turning the money printing on and off. The money printing doesn’t have to create inflation, it can simply offset the long-term gradual structural deflation central banks policies create in the first place. This plan can work for a long time, as Japan has proven. But, for this to be effective, central banks need authority to buy stocks, bonds, and just about anything to prevent periodic asset price crashes. It also helps to eliminate paper money to eliminate the zero interest rate bound.

    Of course, these central bank policies clearly cause a loss of economic freedom for the population. Nobody voted for these vast changes. It’s done behind closed doors, by who????

    Also, it creates a permanent wealth gap. Did central banks tell nurses, truck drivers, store clerks, younger generations, etc. that they were going to increase asset prices permanently while wages would be suppressed? Fed board members obviously weren’t afraid to act on this information. Goldman Sachs certainly told all its clients. Everybody was in the know except Main Street, which trusted central banks to abide by long-held monetary principles.

    If central banks completely change monetary policy in a way that impacts the core well-being of the population, isn’t it necessary and moral to communicate to the general population in a fair, honest, and accurate manner? They knew what would happen to asset prices.

    • Wolf Richter says:

      Japan could create economic growth by paying 4% interest on bonds and CDs. There are many trillions of dollars’ worth of them, and people would earn some money and they’d spend it. 0% interest rate policy cuts the income of a whole lot of people in Japan, and they cut their spending in return. 0% interest rate policies are idiotic in terms of the economy.

      • Dave says:

        Most people in Japan work for zombie companies, which depend on ZIRP for their survival. It’s politically impossible to raise rates.

      • Mojer says:

        You are right Wolf on this solution corresponds with the declarations of the new Prime Minister Fumio Kishida who declared that he would bring back the middle class which had practically disappeared. Initiative to be verified but that the Japanese planners are bringing all their attention contrary to the in the western world where the middle class is made more and more disappear into thin air.

      • eg says:

        This is an important insight, Wolf, and one that Mosler has been working on lately — the way that the sovereign adds to net private wealth via the interest rate channel. There are implications here for monetary policy that are counterintuitive.

        • Augustus Frost says:

          Paying additional interest on unsustainable debt is just more fake wealth. That’s the reality of the current low interest rate environment.

          ZIRP is stealing money from savers through low to no interest.
          “Normalizing” interest rates just means it will be stolen through inflation or default.

          If debtors can’t service their debts, they can’t service it, whoever they are.

          I regularly read questions and comments on potential solutions out of this mess. The question really being asked is, how can the consequences of previously bad decisions be avoided?

          The answer is that it is impossible. It’s a question of when and who is going to pay it. There isn’t something for nothing in life just as there is no “new normal”, no matter how long it takes reality to arrive.

        • Mojer says:

          August Frost

          Stopping the zero interest waste would have been a good start.

  27. fred flintstone says:

    We used to call full employment 4%. We’re at 4.8% with a lot of forward momentum.
    So Mr Powell…….lets take our time time with the taper and keep rates low for at least another 2 years…….after all the inflation rate is only 3x what it was last year.
    I wonder if Powell flunked economics in college……was he smoking pot that semester……or was Suzy keeping him busy.

  28. Saltcreep says:

    Musical chairs time.

    Tightening measures going in with communicated decisiveness around the world just as the measures that direct their policies have likely already passed, or are approaching, peak acceleration from the pandemic boosting.

    I’ll fall out of my chair before the music stops if they haven’t gotten their timing almost perfectly wrong, though. The countries that went up first from the pandemic lows tightening first, and the rest of us following along like wind-up tin soldiers. Their recipe is to overdo massively as things tank, then tighten into the reslowing with impeccable timing. If they stay true to their nature, I suspect we will watch them jitter and reverse course next year sometime.

    I guess it’ll at some point eventually become clear to everyone, even to central bankers, that we’re caught in a finger trap…

  29. David Hall says:

    The Japanese population is declining. There are 8 million abandoned homes as a result. Japan is earthquake prone and a house might not last a hundred years there.

    Japan is #3 in GDP.

    Years ago they were buying real estate in Hawaii.

  30. Rowen says:

    I think everyone just realized that, while central banks can print money to stimulate aggregate demand, they can’t print the resources needed to meet that demand. The CPC just authorized their electrical utilities to pass the energy costs on, mostly to non-residential customers; in other words, they’ll be exporting that inflation where they can.

    • Saltcreep says:

      Hey Rowen, I regrettably think few people have yet realised that we can’t print energy and resources out of nothing, as virtually all mainstream economic thinking appears to say to hell with laws of thermodynamics, and would rather argue that we can do just that…

      It all magically appears so to our myopic economic models because in the past couple of centuries we on an accelerated basis converted aeons’ worth of stored energy in fossil fuels into heat.

    • Bobber says:

      I might be seeing the impact of high natural gas prices on housing sales in the Midwest. The huge houses with 5000 sq. ft. or more seem to be sitting on the market, even at a very low price per foot. The monthly gas bills on those suckers will likely be $1000/mo. or more this winter. Some of the older houses may cost $2000/mo. to heat.

  31. Swamp Creature says:

    Wolf,

    I’m curious if you have any idea on what the price of beef is in Japan today. Way back when in the 1970s beef was so expensive that only the rich could afford it. That’s because it all had to be imported. And that’s when the Yen was 365 to the dollar. I wonder what it is now in US dollars/lb and is anybody in Japan eating beef anymore? Who can afford it? This may happen here the way inflation is going.

    • Wolf Richter says:

      I don’t know what it now costs. Maybe someone here who currently lives in Japan can answer your question.

      I never bought beef in a store there and don’t remember the prices. I eat it in restaurants occasionally where it shows up in various Japanese dishes. The only steak I ever ate there was wagyu ($$$$$$$$$). It was like eating butter, not my thing, I like grass-fed muscular beef, not butter, as steak.

      Generally, beef is served in small portions that would frustrate most Americans; cubed or thinly sliced, ground, etc. Small quantities suit me.

      Mama-san occasionally adds some beef to her dishes.

    • Dave says:

      Lean beefsteak is about US$6/pound. Ground beef is $4/pound.

      • Swamp Creature says:

        Doesn;t sound right. It was close to $35/lb in the early 70’s and now you say its gone down to $4/lb? With the Yen going from 365/dollar to almost parity????

        • Petunia says:

          I saw a video of Japanese young women asked what they make working a regular job. They replied around US$10 HR as average. This would be a window into the deflation that has taken place in Japan.

  32. Beardawg says:

    These charts are fascinating and mind-boggling. Though Japan is a taper-leader, the $30T Govt assets worldwide will take decades to unwind.

    With nowhere for a world class middle-classer to go, Crypto looks better every year.

    • SpencerG says:

      “Crypto looks better every year.”

      I got a chuckle out of that. You posting that on THIS board of all places.

    • Bead says:

      Watch out with the crypto. The value of nothing can drop in a hurry.

      • Beardawg says:

        Don’t own any Crypto. But as fiat pushes middle-classers farther away from prosperity, it’s only natural for that kind of person to be open to a finite currency / commodity or whatever you want to call it. Regulators are embracing it now as well.

  33. Hyde says:

    The Nikkei will be 15,000 or 46% drop within 12 to 18 months. I would not be surprised the Nikkei 225 at 22,000 by year end, Dec-31-2021.Today, Nikkei 225 is 28,000 so a 21% drop by year end is going to happen. You will see. They still can’t push it up to 38,000 what is was back in 1989 or 1990 The last time it was that high. Even Japan’s low to negative stated interest rates on it’s bonds can’t do the trick. Alot of leveraged investors are going to be in big trouble the next few months.

  34. Lisa says:

    I remember the Nikkei was 8,600 back in 2009 if I am remembering correctly. This means it can get really bad. If this happens again this is almost a 70% crash from the 28,000 level it is today.Yikes! Almost Great Depression like crash.

    • Augustus Frost says:

      My recollection is that it fell below where it was in 1982, the starting point for the 80’s mania.

  35. Michael Gorback says:

    Yeah lots of news about CB’s raising rates. Let’s see how long it lasts. Volcker killed inflation. Who remembers what happened next?

    TANSTAAFL. There’s no way out of this without pain. Mises pointed this out years ago.

  36. Scottie says:

    Michael Gorback, not if they keep money printing, fiscal train wreck policies of QE, bond buying, $3.5 to $6 trillion spending bills. We will end up like the good old Zimbabwe.

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