Inflation Comes to Japan, amid Plunging Yen, Inflation Subsidies. Bank of Japan Blows it Off as “Transitory,” Throws Yen under Bus

The Japanese people are not amused.

By Wolf Richter for WOLF STREET:

OK, so here we go. The overall consumer price index for all items in Japan jumped by 0.4% in April from March, the third month in a row of 0.4% increases (4.8% annualized), and by 2.5% from a year ago, up from an increase of 1.2% in the prior month, Japan’s Statistics Bureau reported today.

The Japanese people are not amused.

Food prices jumped by 4.0% year-over-year, including fresh food (+12.2%), driven by the all-important categories of fresh seafood (+12.1%) and fresh vegetables (+12.2%).

“Fuel, light, and water charges” spiked by 15.7% year-over-year, including electricity (+21%), gas for the home (+17.5%), and “Other fuel and light” (+26.1%).

Prices for household durable goods, such as furnishings and appliances, jumped by 5%.

The now ended price wars amid wireless carriers still held down the overall inflation rate: The index for “communications” dropped by 10.9% year-over-year, but those price wars had peaked last year, with the steepest month-to-month drop in April 2021 (-24% from March). The year-over-year decline peaked by over 34% in December. Recent month-to-month changes indicate that rates have flattened. And going forward, this category’s downward pressure on the overall price index will dissipate, and the other price increases can carry the day.

Wholesale inflation blows out. On Monday, Japan’s wholesale price index for April was released, and it spiked by 10%, the worst jump in at least 40 years, as inflationary pressures are building up in the pipeline.

Inflation subsidies, of course. The government has passed a series of inflation relief packages, including one-time cash handouts of ¥50,000 ($391) per child to low-income families to help them pay for the higher prices.

The inflation subsidies also include cash payments made to gasoline wholesalers and distributors so that they would lower their gasoline prices, which would lower retail gasoline prices and therefore the inflation index for gasoline prices. The amount of the subsidies is adjusted weekly.

Subsidizing wholesalers is an ingenious move because it pushes down the retail price of gasoline, and thereby the inflation index, which then makes the overall consumer price index seem less bad. These subsidies to wholesalers have been in effect since early this year, and the inflation index would look worse without them.

Healthcare “inflation” largely decided by the government: pushing down on it. Health insurance and healthcare in the US are huge budget items for Americans, and inflation has been rampant. That’s not the case in Japan, which has a government health insurance system for universal coverage, funded by taxes and individual contributions. Enrollment is required, either employment-based or residence-based. The amounts that the Japanese pay directly for healthcare (co-pays, etc.) are small, compared to what Americans pay. And a lot of the consumer-facing costs are determined by the government.

So, yes, the price index for “Medical services” fell 1.8% year-over-year in April, the steepest decline in years. The index for “medicines & health fortification” rose 1.2% year-over-year. The index for “Medical supplies & appliances” fell 0.3% year-over-year.

The core inflation index – “All items less fresh food” in Japan – jumped by 0.4% in April from March, after having jumped by 0.5% in March, and by 0.4% in February (average of 5.2% annualized). Year-over-year, it jumped by 2.1%.

The Bank of Japan: It’s just transitory, throws yen under the bus.

The “All items less fresh food” index is the measure that the Bank of Japan uses for its inflation target of 2.0% — or as it calls this, it’s “price stability target.” The BoJ has been justifying for years its money printing orgy based on this measure having been mostly below 2%. And when it went above 2%, the BoJ blew it off because of what it calls its “inflation-overshooting commitment.” And it says, “With this commitment, the Bank aims to enhance the credibility of achieving the price stability target of 2 percent among the public.”

So, true to form, the BoJ has been blowing off the inflationary pressures, and has been saying, in the best Powell imitation, that those pressures are just “transitory.”

“There is no need to tighten monetary policy in response to a transitory trend, as opposed to a sustained one,” BoJ’s head Haruhiko Kuroda told a nervous Parliament in April.

The yen has plunged all year (except for a bounce the past few days), which is where part of those inflationary pressures come from, as the plunging exchange rate of the yen against the dollar makes imported commodities and raw materials, including food and energy commodities, a lot more expensive.

The yen has plunged against the dollar because the BoJ refuses to budge off its negative policy rate and Yield Curve Control, even as the Fed is now grappling with inflation, and US yields have shot higher. Given the recklessness of the BoJ, the yen has paid the price, and the BoJ as thereby contributed to importing inflation.

But to its credit and despite all its endless money-printer rhetoric, the BoJ effectively ended its aggressive government-bond buying program at the end of 2020, and its holdings of Japanese government securities peaked in February 2021.

And that’s still the peak, despite a bout of bond buying recently, as part of its Yield Curve Control, to try to tamp down on the 10-year yield that threatened to shoot past the BoJ’s upper limit of 0.25%. So the holdings of Japanese government securities rose in April but remained substantially below the February peak.

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  141 comments for “Inflation Comes to Japan, amid Plunging Yen, Inflation Subsidies. Bank of Japan Blows it Off as “Transitory,” Throws Yen under Bus

  1. Levi C. says:

    As the BoJ becomes further out of step of other central banks in addressing what seems to be pretty well global inflationary pressures, how likely is it that the BOJ makes a strategic about-face? Also what would the consequences of that turn around look like?

    • Augustus Frost says:

      Apparently, Japan has run out of road to
      “kick the can” any further.

      With inflation low and the currency stable, the BOJ could get away with “printing”.

      Now they have three choices, all bad:

      One: Trash the currency. Unlike the US which I am confident will not do that to the USD, Japan has no Empire to protect, not a similar one anyway. I still would not bet on hyperinflation anytime soon though.

      Two: They can cut government spending, but it would have to be drastic to make the debt sustainable. Other than knowing that no electorate wants to do that, I have no insight into what Japan might do.

      Three: They can support the Yen by letting markets price interest rates correctly. If this happens, interest on debt will possibly consume most of the budget. Heard it’s already about 40%.

      Choosing door one, two or three all lead to a similar outcome, (substantially) lower living standards. There is no escaping it, just as there isn’t in the US, though Japan is further along this path.

      No, there is never something for nothing, even though it took about 30 years to get here. The consequences of all bad decisions must be paid, by someone.

      • TheAltonRoute says:

        Where does the government debt come from? Building bridges to nowhere?

        • Bobber says:

          The way I view it, the bulk of Japan’s government debt does not matter because it’s owned by the central bank. It will never see the light of day. If you consider the government and central bank to be a consolidated entity, there is no government debt.

          It’s classic MMT. In a deflationary economy, you simply print money to offset the deflation, plus create a small amount of inflation. Problem is, it creates risks in the form of high asset prices and wealth concentration, which can blow up in different ways. In the US, the MMT has increased asset prices to the point where real estate is in a huge bubble, and that is causing an inflation problem that must be dealt with.

        • historicus says:

          MMT holds that the deficit spending and greater debt harm is offset by the benefits to the economy.
          And the kicker is that the answer to inflation is to raise taxes.
          So, as inflation cripples businesses, the answer is to then tax them more! Then govt pulls money from smart private sector and spills it around willy nilly.
          Control goes to govt. That is MMT
          Paul Krugman was the advisor to Abe in Japan….and a proponent of all the ZIRP nonsense.
          Paul should go talk to the physics dept…he should learn that for every action there is an equal and opposite reaction.

        • Augustus Frost says:

          Yes, the BOJ and Japan government asset-liabilities net to zero. But someone ended up with the money resulting from the government spending. It resulted in fake wealth and fake “growth” somewhere in the economy, just as it has in the US since 2008.

          I don’t consider QE to be MMT but regardless, MMT is more economic idiocy. It’s another belief in something for nothing under the assumption that people are collectively robots and not human beings so that the theory will always work where nothing will ever go wrong.

          In Japan, whatever appeared to be (mostly) free for the last 30+ years will lead to future “blowback” both there and around the world when fantasy collides with reality.

          There is never something for nothing, ever.

        • Einhal says:

          Augustus, that’s the biggest positive to come from the U.S.’ absurd response to the pandemic and overstimulation. If it had happened slowly, people would have continued believing that government borrowing, printing, and spending was “free.” Doing it really rapidly exposed that lie for good, and more, but not enough, people realize now that there is no free lunch.

      • Cas127 says:


        Excellent summary about how in the long run there is no free lunch and the government can’t pull a unicorn out of its *ss.

        One point that might clarify things a bit more for the general audience.

        1) In Japan, the accumulated government debt-to-GDP ratio is truly awful (something in excess of 250% I believe).

        2) That horrible ratio is the accumulated cancer of decade after decade of deficit spending – all to paper over gross imbalances in the economy, to numb the transient pain needed to *fix* those imbalances as they occur (versus an accumulated terminal cancer).

        3) In short, the Government bought political “stability” (ie, incumbents got to keep their shitty jobs, performed like shit) at the cost of ruining the currency and the economy. See also, America.

        4) Now, essentially, the Japanese G *has to* continue printing (ie, creating inflation) so as to keep their interest rates artificially low, insanely so (what is the risk premium on a deadbeat owing 2.5 times his income for decades? It ain’t f*#t&* .5 percent…).

        5) If Japan’s G stops printing and interest rates soar (quadrupling to a mighty 2%), then the G’s *annual* debt service (40% of its budget already?)
        goes up 4x (see accumulated debt cancer above).

        6) How could the G possibly pay 160% of its current budget…just for interest!?

        7) See printing, inflation, ruined currency, ruined economy.

        7) a) Better (for politicians) to print the money on the front end (gutting interest rates) to “help the people” (thanks benevolent Government!) rather than on the back end to pay off the 160% in interest, which would reveal the true evil wrought over decades. Printing on the front end only creates “mysterious” inflation…clearly not savior government’s fault!

        8) Politicians’ only talent, only skill…is deceit.

        • VintageVNvet says:

          SO GOOD c-10
          thank you for SO good a summary of the over all situation, with the very clear FACTS on the dirt,,,
          SO far,,,
          but, unfortunately ”those very clear facts” are still ONLY based on the clearly mostly hidden realities that many on here reference,,,
          BUT cannot know because of the very clear actions of the folks now known as ”financialists.”
          Until WE the PEONS (thanks una for that very relevant term ) do what needs to be done to get rid of the now clearly overwhelming ”LOADS” from those financialists and the ”overlords” who control them and have done for centuries,,,
          WE the PEONs will continue to be just exactly that: PEONS,, aka CANNON FODDER,,, aka ”expendable” and etc., etc…
          Really and truly,,, ”REAL” Education is the only long range answer..

        • Jon W says:

          I don’t even think it was a question of the long run. In many developed countries if you are a worker under the age of 40, you’ve been going backwards since the GFC – ever higher housing/asset prices and stagnant real wages (or negative for many).

          It’s just that this process occurred by a few percent each year so it was hard for the average person to spot the connection with monetary policies. But COVID forced them to do 10 years worth of intervention in a year and now the effect on workers is readily apparent. But the effect was always there.

          The workers are now really angry because the temperature in the pot just got cranked up quickly. And the CBs are freaking out because their plan was to just keep raising the temperature by a few degrees every year and hope nobody noticed.

    • perpetual perp says:

      If the dollar gets stronger vs a vs the Yen wouldn’t this increase Japan’s income from export sales? And push its balance of payments into surplus.

      • Wolf Richter says:

        well, no, because Japan imports a huge amount for DOMESTIC consumption, and exports comparatively speaking less (but higher-value products). Since the yen plunged, and import prices (in yen) surged on top of the surge in dollar-priced commodities, Japan’s trade balance turned negative, and has been negative for nine months in a row.

        A low yen is good only for specific exporting companies that don’t import much (materials and components). A low yen is bad for Japan’s economy overall, for many companies in Japan, and for the people of Japan.

        • Cas127 says:


          I agree with you for the most part and think you have most of the specifics right, but…

          1) I think that Japan has thought of itself as an export-led country for a long time (and still tries to, despite being beaten like a drum by China re export growth over the last 20 yrs),

          2) Japan still doesn’t have to compete with Chinese automakers for exports to the US (actually…where *are* our Chinese auto imports…) and at least auto components (if not always the entire car) still get made in Japan, so…

          3) My guess is that Jpn still thinks a weak yen (relative to USD) is in its favor, on balance, because it greatly helps Japan export goods (basically, autos) to the played out old consumer trollop that is the US.

          4) Everything you say is true (weak yen hurts Japanese consumers – as it has *forever*, hurts import terms for components needed for future export products, etc) but in aggregate, Japan is still enough of an export focused economy for a weak yen to be beneficial in aggregate.

        • Wolf Richter says:

          “where *are* our Chinese auto imports…”

          Among the vehicles that you can buy in the US and that are made in China are the Buick Envision and two Volvo models.

          Many components in vehicles — no matter where they vehicles are assembled, Japan, US, Mexico — are manufactured in China.

          This is just nonsense: “Japan is still enough of an export focused economy for a weak yen to be beneficial in aggregate.” Japan as 127 million consumers and a vibrant consumer economy. Consumers spending, just like in the US, is by far the biggest part of the economy. And they’re hurt by a lower yen that adds to inflation. And then consumption sags, and GDP sags because of it.

        • Wolf Richter says:

          “where *are* our Chinese auto imports…”

          Among the China-made vehicles that you can buy in the US are the Buick Envision and two Volvo models.

          Many components in vehicles — no matter where the vehicles are assembled, in Japan, the US, Mexico, or Europe — are manufactured in China.

          This is just nonsense: “Japan is still enough of an export focused economy for a weak yen to be beneficial in aggregate.” Japan as 126 million consumers and a vibrant consumer economy. Consumer spending, just like in the US, is by far the biggest part of the economy. And these consumers are hurt by inflation, and part of the inflation is due to the lower yen. And then consumption sags because consumers struggle to deal with the price increases, and GDP sags because of it.

          In addition, all the big Japanese automakers assemble the majority of the vehicles sold in the US in North America, and the buy a big part of the components outside Japan. They don’t benefit much from the weaker yen.

        • DF says:

          So Warren Buffets 5 billion dollar investment in the fab five (MSBHF,MARUY,MITSY,ITOCY,SSUMY) is based on what?

          In general they have gained this year while our domestic markets are tanking.

          Devaluing there currency has been good for corporations, bad for the average Japanese citizen-in the short term. In the long term, capital formation via stock purchases will lead to a better economy overall. Perhaps Buffet sees the willingness of the population to suffer for long term benefit.

          Beats me I’m not an economist, I just read your objective, amazingingly researched data with regularity and appreciate your expertise.

        • Wolf Richter says:


          Read what I said in my comment before you argue with me. I hate having to waste my time with people that argue without reading.

          This is what I said, and I’ll break it up for you:

          1. “A low yen is good only for specific exporting companies that don’t import much (materials and components).”

          2. “A low yen is bad for Japan’s economy overall, for many companies in Japan, and for the people of Japan.”

          So you listed some trading companies there, one of which my sister in law works for. So they’re big exporters, and they would benefit to some extent from a low yen. But their shares got hit too.

          But the vast majority of the Japanese economy is consumer spending, that gets damaged by the low yen.

  2. Brewski says:

    Makes one wonder if the JCB CPI numbers are as fudged as ours are.

    Based on their monetization of debt, I have always been amazed at the low inflation rates in Japan.

    Globalization cuts a big swath.


    • Wolf Richter says:

      Inflation has been relatively low in Japan, and that’s a good thing. Over the 25 years that I have been going to Japan, many prices haven’t changed much, unlike in the US.

      • Brant Lee says:

        “Subsidizing wholesalers is an ingenious move because it pushes down the retail price of gasoline.”

        This could never happen in the U.S., right? One reason is big oil corporate profits I suppose.

        • Anthony A. says:

          We don’t subsidize wholesalers, we send the money directly to the citizens!

      • Cas127 says:

        But didn’t Japanese prices start out pretty awfully high for many items?

        When *oranges* are thought of as a pretty nice, fairly pricey gift in 1984…we are starting off a high base.

        And 32 years of stultifying economic stagnation in Japan (coming soon to an American theater near you!!) isn’t exactly a triumph, even if it kept Japanese inflation in check (from its high base).

        • Wolf Richter says:

          Yes, prices were ridiculous in 1996, for us earning money in USD. Now they’re very reasonable. But in yen, prices didn’t change much. It’s because of lots of inflation in the US, and little inflation in Japan. Some imported things, such as wine, have gotten cheaper in yen because the market opened up over the years. But those were just a few items. In yen, most things stayed close to the same or had relatively small price increases.

          Over those years, a $100 bill in the US lost a lot of its purchasing power.

          The ¥10,000 bill (=$75 to $120 over the past 25 years) hasn’t lost much of its purchasing power in Japan.

        • VintageVNvet says:

          Yen was 300-305 to the dollar the last time I visited there on the way back…
          Purchased a LOT of very beautiful stuff there at very good prices.

      • yuanshan says:

        In December, 2021, the housing price in Tokyo metropolitan area finally exceeded the highest point during the foam period in 1990.

        But the stock market is still 30% below its peak in the foam period

      • yuanshan says:

        A few days ago, I saw the following news.

        The United States should stop beating itself in the face and try to compete with China. This is what Elon Musk, the world’s richest man, said.

        He said that China will soon surpass the United States in economic strength. Elon Musk is convinced that the economy is not a place for political games and needs to focus on its competitiveness.

        Tesla and musk, the founder of SpaceX, expressed their views in the all in podcast. According to the American billionaire, contemporary people will see for the first time in history that China’s economic strength will be twice or even three times that of the United States. Musk expressed doubts about the correctness of Washington’s blindly political confrontation with China. At the same time, private enterprises are increasingly forced to follow the political interests of the United States. Musk believes that the United States should accept the new reality of China’s rise and strive to improve its competitiveness.

        • Wolf Richter says:

          Musk needs to STFU. Without US government subsidies, he would have never been able to build Tesla. As far as I’m concerned, he needs to pack up his shit and move to China and argue with the Chinese authorities about “freedom of speech.” But he is mouse-quiet about China – other than brown-nosing the Chinese authorities. They shut down his factory in Shanghai, and silence. When the local government tried to temporarily shut down his factory in California, he went on an anti-government rampage. Good luck going on an anti-government rampage in China. So he needs to pack up his shit and move to China and argue with the Chinese authorities. But he doesn’t have the balls to do that. He’s the biggest piece of hypocritical chickenshit.

        • phleep says:

          Meddling billionaires who think one skill set translates into visionary proclamations are a dime a dozen in the US. Musk heads the parade. If one keeps a careful count of his about-faces and lies, as I have done, it is staggering. Yes he is a disruptor, to some social benefit, but in recent times, the ratio of BS and just made-up stuff (often causing value destruction) to substance has gone off the charts. I am not going to accept any inevitable world power balance narrative. It is a complex place, and lots of wild cards happen to all. And I am not going to accept a total surveillance society that fines me digitally if I jay-walk. I teach free speech at college level for decades now, and am confident Musk hasn’t learned the rudiments of its laws (brilliantly formed), or what speech moderation entails. He already has pressured companies to ruin careers of people who state free opinions criticcal of him. His feet are as much of clay as any of ours, but he has billion$ to throw around behind his whims.

        • gametv says:

          There are alot of people that hate Musk for the subsidies Tesla received. Get over it! Oil and gas production has been subsidized for decades. It was a great investment. Ford, GM and their ilk could have dominated BEV cars, but they are managed by bureaucratic idiots, the same type of people that run our government. Tesla single-handedly has transformed the auto industry, it simply would not have happened otherwise (maybe 10-20 later).

          Our Tesla is the only car we drive now. The SUV just sits there for an occasional short trip or hauling stuff. So nice to just plug in at night and never pay $6 a gallon. No maintenance cost to speak of. In a decade when I sell the car and ICE cars are worth $0, it will be the biggeset money-saving purchase I have ever made.

        • Shiloh1 says:

          Hi Wolf.
          I’m agreeing with you on Musk. How did the subsidies come about? The Virtue Signaling ESG poseurs. Politicians front-running his stock. Someone how couldn’t pass a high school physics class let alone a college p-chem or thermo class.

        • NBay says:

          I was in favor of a one-way ticket to Mars, where he could tweet his genius ideas from, (kinda like the Fortress of Solitude where Superman went to think), but I kinda like your idea better.

        • c_heale says:

          I’m not a big fan of Musk, but I also think the confrontational stance of the recent US administrations to China is not wise.

        • sunny129 says:


          This is the best description of this arrogant and narcisstic guy!

          Another one I recently read:

          What do you make of Mush – WE have yet to determine is how much of him genius and how much fraud!

          Your description stands above that! Bravo!

        • Cas127 says:


          Musk may be hypocritical in cowering before the Chinese government (tollgate to Chinese workers/consumers) but…that is far from saying the same thing as he is wrong in his critique of the US government/economy.

          The US *does* have a massive competitiveness problem that DC has ignored (when not aggressively papering over) for decades.

        • Wolf Richter says:

          The problem the US has is that it hasn’t slapped 25%-plus tariffs on ALL imports. Tariffs are a tax on corporate gross profits, and that’s where taxes need to be raised. Then we can cut income taxes on individuals. This will lower the incentives for Corporate America (incl. Walmart and Amazon) to offshore everything.

    • DutchTokyo says:

      All the money printing by BoJ has leaked out of Japan into foreign assets, mostly U$ assets. Japanese brokers have only recommended US tech stocks over the last 2 years.

  3. DR DOOM says:

    Japan will just love transistory inflation. I was so sad when it left us in the US. I really miss those transitory sunny days.

    • Josh says:

      I heard it’s on a world tour but should be back in the US soon. Keep checking the site for ticket details.

    • Cas127 says:

      Transitory as in terminal cancer.

      (The G – “You mean you didn’t understand how we meant it? Well, we can’t be expected to fix the stupidity of our electorate, can we? Now, if you will excuse me, I’m late for a plane to China. Yoink!”)

  4. Phoenix_Ikki says:

    Like a Simpson episode, I would like to see what the Japanese version of Jerome Powell look like…they even used “transitory” just like someone did 6 months amusing

    • Trucker Guy says:

      Saw a funny joke about it.

      The bank of Japan’s chairman Ji Pao said the inflation was just transitory.

  5. Noodle says:

    Good thing they don’t have a aging population.

    • Harvey Mushman says:

      Yes, and good thing they have lots of young people coming into the work force.

      • DR DOOM says:

        Avg age in Japan is 48 vs 38 in the USA. If they have a large crop of youth pending it looks like the old farts are getting some “action”. I am just another tired old Social Security resource sucking boomer over here in the US of A.

      • Wolf Richter says:

        The urban areas of Japan are incredible crowded. The rest of the main island is mountains. Living spaces are tiny. Trains are packed. Commutes from the suburbs are horribly long. If everyone drove to work, no one would make it to work. The Japanese have figured this out: The crowd is big enough and dense enough, no need to add to it. Go live in Japan for a while to see what “crowds” are and what “population density” means.

        • Cas127 says:

          One look at the “designated pusher” in action for Japanese trains tells you all you need to know about population density.

          Ditto capsule hotels.

          (Which are now capsule *homes* in SF…)

        • Bobber says:

          When flying over Japan recently, I remember looking down and seeing lots of small villages all over the place. 10-15 houses would be clumped together, with small plots of farmland nearby. I suspect the family farm is alive and well in Japan. Then, you’d see a high speed train cutting through all the patchwork, which creates a contrast.

        • Wolf Richter says:

          Depopulation of these rural areas and small towns is a real problem. The farms are subsidized. But the young people have left and are leaving. There is nothing to do for them, outside of farming. Hokkaido has a lot of wide-open flat farmland. But on Honshu (the main island) the two big plains are where the two big urban areas are (the Tokyo area and the Osaka area). There are some smaller flat spots along the coasts, such as Nagoya, Nigata, etc. where big cities have sprung up, but the rest of Honshu is mountainous with narrow valleys and lots of small towns and small farms, and those areas are losing population (urbanization).

          You can buy a very cheap house in those rural areas and distant small towns. They might even give it to you for free if you pay the taxes and take care of it. There are statistics that track abandoned houses that no one wants.

          Japanese cities are super-vibrant, but those rural areas, if they cannot attract tourism, are a different ballgame altogether.

        • Watwick Francis says:

          I lived in Japan for 36 years working as a business consultant, university lecturer and trainer of Japanese diplomats and security forces personnel and can tell you that Japan is the poster child of demographic collapse. Yes, the cities are crowded, safe and vibrant – but dying. I can take you to places in Tokyo that are quiet because there are no children. Drive north into Took and you wolll pass through town and village after town and village that are being boarded up. Farms are dying and the monkeys, deer, pigs and natural vegetation are taking over the paddy files because the farmer is too old or dead and his son is in town because farm work is “too hard” and Japanese girls do not, generally speaking, want to marry a farmer. I know, I married one.

          The magnificent infrastructure, so much of it white elephant pork barrel projects, is crumbling along with the tax base needed to maintain it. And every summer the number of rotting corpses of old people who died alone I their apartments/houses increases because, like in China and other parts of Sini Asia, filial piety and the looking after the parents who sacrificed so much for the little emperors, is dying fast. Don’t believe all tniir crap.

        • Wolf Richter says:

          Watwick Francis,

          I’ve been married to one too for over two decades, and regularly visit my in-laws who live in Soka (suburb of Tokyo). We also lived in Tokyo some years ago. In Soka, plenty of kids walking home from school in the afternoons. One place where I used to live in Tokyo (in Takadanobaba), my apartment was right across from a grade school. Lots of kids.

          Urbanization continues, and young people don’t want to live in distant villages, and they leave, and the distant villages depopulate. That’s normal, happened in the US too. The rest of your thing is just kind of a dystopia.

          Over the 25 years that I have been in and out of Japan, life has gotten a lot better in many ways, including four-tracking of commuter train lines (less crowded, faster), and entirely new subway lines, including one that now goes past the first place where I used to live in Tokyo (Ekoda). Now all decrepit old apartment buildings in the area along Mejiro-dori and toward old Ekoda station have bene replaced by new and much nicer apartment and condo buildings. Urban renewal everywhere. All the time. Like it or not.

          The one thing Japan doesn’t have a lot of is immigrants. You cannot just walk across the border. So what you don’t see is whole cities full of immigrants. There are some, and I run into them even in Soka, but compared to the US, there are very few. That’s the main difference, not the birth rates.

    • Cas127 says:

      “Good thing they don’t have an aging population”

      Soylent Gray is people.

      So is the G’s plan B to “fix” its hopeless debt obligations.

      • Flea says:

        Reset money to digital = peons get screwed and rich 1% will only lose 90% of there wealth still be billionaires

  6. Dan Romig says:

    Wolf, I hope that your wife’s family is doing well & will continue to do so in Japan.

    The BOJ instituted a Negative Interest Rate Policy in January 2016.

    On 31 July 2018, by a 7 – 2 vote, they issued, “Strengthening the Framework for Continuous Powerful Monetary Easing.” This was the playbook for YCC. It reads:

    “The Bank will apply a negative interest rate of minus 0.1% to the Policy-Rate balances in current accounts held by financial institutions at the Bank.”

    “The Bank will purchase Japanese government bonds (JGBs) so that the 10-year JGB will remain at around zero percent.”

    Nope, the Rules of Money do not like that, and consequences are going to hit Japan, as they are now, for breaking these two rules.

    1) Money must have value. It cannot be loaned out at zero interest.

    2) Future Money must have more value that current time Money. i. e.: Long term yields must be higher than short term yields.

    The IMF reports that in Japan, the national debt, driven by these BOJ monetary distortions, is now 2.63 times as large as the GDP.

    What is the BOJ’s endgame plan?

    • Sams says:

      1) If only used for payment transactions money work fine without interest.
      2) Only if the purpose is wealth transfer.

      • Cas127 says:

        If I lend money to you, there is a very, very real risk that I won’t get some (or any!!) of it back.

        If there is no compensation for that risk, loans will cease. And the economic machine will stop.

        Magic wishes won’t keep an economy running.

        • Sams says:

          It is possible to price the risk of lending without interest. The dfference is that a fee do not inflate the amount of money as interests do.

          Second, economies can work without credit, they will just work a different way. We have a debt based economy, historically debt based economies always crash. The math of exponential growt kill them.

        • Dan Romig says:


          Perhaps you could walk into your bank, assuming that you have one, and ask for a 30-year interest-free mortgage with nothing down up front on your end to contribute to the purchase price. The bank will then write the check to pay for the house, won’t they?

          Also, ask the bank if title and deed could be made out to you directly upon singing the purchase agreement with the seller.

          Of course, your bank will certainly be happy to accommodate this request, since:
          “It is possible to ‘price the risk of lending’ without interest.”

        • Sams says:

          Dan Romig, read careful. I said two thigs:

          A monetary system not based on debt will be and work quite different than the debt based system we have today.

          A bank can price and get paid for the risk when lending without charging interest. There is subtle difference there that make a large difference in the monetary system.

        • VintageVNvet says:

          SO sorry for folks who think ”interest” is inevitable because of ”risk” etc.
          CLEARLY NOT SO,,,
          RISK should be and must be ”priced in” to start with, as has been very very clear to those of us who have seen the vast ”defaults”…
          The entire on going ”interest” thing is SO 16thCentury,,, WE the PEONs must consider each and every alternative, in spite of, or perhaps because of the screaming that will ensue if WE do.

        • Dan Romig says:


          As Shakespeare once said, “It smells like a rose.” You can call it whatever you want to.

        • Sams says:

          DR, in math and accounting almost the same will not do.😉

        • Dan Romig says:


          If you take out a mortgage, you pay back the amount borrowed plus interest. Or, you could pay back the amount borrowed with an added “fee.” How you set up the payback schedule, in either case is pre-set and very regimented.

          No, there is no difference.

          If you think a bank will lend you money, and let you adjust the “fee” and payback schedule as you see fit, more power to you. I doubt that this would happen in real life.

          And in real life, I have a bachelor’s degree in physics with a bit of math skills to go with that degree.

          Continuously compound interest is pretty basic, eh?

          “The math of exponential growt(h) kill them.” Nice one ….

    • COWG says:

      “ The IMF reports that in Japan, the national debt, driven by these BOJ monetary distortions, is now 2.63 times as large as the GDP.

      What is the BOJ’s endgame plan?”

      The endgame plan has always to protect the Yen as a world FX safe haven/arbitrage trade…

      USDJPY 100 makes life a whole lot better than USDJPY 150 for the average Japanese citizen…

      Japan has no leverage i.e., import/export to change anything…

      Unless they want to become a banking safe haven, ala Switzerland…

      That could save them…

      But I sincerely doubt the USG would allow that to happen…

      I can see China poking their nose under the tent…

      • Augustus Frost says:

        According to the search results I just pulled up, financial sector accounts for about 10% of Switzerland’s GDP. Japan’s is a little over 4%.

        Japan’s economy is too large where it can be financialized to a sufficient extent to bail out the economy. If the bond mania has ended, financialization is also headed for a big decline globally.

  7. Depth Charge says:

    Central bankers are the scourge of humanity. This past 50 year period will be remembered as one of the most reckless, reprehensible displays of arrogance, thievery and outright fraud in the history of mankind.

    It is beyond time the masses wake up and recognize what this filthy cabal is doing to them. These central bankers can’t even get their stories straight yet the graft continues. It’s like a kid with chocolate all over his face denying he at the brownies and people falling for it. It’s time to hold these crooks to account.

    • Escierto says:

      The masses? That’s hilarious. The masses are ignorant fools just as they have always been. Not one person in a hundred could tell you what the Fed does or who Jerome Powell is.

      • Cas127 says:

        If only there had been a means of communication and education transmitted through the air to everyone, captured by a “receiver”…

        Or perhaps if there had been flat “sheets” of…rock…no, “paper” distributed widely at a reasonable cost.

        Or if there had been a series of tubes, an “interweb” if you will…

        The first tool of a political class aristocracy is deceit (see MSM), violence only comes second (its disruptions reduce appropriated output).

      • John H. says:


        Backing up your point that the masses know of and care less for the mechanics of monetary devaluation:

        “By a continuing process of inflation [of the money supply], governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens….. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency. The process engages all the hidden forces of economic law on the side of destruction, and does it in a manner which not one man in a million is able to diagnose.”
        – John Maynard Keynes, The Economic Consequences of the Peace, 1920, Ch. IV

        He hit the nail on the head, the clever old hypocrite!

        • phleep says:

          The 20th century was the story of nations recruiting people as soldiers and factory workers for the big wars. For that, the elites needed to be nicer to the poor, to provide a ready supply of humans needed in those labor markets, at scale, reasonably healthy and educated up to a minimum standard. The welfare state was pioneered in Germany and Japan which were looking forward to create and deploy these human resources.

          Postwar, the USA became the beneficiary with a vibrant consumer society, as the bombed-out globe cobbled itself together.

          In 1971 the writing was on the wall when Nixon took us off the gold standard, and soon, the military draft was ended in the USA. The USA offshored factories, and it was perceived the knowledge and service economies would prevail as China and other developing nations played catch-up. What we have now is a new, major reshuffling. Consumers have become necessary only as such; it is harder for many of these “excess” persons economically, to create and contribute value. Hence, jobs at theme parks or cruise ships, carting food around and kissing up to the lucky next-echelon-up of petty consumers. Now there is an attempt to create new frontiers: endless fake value in digitized virtual spaces. But everything has its costs. Next stop: the Matrix?

        • VintageVNvet says:

          actually reply to phleeper:
          Cannon fodder has been the main meme, or at least one of them for centuries bro; no doubt you have heard of the massive changes to warfare as a result of modern weapons?
          When the cannon fodder was only facing cannon and pikes or arrows, WE could put up our shields against the latter and run from the former that were not very accurate and not reliable in field conditions, etc., etc.
          The advent of machine guns showed how ”fighting the last war” was a losing proposition in WW1; unfortunately, the PTB didn’t get the memo, and we are learning a lot about that right now in EU, eh?
          I pretty much agree with the rest of your comment,,, shows how intelligent you are!

      • c_heale says:

        Imo the masses aren’t ignorant, they just don’t have much (if any) political power. One thing they do know is whether they have enough to survive on and if their quality of life is getting better. And if it gets really bad the situation ends up as it is in Sri Lanka, or Somalia or with a dictator. People may no nothing about Central banks but they know when the economy is bad.

    • Tom S. says:

      I’d like to agree but central bankers are mostly middlemen. If congress didn’t like what they were doing they would be replaced. The real corruption is in investment banking, asset management, and private equity. Cheat the system through low rates, unlimited liquidity, and corporate handouts to generate phony profit growth…it stifles innovation and competition. Capital can be thrown at digital rocks and still generate a return. Consumers aren’t picking winners and losers, the corrupt government is.

      • VKA says:

        and if people didn’t like what congress did, they would vote for someone else. if honesty and fiscal prudence got you elected, congressmen would be as honest as the day is long and run a balanced budget every year. but the voters send those people packing and congresspeople adjust their behavior accordingly. they would be fools not to.

        ultimately, the “system” is just us.

        • phleep says:

          Well said, VKA! Behind every scoundrel is a crowd. Else the scoundrels would be yelling out in a field, to no effect. The most popular now have simply found new amplifying technologies, to reach new collections of fans.

          All living creatures like free stuff (low energy-cost). We are energy-conserving creatures (cynical translation: lazy and manipulative).

          The shocking thing to me is that there was ever any decent, ethical leadership. Hamilton and Jefferson each had their version of cynicism about this. Hamilton said, recruit and involve the rich in finance, get them inside the fence by rewarding them. A subtle play. Jefferson said they are all forever scoundrels, but that leaves us atomized yeoman farmers to be roadkill for the other empires.

        • Dan Romig says:


          Yes, Hamilton and Jefferson had much different visions of how and what the USA should have for its central bank as it was founded.

          But Hamilton was, along with Isaac Roosevelt (yup, Dutch banking family and same as two USA Presidents down the road) the founder of the Bank of New York in 1784. This was the first publicly traded stock on the New York Stock Exchange in 1792.

          In 1791, Hamilton prevailed over Jefferson, and the First Bank of the United States was granted a 20 year charter by Congress, and became the Central Bank of the USA. However, it was controlled, behind the scenes, by the banking powers in the City of London.

          The true power lies in control of the dollar. Both Jefferson and Hamilton were well aware of that.

          In Japan, the true power is with the Bank of Japan. I am amazed that Japan has not unravelled sooner, but I fear that it will.

    • fred flintstone says:

      Mommy…… I didn’t really mean to rip off the entire middle class around the world and transfer the entire pile to my bank account in the Cayman Islands…….It was Jimmy. I just forgot to raise the rates once the problem was gone…….for a decade.
      Besides I saved them from deflation……..which I could have done more efficiently by just cutting a check for $10,000 for each person in the US…….but……details…..details……details……doing it that way would have resulted in power and wealth in the hands of the middle class…….
      and that would not be capitalism….it would be socialism……..but……but…..but…….what do you call low interest rates and a booming stock market…….socialism for…….me.

      • The Real Tony says:

        Exactly correct.

      • phleep says:

        The middle class bought their station in life by working their lives away in factories and bleeding on foreign shores. Who says the universe endlessly owes the self-proclaimed middle class a house in the ‘burbs, power mower, three kids in college, two ICE cars in the driveway, ever-larger TV to watch drivel, vacations and a fat pension?

        What god wrote that insurance policy, I am curious? And what premiums have these saints paid any time lately?

        • Flea says:

          And you probably own all this stuff and more

        • unamused says:

          “Who says the universe endlessly owes the self-proclaimed middle class a house in the ‘burbs, power mower, three kids in college, two ICE cars in the driveway, ever-larger TV to watch drivel, vacations and a fat pension?”

          That’s your Modern Marketing Culture.

          Make money, spend money. Your masters get a cut both ways.

          Buy something. It’s make you feel better.

          Notice I said ‘your Modern Marketing Culture’, and not ‘our’.

  8. Rowen says:

    Japan imports over 90% of energy and 60% of calories. Not good with a falling JPY. Meanwhile, China keeps crowing into its export sector.

    • Iona says:

      Had to double check that, apparently it’s true. Surprising to me as when I was there I saw lots of farming and seafood. But they do have a lot of people to feed. Good meals were pretty reasonable there.

  9. breamrod says:

    maybe its not that bad. maybe 5 out of 100!

  10. David Hall says:

    The Japanese invested in Hawaiian real estate when they were the world’s second largest economy decades ago. They bought the 7-11 convenience store chain. They own some tire stores, a fishing fleet etc. They may not have to worry.

    Circle K convenience store clerks get $10 an hour in Florida. Canadians bought Circle K. The store clerks may have to worry.

  11. dishonest says:

    While the common fellow is suffering mightily, someone is getting very wealthy off of the inflation that is occurring worldwide. Imagine if, rather than dishing out subsides and jawboning, a political leader named names and quoted figures.

    Imagine Biden, for instance, doing a Powerpoint presentation in which he showed what the profits were and to who, specifically they were going. He could show the houses, with addresses and give out the phone numbers so all could express their admiration directly to these folks and say personally, “well done”.

    • phleep says:

      So what virtue gives this glorious common fellow a ticket to resources? Making babies? Driving around muttering to himself about the fall of man? Just not being a gang-banger? Who will open up this utterly deserved opportunity-space for him? Or as his mythology would have it, re-open it, restore him to his royal desserts? Crown him a little king again?

      It was understood in the USA’s government’s moment of creation that the mob or masses could not run things. Everything up for a vote or crowd acclaim is simply chaos (footnote: Occupy Wall Street). We had to delegate: thus a republic. It was understood everyone (even this common-fellow saint) had selfish motives and behaviors. Hence limited government, hemmed in by written rules. Oh, but that is so boring! It makes such boring politicians! Not exciting, “get ‘r done” tough-

      Should we now pick a champion, a Julius Caesar, a big time business mover and shaker, a twitler, to clean the stables and set things right for this noble common man? Right there, you have the road to the fall of the Roman Republic and ultimately, Rome itself: mobs following superstars into streetfights. The common man went back to what he always did: stoop labor under someone else’s thumb, with no absence of grumbling. Careful what you wish for.

    • Wisdom Seeker says:

      Dishonest – asset prices of all types are way down. Energy sector is the last holdout and it’s about to joint the crowd. So Who, exactly, in your view, is “getting rich” off this inflation?

  12. historicus says:

    Paul Krugman
    the advisor to Abe
    what now Paul?

    Lets look at where MMT has taken the nations who followed the nonsense
    Inflation is to be tamped down by higher taxes the MMT says.
    So nations must raise taxes as industry is harmed by inflation…so governments can drain money from the struggling private sector to give to the government who will spend it away into the economy, thus having no tempering of inflation but only a changing of who spends the money. Govt wins

    • Brown Dog says:

      MMT and most of what modern governments do today is nothing more than legalized racketeering. Which is a oxymoron but so is jumbo shrimp and they exist too. Starting with the Reagan era or Nixon if you want to include going of the gold standard the government has been dismantling every safeguard to protect the people from immoral government ideology established in the 30s and 40s that US citizens died for fighting our US military not the national guard see history on the bonus army. By this systematic destruction of law they have returned the populace “legally however not morally” to a mobile serfdom. We still have the right to choose but the choices are all at odd of our fundamental right to pursue happiness. As George Carlin said a big red white and blue … up our …. We have gone back to the 1920s where corporations once again run our country and people are a commodity not a humanity.

    • YuShan says:

      The idea that they would really raise taxes to counter inflation (per their theory) was never credible and fortunately debunked now! I’m glad it didn’t take long to debunk this nonsense.

  13. SpencerG says:

    “The Japanese people are not amused.”


  14. Cobalt Programmer says:

    As an Ex-navy seal turned investment banker and a part time neurosurgeon and lawyer and a rapper, i will provide my few cents…
    1. Oriental economies do not have the same philosophy as the judo-christian philosophy
    2. Japan birth rate is shrinking which means that there is deflation not inflation. Or I would say inflation is smaller compared to western ideology
    3. Also, if the population in future is small, lesser people will inherit more wealth. (Usually inflation is more money chasing less goods)
    4. Think about cars. Japan came with good cars. Nissan Datsun, Toyota and Honda. However, now koreans make better cars (Hundai and Kia and I forget) while Japan is lagging behind in the electric vehicles and trucks.
    5. What about the computers? They made SONY and other stuff. Comparable to Made in Germany. They lost to silicon valley and have you heard about any good radio, TV and computers made in Japan?
    6. OK. My personal favorite ANIME. Japanese made good anime. Remember CENTURIONS? it was made in japan. They had good visual themes. They are still doing outsourcing for hollyweird.
    7. Think about the kaizen and kanban (Six sigma from the HR was a boring stuff). Nippon is a goner. A medieval island, even china don’t care about. If they want to drink sake and play with their swords. Fine with me. Leave them alone….
    8. Another of my personal favorite…

    • Brant Lee says:

      NO, S Korea is NOT making better cars than Toyota and Honda. Not even close. Don’t listen to this B.S. if you’re car shopping.

      • VintageVNvet says:

        Correct IMHO also BL:
        Honda the best, and actually their Accord has been made in Ohio for over 40 years and is the best in its price range consistently.
        Toy is second, but quality has fallen according to some of the ”motor heads” I have talked to in the last few years.
        Korea cars ARE improving, WERE lower priced but have gained a lot and last time we tried to buy, Jan of 2020, were actually higher ”out the door” than either H or T!
        Still hearing Lexus the best overall in the higher price category, but not shopping there for new.
        Buick also coming back as better quality these days, but others still about at par of last 20 years…
        We just ”rehabbed” older Cobalt and will wait for the dust to settle to buy new again, IF EVER???

      • Cookdoggie says:

        Agree, I’ll take a Toyota over a korean car any day, but you can have my Nissan for a few yen.

    • Michael Engel says:

      Japan will invade the Sakhalin island, while Russia is stuck in Ukraine, to solve the west inflation problems.

      • Old School says:

        My neighbor has interesting history. She is Japanese and was a little girl when Russians took family prisoner. She lived in prison camp as a little girl. She said they got no rice and only dirty wheat which must have been awful for it to be such a strong memory.

        Once war was over there was a lot of pressure to marry a GI and get out of Japan. She kept skipping out on arranged dates, but finally gave in and married a GI and came to the states. Her husband is long dead and she is a widow in good health

        Always flies American flag. She said her main goal when a teenager was to get somewhere she could have her own money.

    • Seneca’s Cliff says:

      I think you have it all wrong cobalt. Despite decades of monetary stagnation , Japan has not lost any ground in cutting edge industrial products. They ( and Germany) are the leading maker of machine tools, precision optics, control systems and high performance industrial electronics. And above all they are the leading maker of robotics in the world. Lots of companies pretend to build robots for everything from cooking burgers to washing windows, but most of them just buy Japanese Robot arms and write new software for them.

      • Dan Romig says:

        Thank you S C.

        And as Practice Session 3 is starting for Formula 1 in Barcelona right now, I enjoy the fact that the Mercedes F 1 team is located in Northamptonshire, England. Chassis from Brackley & Power unit from Brixworth.

        • c_heale says:

          The UK still has an edge in a very few high priced sectors, but Thatcher and subsequent administrations, threw out all the babies with the bathwater (there was a lot of bathwater like British Leyland), and Brexit has really damaged these few remaining companies/sectors. The UK has no coherent industrial strategy.

      • Old school says:

        It is interesting reading about naval battles during WWII as US had primitive radar, but Japanese had superior optics. A lot of time was spent trying to find the opponent’s fleet first even though you knew approximately where they were.

    • The Real Tony says:

      What wealth? Their stock market and housing market produced nothing but huge losses over the last 30 years. So much so the government had to takeover the stock market and rig it like in America as of a few years ago.

    • rick m says:

      A judo-christian church I might attend, if there’s music.

  15. SocalJimObjects says:

    Give it 5 years at most, and Japan will be restarting her nuclear reactors. Guaranteed.

  16. Swamp Creature says:

    The price of Beef was $26/lb back in the 70s when I was there in Yakuska and the Shinjaku area of Tokyo. I wonder what it is now?

  17. LordSunbeamTheThird says:

    Ihave a theory that although the Japanese government state that they want inflation, secretly they don’t, they want the public to save and corporations to hold back profits so they can “borrow” the savings to spend on corrupt public work projects which are literally forever here and god knows how much cash dropped in Tokyo hostess bars.

  18. NJB says:

    The BOJ’s bond buying may have peaked just over 1 year ago, but it’s sticking with its yield curve control centered around the 10 year JGB. It’s showing no signs of backing away from this pledge. Given this, I think it’s premature to congratulate the BOJ for buying less bonds. It is also maintaining the stance that a weaker Yen is good for the country, although Kurodo recently stated that the pace of weakening has been “very rapid”.

    To its great credit, the BOJ has effectively monetised a large proportion of the government’s debt and the country is much better positioned because of it. In Japan, MMT has worked – I don’t think anyone can dispute this. Whether it will continue to work is highly uncertain.

    • Augustus Frost says:

      It’s not MMT., at least the one I know.

      • John H. says:


        Buying current “stability” at the expense of future stability, and using your currency to do so, sure rhymes with MMT, in my opinion.

        As do these items mentioned by Wolf:
        – Subsidies to wholesalers of gasoline
        – Transitory inflation pressures
        – Price stability target
        – Price fixing in healthcare delivery system
        – Yield curve control
        – Subsidized farming

        Maybe I’m conflating the concept of MMT with its effects…

    • The Real Tony says:

      People starved to death the last 30 years due to zero or negative interest rates. See the suicide rate in Japan. I believe the ones who starved to death are included in the suicide statistics.

  19. Big news. How will they deal with all the public debt?

  20. Michael Engel says:

    1) GOOGL weekly, casino royal for entertainment and fun only :
    This week low closed Mar 29/ Apr 5 2021 open gap, after over a year, but
    closed above Mar 29 2021 low, that started the bull run. The uptrend is intact.
    2) White bar Aug 23 2021 high saw it’s first close above after 9 weeks
    on Oct 25 2021, a setup bar. Nov 1 2021 was a trigger.
    3) There was no close above the trigger bar for 13 weeks. Nov 1 2021
    high was breached 3 times, but that’s not good enough.
    4) Jan 24 2022 low was tested four times on the right hand side of the chart, but Jan 24 low was still above big white July 19 2021 low. This section of the uptrend held until Apr 18 2022 close. April 18 2022 low was breached on Apr 25 2022. There is no close above Apr 25 high to indicate a bull run, or short covering. It might start next week.
    5) Apr 25 2022 vol was x2 higher than Apr 18, but Apr 25 is a smaller bar, closing May 17/25 open gap, possibly the first stopping action.
    6) May 16 2022 low closed on top of big white, high vol, Feb 1 2021 high, a congestion area.
    7) This week bar, twice the size of the previous bar on lower vol. Something
    is wrong.
    8) We don’t know if GOOGL correction is over, at least for a while.

  21. Crunchy says:

    “Subsidizing wholesalers is an ingenious move because it pushes down the retail price of gasoline, and thereby the inflation index”

    To subsidize is to partially pay for something.

    Where is that subsidy money coming from? Unless the government is otherwise running a budget surplus, I’d have to say it’s come out of thin air (aka newly issued gov debt).

    Just how effective will this overtly inflationary behavior be in pushing down the overall inflation index for more than a fleeting moment??

  22. The Real Tony says:

    Like the retirees in America most of the retirees in Japan have been starving to death due to 30 years of zero or negative interest rates.

  23. Beardawg says:

    These charts surprised me. Interest on debt in Japan is 40% with extended ZIRP ? Inflation is historically 1/2 of that in USA ? Per Wolf, real on the ground purchases confirm this.

    We have been talking about the Japanese being the walking dead for 30+ years and their end if days is imminent. It looks like they are fooling everyone, but especially the USA. Maybe they do QE / MMT differently, but they are making it work.

    • perpetual perp says:

      Bill Mitchell, the Australian founder of MMT, has got a new gig in Japan. Or so I’m told.

  24. Michael Engel says:

    1) Japan is an unsinkable aircraft carrier. The Japanese navy, air force and army is growing in strength.
    2) Japan is part of India diamond necklace to choke China.
    3) Japan is a powerful member of the squad.
    4) China GDP was in a long slow slog down before 2019. Bubble down
    to minus (-)7% in 2020, bubble up to +18% in 2021, decaying to the old trend in 2022. China is still infected.
    5) Industrial production is shifting away from China to US and ASEAN countries. Japan outsourcing will benefit from that shift.
    6) Canada TM pipeline will be completed within a year. Japan will benefit from Canadian oil.
    7) WFH enhance Japanese productivity, solve major cities crowding. WFH might encourage Japanese women to have babies, to produce more.
    8) The old, proportionally large in Japan, are frugal, the rest, proportionally small, can benefit from a growing economy.
    9) Japan might go for mini nukes.
    10) Japan might improve their relationship with Russia after the Ukraine war…friendship are shifting in the sand to change the balance of power.

  25. Michael Engel says:

    GOOGL weekly retraced 0.886 of Mar 29 2021 low and 50% of the
    move from Mar 2020 low.

  26. eg says:

    Isn’t the BOJ finally getting the results it has wanted for years now? I thought they were pretty overtly trying to avoid deflation and frankly struggling to do so (in part because they weren’t getting complete cooperation from the fiscal side where every once in a while a tax hike would interfere with their plans)

  27. Yancey Ward says:

    Japan’s population peaked in 2008 at 128,538,000. In 2020, the latest data I have, it was 126,476,000- a loss of 2.07 million in 12 years, and the decrease is accelerating still. It will almost surely drop another 4 million+ by 2032, and another 8 million the the 12 year period after that.

    Everything government does has a cost as a commenter above described. Those costs show up in different ways- in the case of Japan, it shows up in a population that is withering away. There won’t be a Japan a hundred years from now if something doesn’t drastically change in the country that makes it possible to raise children. Dependency ratio matters- you can’t raise a family while bearing the financial burden of a sea of non-familiar elderly and other parasitic free-loaders.

    • Wolf Richter says:

      You sure packed a lot of iffy stuff into this. So let me straighten some of this out.

      The big urban areas (where the jobs are) are immensely crowded. Packed trains, small living spaces. Long commutes. The last thing the Japanese need are even more people to pack into all this, and so they have chosen. Once they have more space and better ways to spread out, maybe some folks might change their mind.

      Japan’s fertility rate:

      Though the BS media keeps dragging out the small population decline (largely because Japan has strict LIMITS on IMMIGRATION), it forgets that Japan’s fertility rate isn’t all that low. On the global scale, it’s in 21st place. Look at all the countries that have lower fertility rates:

      The 21 countries with Lowest Fertility Rates (by births per woman) – World Bank 2021 (2019 data)

      South Korea – 0.9
      Puerto Rico (U.S. territory) – 1.0
      Hong Kong (China SAR) – 1.1 (tie)
      Malta – 1.1 (tie)
      Singapore – 1.1 (tie)
      Macau (China SAR) – 1.2 (tie)
      Ukraine – 1.2 (tie)
      Spain – 1.2 (tie)
      Bosnia and Herzegovina – 1.3 (tie)
      San Marino – 1.3 (tie)
      Moldova – 1.3 (tie)
      Italy – 1.3 (tie)
      Andorra – 1.3 (tie)
      Cyprus – 1.3 (tie)
      Luxembourg – 1.3 (tie)
      Japan 1.4

  28. unamused says:

    “The Japanese people are not amused.”

    A lot of that going around these days.

  29. Michael Engel says:

    US, Japan, India and Australia leaders will meet in Tokyo this week,
    but PM Scott Morrison lost election.
    China oppose the squad, because Chinese families have only on child.

  30. Michael Engel says:

    The American people are not amused, until CA vote for Wolf Richter
    as a Republican senator.
    Wolf to the top.

    • Putter says:

      Wolf needs to run as an Independent. D’s and R’s are a tag team taking this country to the mat!

    • SocalJimObjects says:

      Don’t wish ill on our host. Only a revolution by the people can fix this country.

  31. dang says:

    Well, I have too say that the Japanese have milked QE, hell they invented it, since their twin bubbles, housing and the stock market burst in the midst of their hubris back in 1986 I think.

  32. YuShan says:

    What people are going to discover soon is that “wealth” expressed in currency and asset prices is meaningless. All that counts is how many real goods and services the economy produces.

    Current money supply and asset prices suggest an ability to buy goods and services that is multiple times the amount that can actually be produced by the economy. There are simply not enough people and resources to produce them.

    So this “wealth” has to be (and will be, eventually) repriced to match the actual economic capacity.

  33. SocalJimObjects says:

    The world’s most successful Youtuber, PewDiePie has moved to Japan. Whether that’s a good thing or not is naturally still unknown.

  34. Finster says:

    Those subsidies actually aggravate the problem. They’re paid for with money the government doesn’t have … i.e. by money creation. So it’s a big game of whack-a-mole … hammering down a price here and there by levitating them elsewhere. Looks to me like they’re trying to make US economic policy look sane.

  35. Frank O'Brien says:

    A very thought-provoking article, as usual. Just one point that I’m not sure has been considered…”The overall consumer price index for all items in Japan jumped by 0.4% in April from March, the third month in a row of 0.4% increases (4.8% annualized)”. Taking this literally, I fed CPI monthly increases of 0.4% (1×1.004 12 times over) into an online compound interest calculator. The result after 12 months was an effective annual rate of around 12.736%.

    • Finster says:

      Double check the math.

      1.004^12 = 1.049070 … or about 4.91% annualized.

      • Frank says:

        You’re right. It looks as if the site I used rounds figures up to the nearest whole cent. :(

  36. This is how the record by Japan’s Government Pension Investment Fund (GPIF) for the March-June quarter which is the first quarter in Japan’s financial year which started out so as to pacify the drained out nerves of the people who’d rewarded into this system all their working lives: the fund is handled permanently, and its investment outcomes should be evaluated in the similar manner. The GPIF isn’t lonesome. Pension funds in the US and at another place are in dilemma. Most of them have been taking on too many risks to resolve their underfunding issues. It has been termed as the global pension crisis. And there’s a particular treat. Foreign assets and foreign bonds collective account for over 34% of gross assets: a vast bet on the exchange rate or on the other hand on the wholesale abolition of the yen. But the yen has emerged sharply in the present times.

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