04-23-2016, 11:45 PM
Olivier Blanchard, former chief economist at the International Monetary Fund, said zero interest rates have disguised the underlying danger posed by Japan’s public debt, likely to reach 250pc of GDP this year and spiralling upwards on an unsustainable trajectory... The BoJ is soaking up the entire budget deficit under Govenror Haruhiko Kuroda as he pursues quantitative easing a l’outrance. The central bank owned 34.5pc of the Japanese government bond market as of February, and this is expected to reach 50pc by 2017... Japanese officials admit privately that a key purpose of ‘Abenomics’ is to soak up the debt and avert a funding crisis as the big pension funds and life insurers retreat from the market. The other unstated goal is to raise nominal GDP growth to 5pc in order to ‘bend down’ the trajectory of the debt ratio, a task easier said than done.
Olivier Blanchard eyes ugly 'end game' for Japan on debt spiral
The story seems plausible to many, and thus is deeply challenging for the backers of sound money principles. The financial TV commentators tell us that the yen is now the safest of all the safe havens. How can this be so?
Japan's monetary experiment just beginning - Business Insider
It is not easy to decisively break out of a growth slump associated with the bursting of a financial bubble. The longer an economy is stuck in a low-growth regime, the greater the structural headwinds impeding an economic liftoff. This affects not just the current growth trajectory, but future potential, too.