BOJ to double money supply to get Japan out of slump

100 yen to the USD is just a matter of time now. It is probably a good time to start shifting your savings out of yen into other currenceis or possibly Japanese equities.

Any good cards left? No, Game Over, me guess.

Does this mean they are just going to print more bills?

Rampant inflation, here we come?

i'm with you bertie, but i wouldn't necessarily call it rampant. and unless my cheap boss is gonna give me a raise, this inflation won't help anyone but large corporations.

Inflation is a hell of a lot better than continuing the current deflation situation.

too all you import lovers might be time for you to start buying Japanese made products keeping them money in Japan. controlled inflation is a hell of a lot better than uncontrolled deflation which is what has been hurting the economy all these years. simple economics export more than you import while not overspending, which many economies have failed at miserably over the years

Oh, boy! This is really gonna create huge problems down the line. How about an inflation rate in double figures within three years? Move over Spain! Here comes Japan!

I wish the BOJ would double my money supply. So far my income looks the same.

"The idea is that increasing the amount of cash in circulation will help push prices higher." just the sort of news you like to hear (pure sarcasm sorry)

The idea is that increasing the amount of cash in circulation will help push prices higher

The problem is, there is too much money sitting in closets and pillow cases, which the banks cannot touch. The scrooges keeping billions of yen in their homes are the source of this problem and they are the ones who the BOJ attempted fix will effect the least.

in hopes of getting corporations and consumers to begin spending more in a virtuous cycle that would put growth back on track

Spending more? BS. Taxing more.

Love to see Barnanck/Abe square off in musical chairs. Winner gets to print the most money. Growth/pay raises come from more production/lower prices. I saw a slow cooker on the shopping channel selling for more the ¥10,000. Same one would cost you half that in the States. Think I'll buy stock in large home freezers.

Time to sell JGBs at alltime record high prices to BOJ, and use Yen to buy Nikkei, properties and foreign assets.

If only that double supplied money comes directly into my pocket. I need it now very badly. I was laid off again last march 20 and the company hasn't released yet the risokojo for my unemployment insurance.

Government contractor. Get paid in dollars. All my bills are yen. This is huge for people like me. After years of 75-83 yen to the dollar, a lot of us scraped by. I will be spending more for sure. 1 up for me and the economy.

"If prices don't go up ..." They have already started to go up. Petrol is up about 10 yen a litre. I have noticed some other prices have gone up, too. Unless wages go up, we will in effect be earning less, which will make us poorer. If we keep our savings in yen, our savings will lose value and that will make us poorer, too. So what should people do: first of all they should move their savings overseas if they haven't already done so. After that they should start to demand wage increases.

Bank accounts in Japan might be acceptable when the yen increases in value, but when the yen is going down and the accounts pay virtually no interest, it is time to move money elsewhere or buy something solid like gold.

Well done, Abe. You are making everyone in the country poorer.

Planing for more spending while the people's salary remains the same.Abe should better stop this system because it only good for big companies like Toyota and others.

Good grief, this abe is so incompetent it's laughable. He wants people to spend more. 40% of workers here are on rubbish temporary contracts, including most foreigners it seems. They won't be spending and wages/salaries are not rising generally. And next year, consumption tax rises to 7%. All laughable if it wasn't so serious.

With a shrinking and aging population Japan - mainly an industrial economy - needs deep structural reforms and immigration to maintain its level.

Ignoring that and playing Monopoly is just a fart in the water!

@gaijintraveller

Bank accounts in Japan might be acceptable when the yen increases in value, but when the yen is going down and the accounts pay virtually no interest, it is time to move money elsewhere or buy something solid like gold. Well done, Abe. You are making everyone in the country poorer.

The currency war is going to happen, if not already if the yen stays weak for too long!

Same like here in US. Everything imported is more expensive here with the Fed QE while the banks pay almost zero interest rates. Looks like a massive ponzi scheme by the government to move assets from one class of the population to another class in the name of saving the banks and manufacturing, but I think the fix is only temporary, not sustainable.

Abe should not copy the failed US approach of endless yen printing. It will make every Japanese salarymen poorer with no guaranteed long term successful outcome since the competition will make sure Japan do not have the export advantage at their expense from a weakened yen!

There's only one reason for this, and it ain't got nothing to do with stimulus or growing the economy. They need to devalue the currency so it will be easier to pay off the debt, as well as keeping interests at zero so the interest on the debt won't grow larger than GPD. Then all those construction workers building roads going in circles would lose their jobs.

"If prices don't go up, wages don't go up. If people believe prices will be higher six months from now, then they will believe it's best to buy now rather than later,"

I don't know "who" are his targets??? for a normal person, most of their salary goes to rent, food and transportation. and I have no idea how to buy them right now.

Sad to say that BOJ has lost an independence officially today.

I see Mr. Amari from Abe cabinet members is sitting with them. What is he doing there? He should not be involved at all. And yet, Japanese media has nothing to say or they are too dumb to notice it.. The world financial leaders will notice it though.

well I export for a living and already it helping me making the goods I export cheaper and more desirable, ill be definately making more money this year thanks Abe finally brought the yen at a level where it should be anybody who says 80 yen/$ is fine is a moron, once upon a time it was over 200 so 100-120 is a fair level considering that the US/Euro/China/Korea/GB are all printing flat out to make there exports cheaper as well.

I dunno, most of the people I know are either retired and have nothing they want to buy, young and broke or working to pay their bills.

YESSSSSS !!!! /dance

Come on 120yen / 1 usd !!!

in hopes of getting corporations and consumers to begin spending more in a virtuous cycle that would put growth back on track after two decades of malaise.

There's the tough part: Getting the Japanese to "actually spend" their Money.

Most Japanese "save" thier money vs. Americans that "spend anything" the government lands in their mailbox's.

For Example: Americans will go to Mickie D's for lunch almost every day (expending on the average $300.00 a month) where Japanese take a Bento to work (expending about $80.00 a month).

The Japanese Housewife normally controls the money and makes those Bento's to help save, and at the end of the year, that little bit of savings averages out compaired to Americans: $220 a month cost savings x12 = $2,640.00

...go figure the odds.

Given that interest rates in Japan are near 0%.. and even this hasn't sparked off consumptionm what does the BoJ and Gov't expect when the rates start to rise?.. because lenders fear inflation and will have to adjust rates to compensate for the fact 100yen today will buy less tomorrow

or when inflation starts to run rampant, will we see contractionary policy?

either way, I have no confidence this will work in the end.. a rapidly aging population isn't interested in buying houses and cars

Why not? Way overdue for bold action after decades of stagnation and deflation.

Japan's economic malaise has had tremendous costs and it's surprising that some here advocate just continuing the status quo with chronic "endaka" as companies can't afford to compete, expand and employ.

Of course, reforms are also necessary - hopefully "abenomics" will attempt comprehensive structural change to reverse Japan's economic decline.

And of course there are risks, this should have been attempted decades ago before all the debt from dubious infrastructure and stimulus programs was wasted. But better to try to inflate your way out of the current mess- rather than do too little as usual.

In electronic edge nobody see money, all is going through wires and where will end up is not always where is needed..

p.s if wage increases don't match inflation then everyone is worse off in the end

I think a precision needs to be made. Inflation is often calculated as the increase in consumer prices, but the reality is that the monetary phenomenon of inflation implies that both prices and wages increase because of more money being in circulation. After all, one man's spending is another's revenue, so if prices increase, revenues and incomes should increase similarly.

So for the people who fear that higher inflation means lower wages and higher prices, calm down. Higher inflation, if generated from monetary inflation, means both high wages and higher prices. You might ask: what's the point then? Well, the point of increasing inflation is to reduce the burden of debts strangles the economy, and hopefully get liquidities moving around a bit more, perhaps creating economic opportunities.

I'm rather stupid when it comes to economics, but I think this move is more about making more Japan competitive in overseas markets. Nearly every other major economy has devalued their currency with the express purpose of making exports cheaper for foreign consumers. Japan is simply countering so they can remain competitive. If people stop buying Japanese made cars, electroinics, etc. because they are too expensive, Japanese corporations take huge hits in their profits margins. Profits go down, wages go down, unemployment goes up, people stop spending. If Japanese business remain competitive, profits go up, wages go up, more jobs are created, people start spending. Should this happen, the market will adjust itself accordingly.

The problem with that way of thinking is that it totally ignores the social and human dimension and has brought the country in this situation in the first place

Increasing the amount of available paper yen is not going to help the middle class Japanese citizen,this just causes far more personal debt..sure those with huge cash reserves might spend a little more but not the average person..In the US the federal bank has been issued trillions of US dollars via the us treasury and all at very low or zero interest..As a result average household incomes have decrease by about 10 percent over the past 4 years and prices for energy,food and other staples has increased by 15 percent and more...Yes,this quantitative easing scam has caused the the middle class to spend more but it has nothing to do with the will of the population to spend more money and everything to do with increased consumer spending to cover basic survival needs.. Devaluing the Yen will not cause any improvement in the Japanese economy for one simple reason, and that reason is...Most all the raw material/resource that japan uses today for most all of its industrial output is imported.from other countries,.so while imported consumer goods will rise in cost, domestic prices also will increase,including food or anything else that must rely on imported oil/Ng/coal/metal ores/wood, even cotton for production to take place. Everything is relative in today's world economies and national monetary systems .One country can not out compete another simply by printing paper currency, that serves only to creat higher national debt and further increases poverty among the populace..only the very wealthy gain from such policy.

So for the people who fear that higher inflation means lower wages and higher prices, calm down. Higher inflation, if generated from monetary inflation, means both high wages and higher prices. You might ask: what's the point then? Well, the point of increasing inflation is to reduce the burden of debts strangles the economy, and hopefully get liquidities moving around a bit more, perhaps creating economic opportunities.

@kchoze

You must not be familiar with Japan!? Your premise is based on the idea that companies will increase wages. It simply means more people will have to work more maintain their standard of living. You are sorely mistaken which is why the weakened yen screws most of us!

Buy Nikkei, properties & reits and sell JGBs & Yen. Buy exporters shares and sell utilities shares. Buy foreign shares & properties and sell Yen. Inflation on imported goods will be strong.

Companies WILL NOT increase wages. Why would they when there is an endless supply of fresh work units available?? A capitalist's dream. And in Japan workers are contented to work all hours for no pay.

Japanese companies have already begun increasing wages. Please pick up the Nikkei newspaper and read it from time to time.

Ina0891----

What exactly is "the social and human dimension and has brought the country in this situation in the first place"?

I doubt that most of them will increase wages when their profits are stagnating or decreasing although many probably will .

On the long term though , i'm not sure having an even weaker yen will help the population , some companies will export more easily , but the cost of energy and imports will rise and the average citizen will feel that more than if the top Nikkei companies make more profits . I also think the central bank should loan more money to productive investments

Japan is a very rich country with an impressive debt , but most of it being owned by them , so in the end it(s the population that will have to tighten its belt , i think a better redistribution of wealth is in order , especially among the youth in a country that is ageing rapidly , i'm also worried that they start printing so much money , inflation leads to a higher cost of living , it's never a good sign when a country resort to this in order to pay the interests of a past debt , it's a vicious circle , what will the yen be worth in the future if the stimulus fail ?

i try to gauge the cost of living at any time by the ratio of the price of one loaf of bread versus a standard wage. A bit silly but somewhat of an indicator. The idea is great in theory but like the article says a 'norma'l consumer might not just start throwing money out the windows because prices go up when wages stay the same. Overhere there's been a two percent increase this year (that's about three train tickets a month for a standard wage) and a cut in cost for employers to stimulate them hiring new people. It's all patchwork all over the world, make do. Like the plan to get hoarders spend money by keeping intrest rates in banks low didnt really work either in Europe i think. If all else fails they can still go robin hood and pull a european cyprus, steal from the rich in a populist move like that. I dont think there's any short-term solutions available anywhere really. Then again, i'm not an overpaid overdegreed expert on the matter. Just a minimum wage person who needs to live at his parents house since the alternatives arent really acceptable.

"Ina0891----

What exactly is "the social and human dimension and has brought the country in this situation in the first place"?"

i meant following an economic dogma that may or may not work but without taking into account the consequences on the civilian population : increased of the divide between rich and poor , impoverishment of the youth , rising cost of living and stagnation of wages , demographic slump , crisis of confidence

Japan followed a model that has been successful in the past but that is no longer working as intended , they didn't manage to invert the tendency since the 1980's and to be honest it's unlikely printing more money will solve much , stimulus work better in countries where people traditionally spend more and save less than in Japan

So basically , what i meant is that beyond some risky monetary policy measure , Japan needs a larger , deeper and more ambitious project for its society as a whole if they want to bring back confidence into its people , i may be mistaken though , just my opinion

I understand your point. Then again, this is an economic policy designed to address a broad economic problem. I don't think it was intended to solve social or political issues of revive Japanese "society as whole." Those are solved my social policy and political reforms, no?

It seems your suggesting that Japan adopt a single broad-sweeping policy to solve all of it's problems in one shot. Personally, I think Japan is going through many transformations right now--foreign policy, political structures, welfare programs, etc.--are all being rethought and retooled. Japan's knows full well they are in trouble. But, we have to look at this particular policy for what it is, not what we wish it could be. It's intent lies behind improving a stagnate economy, not completely overhaul Japanese society.

It may work, it may not. Time will tell. But, the fact remains, Japan has to do something to remain competitive in the global market. All major currencies has been de-valued in the wake of the financial meltdown. Japanese business have been getting hammered in overseas markets and Japan held out for a long time before making this move.

One point I think many people don't considers is that while Japan's does have a massive about of internal debt, they are also the world's largest creditor buy a huge margin---a very large portion of it to China.

A vision from Europe: Short visual explanation of Japan’s debt problem. Understanding of Japan’s debt crisis and Global economy collapse - http://www.miguelangeldiez.com/charts