Global Inflation In Japan Does Not Speak German

Being able to compare European inflation rates with their American counterparts helps expose what’s driving the latter and it’s not inflationary currency. Comparing both of those inflation regimes with the Japanese simply exposes the Bank of Japan and QE. This was perfectly obvious before the base 2020 CPI estimates came about.

Central banks, we’re always told, possess the printing press of legend and lore. The stories surrounding this currency-cranking machine are always of the cautionary variety by purpose: be very careful lest any printer let too much paper escape and unleash inflationary totality. Not for nothing, this story is always related in German for equally obvious reasons.

Not just possess, the 21st-century central banker is no longer the one who merely threatens to unleash its power. Confronted by big monetary and economic problems, one after another (this seems to be important), the world’s collective money printers have gone literally insane with electric activity.

None more so than the Japanese. Already stuffed to the rafters with bank reserves, supposedly the digital “paper” currency product of this era’s technical output, going back to last February (up to May 2021, the latest average figures posted) the Bank of Japan added another ¥116 trillion to so-called base money which had already reached ¥344 trillion before this latest senselessness began.

In raw terms of BoJ’s balance sheet, the totality of this latest QE LSAP, the increase from February 2020 to July 2021 was also ridiculous: rising from the prior absurd ¥585 trillion to coming in on three-quarters of a quadrillion (¥723 trillion). The ¥138 trillion increase in total assets purchased simply means that the vast majority of those purchases were let straight through the other side of the BoJ balance sheet into bank reserves (only a few dozen trillion being absorbed by other factors).

That works out to an increase in bank reserves of just over 34% in one year and one quarter. Adding another third to, again, what’s called base money already starting from an already-overflowing level of same, this could only result in an equally insane amount of consumer price inflation. And you need not speak a word of German.

If bank reserves are indeed base money.

But they absolutely are not:

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Disclosure: This material has been distributed for informational purposes only. It is the opinion of the author and should not be considered as investment advice or a recommendation of any ...

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