The Market Sentimentalist: Bitcoin And Beyond

Amareos

Ryan Shea

Thematic (Sector/Industry)

Ever since the Great Recession, the world economy has been suffering from a malaise that has come to be known as the “New Normal”; one where real activity is weaker than anticipated and where sustained positive inflation rates in line with central bank mandates have proved elusive.These are afflictions that the Japanese economy has been suffering from for over two decades. As a result, many of the unorthodox monetary policy measures adopted by the BoJ have subsequently been adopted by their peers. Hence, in a very real sense, Japan’s central bank can (and should be) considered a monetary policy vanguard.For all that, Abenomics has so far failed to deliver on its reflationary promises and the Governor Kuroda has promised a “comprehensive assessment” of its monetary policy programmes, at the next policy board meeting slated for September 20-21st with a view to achieving the 2% inflation target “at the earliest possible time”.Given present sentiment levels, it is clear the crowd is not anticipating “shock-and-awe” from the BoJ this month. This may well be right, but given how hard Kuroda has tried to achieve (unsuccessfully) to hit his 2% target, and given the clear unsustainability of Japan’s fiscal position, we are fast approaching the time when the last-resort policy option (outright monetary financing) may be all that is left.

Ever since the Great Recession, the world economy has been suffering from a malaise that has come to be known as the “New Normal”; one where real activity is weaker than anticipated and where sustained positive inflation rates in line with central bank mandates have proved elusive.These are afflictions that the Japanese economy has been suffering from for over two decades. As a result, many of the unorthodox monetary policy measures adopted by the BoJ have subsequently been adopted by their peers. Hence, in a very real sense, Japan’s central bank can (and should be) considered a monetary policy vanguard.For all that, Abenomics has so far failed to deliver on its reflationary promises and the Governor Kuroda has promised a “comprehensive assessment” of its monetary policy programmes, at the next policy board meeting slated for September 20-21st with a view to achieving the 2% inflation target “at the earliest possible time”.Given present sentiment levels, it is clear the crowd is not anticipating “shock-and-awe” from the BoJ this month. This may well be right, but given how hard Kuroda has tried to achieve (unsuccessfully) to hit his 2% target, and given the clear unsustainability of Japan’s fiscal position, we are fast approaching the time when the last-resort policy option (outright monetary financing) may be all that is left.

Listed Index Fund JPX-Nikkei Index 400 (1592 JP)

The World's Most Important Central Bank (It's Not the Fed)