Bank of Japan …. At breaking point.

[Hydrogen]

Is the BOJ the “inflation canary in the coal mine” for MMT and by extension the Federal Reserve and, by extension, Gold?

The BOJ have been making some remarkable interventions recently… they dumped 10s of $billions 3x recently to halt the dollar DXY getting much above 109. They own an obscene amount of Japanese assets. (I read Boj owns about 60-70% of Japanese stock market ETFs…) They print and buy $10bn worth of bonds for breakfast … they are the Apocalypse Now pioneers of MMT and helicopter money.

This article is a must read… the house of cards is about to collapse… because the bond market is forcing yields up and the bank is forcing them down….

Could this signal the death of MMT..? This interview with Jim grant is fascinating:

https://www.zerohedge.com/markets/jim-g ... risk-world


“The essential driver of so much of today’s news are the consequences of the monetary regime in place worldwide. That regime has given us artificially low, indeed suppressed rates of interest, and it has given us the consequences of those false rates which include rampant misallocation of capital and great gusts of speculation; some of which are a lot of fun, and some of which are quite lucrative to the clever people who can get in on them.

However, in the wake of the surge in inflation last year, interest rates have risen rapidly. Now inflation seems to be subsiding. Was the rise in prices only temporary after all?
Plainly, the rate of change has subsided, but what is often ignored is the level of inflation. The rate of change is everyone’s preoccupation, but the loss in purchasing power is never recovered. This is the nature of a fiat currency regime. Way back under the gold standard, prices would rise on average and they would fall on average, but at the end of very long cycles, they would be unchanged. In contrast, a fiat currency regime is characterized by the fact that prices ratchet ever higher and never are allowed to correct to the downside. So what we have is a very elevated level of average prices and a somewhat lower rate of rise in these prices.

Then again, the tension in the markets has eased somewhat recently. Stocks have made a surprisingly good start to the new year.

Certainly, the slowing rate of the rise in inflation is to be celebrated. It’s nice, but we are still left with a system that is inherently inflationary. Here in the United States, it’s a system given to very free and loose public spending, given to great entitlements for one and all, and it’s a system that has flourished in recent years with very low, suppressed rates of interest. To me, that’s the essence of an inflation generating system: Politically, inflation is kind of something for nothing, and that seems to be part of the political zeitgeist. That’s why I would be a little bit guarded in pronouncing the end of this inflationary episode.

Why do you think the issue of inflation could keep us on the edge for some time?

Inflation in such a system resembles one of these inextinguishable long-burning underground coal mine fires. I’m not sure if you have them in Switzerland, but in Pennsylvania for example there has been such a fire that’s been going on for around fifty years. You don’t always see it, but it flares to the surface from time to time. It’s always there, it’s always latent, leaking smoke, warming the soles of your shoes. To me, that is a good analogy for inflation in a free spending and paper currency issuing social democracy.