why further qe is unlikely, page-31

ProPunter

You are looking for evidence of government actions that are likely to cause inflation (or devalue the currency) and stimulate the price of gold. You picked a bad example!


The Japanese government as been in the toilet for twenty years, borrowing and printing to pump money into the bottomless pit that is the shell of the Japanese banking system.

If that money had found it's way into the broad economy, you would expect it to have been spent or lent, generating consumption. If that consumption caused demand to exceed supply at given prices, prices may have risen and there may have been inflation.

But it didn't happen. Inflation is flat, and the Yen has remained strong!

The Japanese government haas borrowed and printed trillions in the last twenty years, and nothing happened. No inflation. No recovery in asset prices. They are still in the toilet.

It is interesting to conjecture as to whether the same will happen in the US. There are structural difference between Japan and the US. I am inclined to think that they are more similar than you would want to hear. In the US, deflation is still a much greater risk than inflation, and that is not good if you think that price rises in Gold will depend on inflationary expectations.

Cheers