Tomorrow?, page-69

Hi timber

Thinking about the hyperinflation....

Examine the structure about to be employed in Japan. The pension fund is to go into the market and buy stocks and property assets. The funds to do so will come from the sale of their Japanese Govt bonds ....which the BoJ will buy [with self created credit]

So what actually is happening here?

Pretty simple. Through this mechanism, the BOJ is creating more money and via the pension fund it is directly circulating it into the economy. Asset prices [Nikkei et al] immediately jumped ... the pension fund will be paying top dollar and the willing sellers will have more cash in their hands.

This is not about restructuring the assets of the pension fund to ensure a greater future return..... its using the pension fund to increase the velocity of money.

The raw number [approx $US750 billion] is not a lot by today's standards but in terms of a percentage of the GDP number it is about 3 times the size of that done by the US .... so far.

The arguments you put regards the QE in the US are still valid [though, I am not sure they will continue to keep that money out of the system indefinitely] ... but this little exercise Japan has launched into is classic, early stage, hyperinflation.