How can you claim that the BOJ is the most powerful CB in the world if Japan lost the war and remains occupied? Clearly the BOJ does whatever it is told to do by outside forces. Your clarification on this would be appreciated.
I did skip a few steps. Japan uniquely among nations, run a capital account surplus at the government, corporate and household level. By that I mean, it invests more in the rest of the world, than the rest of the world invests in Japan. The AVERAGE Japanese person has around USD250,000 saved, versus the average American who would be in debt. So Japanese savings are a massive force in international finance. For years GS used SMFG balance sheet, and Japanese government is the largest holder of treasuries. So when I say the BOJ is the most powerful CB - what I mean is that changes in policy at the BOJ causes changes in the biggest single savings pot in the world -hence when BOJ has tightened rates since the 1990s, financial crisis has followed. Hope that makes sense. Russell
Thank you for elucidating your thought process—although I still think BOJ policy plays second fiddle to the Fed, ECB, and perhaps now even the PBOC. Anyway, I hope you're enjoying the extra volatility so far this month!
What do you think about central bank liquidity peaking in April as the initial spur to the down trend in equities which is then made worse by CH rules? Heard Matt King talking about this on Odd Lots.
The clearinghouse aspect of the volatility machine is not something I read elsewhere, but it makes a lot of sense. So do you think the market volatility still has some ways to go until something “breaks”?
if anything, I suspect that policy reactions to this move are going to drive even more inflation
With property prices already rising - interest rate cuts are hard to see
This is the main hurdle, the barriers to increasing housing supply in English-speaking countries are just too high!
it seems policymakers have made themselves quite an uncomfortable bed
Policymakers follow.what voters want....
Completely agree Russell.
How can you claim that the BOJ is the most powerful CB in the world if Japan lost the war and remains occupied? Clearly the BOJ does whatever it is told to do by outside forces. Your clarification on this would be appreciated.
I did skip a few steps. Japan uniquely among nations, run a capital account surplus at the government, corporate and household level. By that I mean, it invests more in the rest of the world, than the rest of the world invests in Japan. The AVERAGE Japanese person has around USD250,000 saved, versus the average American who would be in debt. So Japanese savings are a massive force in international finance. For years GS used SMFG balance sheet, and Japanese government is the largest holder of treasuries. So when I say the BOJ is the most powerful CB - what I mean is that changes in policy at the BOJ causes changes in the biggest single savings pot in the world -hence when BOJ has tightened rates since the 1990s, financial crisis has followed. Hope that makes sense. Russell
Thank you for elucidating your thought process—although I still think BOJ policy plays second fiddle to the Fed, ECB, and perhaps now even the PBOC. Anyway, I hope you're enjoying the extra volatility so far this month!
What do you think about central bank liquidity peaking in April as the initial spur to the down trend in equities which is then made worse by CH rules? Heard Matt King talking about this on Odd Lots.
Govt policy should dominate CB liquidity. So withdrawing liquidity cause volaitily but no change economically
Hi Russell - what is the relative Japanese bank index
Is it Topix Banks vs Topix?
Topix bank v topix
great post RC - are there any data sources you use to monitor clearing house margin amounts/rates for various products?
Vix tends to be the best visible measure
The clearinghouse aspect of the volatility machine is not something I read elsewhere, but it makes a lot of sense. So do you think the market volatility still has some ways to go until something “breaks”?
In the last few years when clearinghouse "rules" threaten to break the market-policy makers have preferred to break the rules...
Thank you. Btw which BBG ticker do you use to track the movement of BOJ assets size ?
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