Tags: Little | Japan | currency wars | economy

Money Manager Little: Japan Fires 'Another Shot in Currency Wars'

By    |   Thursday, 20 February 2014 09:27 AM

The Bank of Japan (BOJ)'s decision Tuesday to extend special loan facilities by one year and double the size of funds available to banks represents more of the same in its effort to boost the economy, money manager and author L.A. Little writes in an article for Minyanville.

"Japan fired another shot in the currency wars," he says. "It's locked in a struggle to boost exports and create inflation and hopes to remove the veil created by three decades of stagnation."

Trillions more yen will be created/borrowed for the financial sector in an attempt to force/encourage more borrowing, Little says. "The belief is that economic activity will benefit and all will be better off as a result."

Editor’s Note:
18.79% Annual Returns . . . for Life?

But Little questions the wisdom of Japan's strategy. "Looking back on the last 30 years in Japan, was low or slightly negative inflation all that bad for its citizens?" he asks.

They didn't actually come out worse than people in the rest of the world during that period, given all the major booms and busts that took place, Little says.

The problem: "creating inflation is the sole objective of central bankers," he writes.

"As for finding a way to benefit from the insanity, short term the Japanese stock market should outperform again as the relative value of its currency is shaken lower."

Others also view the BOJ's loan decision as a significant accommodative step.

"The doubling of the lending facility is seen as a dovish signal that the BOJ is prepared to ease further — that it's committed to keeping liquidity extremely loose," Izumi Devalier, a Japan economist at HSBC Holdings in Hong Kong, tells Bloomberg.

Editor’s Note: 18.79% Annual Returns . . . for Life?

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The Bank of Japan (BOJ)'s decision Tuesday to extend special loan facilities by one year and double the size of funds available to banks represents more of the same in its effort to boost the economy, money manager and author L.A. Little writes in an article for Minyanville.
Little,Japan,currency wars,economy
310
2014-27-20
Thursday, 20 February 2014 09:27 AM
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