We have commented to our clients in our meetings that Japan is a real danger to disrupting the world. The BOJ may have just started to play with fire.

Global Macro Monitor

The WSJ does a good explaining what is driving the Yen and seems to agree with us that there is a huge difference between quantitative easing to stimulate the economy versus monetizing bad government debt for which there is no demand.

The Germans seem to be the only people on earth who fully understand this and recognize that money demand could collapse if markets realize and begin to internalize the difference.  This is surely not the type of inflation Japan wants.   Or maybe it does?

We don’t think Japan is there just yet but it is inevitable, in our opinion.   Ditto for the U.S. unless Congress begins to address the structural deficit and the country’s debt problem.

The Wall Street Journal writes,

The distinction—between buying bonds to stimulate the economy and doing so to bail out free-spending politicians—is important to economists and central banks.

The controversial practice of…

View original post 314 more words