theautomaticearth.com / by Raúl Ilargi Meijer / November 6, 2014
I think I should come back to what I wrote yesterday in The Revenge Of A Government On Its People, because in my view the essence of that essay deserves far more attention than I see it get, either in reactions to my piece or in the financial press as a whole.
That essence is that, as reported by Reuters yesterday morning, Bank of Japan Governor Haruhiko Kuroda, in a speech at a seminar, stated that last Friday’s surprise QE9 measures were a reaction to one thing, and one only: falling oil prices. This was not announced on Friday, and nobody is addressing it now, though it is a crucial piece of information. First, here’s Reuters:
BOJ’s Kuroda Vows To Hit Price Goal, Stands Ready To Do More
“There’s no change to our policy of trying to achieve 2% inflation at the earliest date possible, with a roughly two-year time horizon in mind ..” [..] “There are no limits to our policy tools, including purchases of Japanese government bonds .. ”
Kuroda said while inflation expectations have been rising as a trend, the BOJ decided to ease to pre-empt risks that slumping oil prices will slow consumer inflation and delay progress in shaking off the public’s deflationary mind-set.
“In order to completely overcome the chronic disease of deflation, you need to take all your medicine. Half-baked medical treatment will only worsen the symptoms ..” While he stressed that Japan’s economy continued to recover moderately, Kuroda said falling commodity prices could be risks to the outlook if they reflected weakness in global growth.
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