To be honest, I am happy to have lived long enough to attend such crazy situations — even if it's from very far, in order to have a false sense of security away from the radiation.
And I hope I'll leave long enough to see the fall of the JGBs, the collapse of the Yen to zero, and death of the BoJ.
March 25 (Bloomberg) -- Bank of Japan Governor Masaaki Shirakawa is under fire for refusing to consider 1930s-style purchases of government bonds to fund reconstruction from the nation’s record earthquake.
Shirakawa repeatedly attempted to quash direct buying of government debt, a step allowed in extraordinary circumstances with the permission of the Diet, in appearances before lawmakers this week. The policy would undermine confidence in the yen and provoke a surge in consumer prices, he said at parliamentary fiscal and finance committee hearings.
“If this isn’t a special situation, what is?” Kozo Yamamoto, a Diet member with the opposition Liberal Democratic Party, said in an interview this week. Yamamoto advocated a 20 trillion yen ($247 billion) reconstruction program funded by BOJ debt purchases. A group of ruling-party lawmakers submitted a similar proposal to Finance Minister Yoshihiko Noda on March 18, according to a web log posting by DPJ member Yoichi Kaneko.
Kaneko’s group cited Japan’s experience of the 1930s as evidence that BOJ purchases of public debt are an effective means of ending deflation.
“Bank of Japan bond underwriting is a policy that is evaluated highly worldwide because it helped Japan recover from the Great Depression before others,” when the policy was implemented by then-finance minister Korekiyo Takahashi, the Kaneko group’s proposal said.
Takahashi boosted spending by 34 percent in the 1932 fiscal year, financing it by doubling bond issuance, according to a report by the Japan Center for Economic Research. While the effort helped end deflation, much of the outlays were used for the military, and Takahashi made enemies when he later attempted to rein in inflation. He was assassinated in 1936.
The BOJ has purchased JGBs through the secondary market, and includes the securities in its 10 trillion yen asset- purchase plans. The Fed and ECB’s programs are also done through the secondary market.
Under Takahashi’s initiative, the BOJ’s underwriting continued for 14 years until the end of World War II, with the ratio of bonds bought by the central bank peaking in 1933 at 89.6 percent, according to a 2001 paper by the central bank.
Today, the Bank of Japan has a self-imposed rule of not holding more JGBs in its portfolio than banknotes outstanding. Shirakawa today said the BOJ is “currently buying a large amount of government bonds” to offer abundant cash to financial markets.