Japan and the Myth of Independent Central Banks

Let's start about the following quote from Wikipedia on the Bank of Japan (BoJ):

A major 1997 revision of the Bank of Japan Act (jp:日本銀行法) was designed to give it greater independence;^[10] however, the Bank of Japan has been criticized for already possessing excessive independence and lacking in accountability before this law was promulgated.^[11] A certain degree of dependence might be said to be enshrined in the new Law, article 4 of which states:

In recognition of the fact that currency and monetary control is a component of overall economic policy, the Bank of Japan shall always maintain close contact with the government and exchange views sufficiently, so that its currency and monetary control and the basic stance of the government's economic policy shall be mutually harmonious.

However, since the introduction of the new law, the Bank of Japan has persistently rebuffed government requests to stimulate the economy

Now Bloomberg headlines:

Feb. 10 (Bloomberg) -- The Bank of Japan is set to refrain from additional monetary easing next week because of signs of strength in the global economy and the boost from reconstruction work after last March’s earthquake.

Governor Masaaki Shirakawa’s board will maintain the overnight lending rate at between zero and 0.1 percent on Feb. 14, according to all 13 economists surveyed by Bloomberg News. A 55 trillion yen ($712 billion) asset-purchase program will remain unchanged, 12 said. 

What happened just 4 days later?

Feb. 14 (Bloomberg) -- Japan’s central bank unexpectedly added 10 trillion yen ($128 billion) to an asset-purchase program and set an inflation goal after an economic slide fueled criticism it has been slower to act than counterparts. 

An asset fund increased to 30 trillion yen, with a credit lending program staying at 35 trillion yen, the Bank of Japan said in Tokyo today. The BOJ also said that it will target 1 percent inflation “for the time being.” 

Stocks rose and the yen weakened against the dollar as the central bank expanded stimulus for the first time since October to revive an economy that shrank an annualized 2.3 percent last quarter. Lawmakers had urged extra efforts to counter deflation after the Federal Reserve adopted a 2 percent inflation target and the European Central Bank expanded its balance sheet. 

Today’s decision “shows the BOJ bowed to political pressure,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “There will probably be limited impact on the yen’s gains.”

These reports show two things:

1. The economists, this pathetic bunch, are always wrong, and heard on the exact opposite side of what is really going to happen.
2. Independent Central Banks are independent for only as long as they act in the way that pleases the Government and they do what the Gov expects them to do. After all, their independence is given by the Government, and can be taken back anytime, with a simple law. For this reason, the same way that the Japanese government can force the BoJ into more easing, the US Government will at some point force the Fed into stopping the madness — or force the US into defaulting on their debt, since the Fed QE programs do nothing but adding more debt to the US balance sheet...

Whatever the outcome, it's time to put an end to this. Hopefully, we'll have a peaceful end with Ron Paul. 30 years of deflation, or 3 years of hyperinflation are too destructive of the people, the economy and the country as a whole.