After more than twenty years of stagnation and increase in its public debt, Japan appears ready to break this vicious circle. Unfortunately, the solution proposed by the new Government led by Shinzo Abe looks more like sailing full steam ahead towards a monetary and economic Pearl Harbor.
As a result of government pressure, the Bank of Japan announced that it set a target for inflation of 2% and will launch a program of quantitative easing without an expiration date, starting in January 2014, as part of which it will begin purchasing 13 trillion yen (152 billion dollars) of government bonds monthly.
Prime Minister Abe has welcomed the decision of the Bank of Japan and described it as historic. Markets were disappointed that the show is slow to start and bought the yen, strengthening it.
What does it feel like to Bernanke, whose latest unlimited money printing program is "just" 85 billion dollars a month? Will he want to exceed the new standard of monetary insanity and end his term at the helm of the Federal Reserve in an ocean of confetti?
Before any reaction from the Fed, major industrial groups in the United States were already complaining. A recent article from Bloomberg said that "auto manufacturers in the US are asking President Obama to punish Japan for its weakening of the yen." The urge came from the Automotive Policy Council, a group which comprises Ford Motor, General Motors and Chrysler. US car manufacturers are convinced that the depreciation of the yen leads to disrupting trade relations between the two countries, and this policy is unacceptable", Bloomberg further writes.
It remains to be seen whether President Obama will be able to satisfy the wishes of each of its domestic lobby groups, especially since the viability of the auto industry is viewed with skepticism in the White House. "A White House insider told me that the
