Boom! Back to ZIRP

[blazespinnaker]

Not sure why this isn't front page news on iTulip.

http://moneywatch.bnet.com/economic-...old-soars/261/

he Bank of Japan cut interest rates and pledged to keep them at zero until prices stabilize. The surprise move to a “zero interest rate policy” or “ZIRP,” propelled Japanese stocks - the Nikkei average had touched three-week lows, then soared 1.5 percent higher after the announcement. The US dollar is falling and gold is rising on the news.

European shares moved higher on the BOJ decision and a better than expected report on British services activity.

[don]

Re: Boom! Back to ZIRP

ZIRP being a tried and true method of wealth transfer from savers to speculators, apparently Japan's savers have a little something left. A BOJ yen for savings.

[GRG55]

Re: Boom! Back to ZIRP

Not sure why this isn't front page news on iTulip.

http://moneywatch.bnet.com/economic-...old-soars/261/

Because Back to ZIRP it ain't.

By definition, to go back to ZIRP they needed to have moved their interest rates away from zero first. For all practical purposes the BoJ's tinkering with the reference rate near the zero bound means the rate has been effectively at zero for a long time now. This seems to me simply the Japanese equivalent of Bernanke's “I think policy is currently quite accommodative. I think it can remain quite accommodative for a while to come...” - an acknowledgement of the obvious.

[llanlad2]

Re: Boom! Back to ZIRP

Because Back to ZIRP it ain't.

Totally true. It would be news if they went -0.25. Then things may start to get interesting.

[tsetsefly]

Re: Boom! Back to ZIRP

Totally true. It would be news if they went -0.25. Then things may start to get interesting.

Is this even possible?

[blazespinnaker]

Re: Boom! Back to ZIRP

No, because Japan is a cash based society. If you started charging negative interest, people would start stuffing their mattresses.

What we need to do is move the world to debit cards .. then we can go negative interest rates.

GRG55 .. I disagree. This was a surprise move and it is a big deal, and what's happening in Japan right now is generally why gold is jumping so hard.

[GRG55]

Re: Boom! Back to ZIRP

No, because Japan is a cash based society. If you started charging negative interest, people would start stuffing their mattresses.

What we need to do is move the world to debit cards .. then we can go negative interest rates.

GRG55 .. I disagree. This was a surprise move and it is a big deal, and what's happening in Japan right now is generally why gold is jumping so hard.

Surprise? Really?? Come now, you can't be serious.

The only people that could have been "surprised" by this are the same journalists that have repeatedly been [over]using the word "Unexpected" in the headlines of financial event reports for the past year or so.

[mooncliff]

Re: Boom! Back to ZIRP

Yes, I thought it was just funny since it has been near zero for so long, when it went closer to zero it makes no difference... Although they are going to buy up debt it seems!

About 1995 it was already said by many economists here that the equilibrium USD JPY was about 50 yen to one dollar, but the bank of japan kept rates near zero, whereas everywhere else it was say 5 percent, so it was 120 yen to the dollar. Now since everywhere is about zero, the difference is only risk.

[thunderdownunder]

Re: Boom! Back to ZIRP

No, because Japan is a cash based society. If you started charging negative interest, people would start stuffing their mattresses.

What we need to do is move the world to debit cards .. then we can go negative interest rates.

GRG55 .. I disagree. This was a surprise move and it is a big deal, and what's happening in Japan right now is generally why gold is jumping so hard.

Jumping ........ Jumping....... Judas priest its a Saturn rocket with after burners.
Scary shit and unchartered waters. I'm selling red flags that are made in China....
Going Cheap. Cheap.... like the idea of Currency.. It is so cheap it now has no value.
As John Lennon would say Imagine ....Imagine if you could borrow all the Cash in Japan and invest it where it makes 700%pa, more than it costs to borrow. Then take a hedge against the currency your investing in going into reverse during the period your invested. This is what is tearing the World apart. And its happening (and working a treat). Total insanity is doing the same thing you did twenty years ago, getting nowhere, doing the same thing again and again and again while expecting a different result. Golds got some catch up yet because its never ever been used as an insane tool. It just is 'Gold' always will be, always was just an Anchor, you know, an Anchor, that heavy boring bit that hangs around like a male appendage generally at the front of a very expensive Boat. It only become priceless when it is used to save your physical wealth from some jagged rocks when either the tide turns or an unexpected storm hits.
Personally I'm expecting Wind against tide.