Under the headling, Kuroda Surprises With Stimulus Boost as Japan Struggles, is the following summation:
Today’s decision comes almost 19 months after Kuroda unleashed his initial asset-purchase plan, with the intention of doubling the monetary base. That move similarly drove up stocks and undercut the yen. Since then, a more competitive exchange rate has triggered higher corporate earnings, and asset-price gains have expanded Japanese households’ net worth.
To which the natural reply, given what has transpired and is transpiring, is “so what?”
Language matters and unfortunately orthodox economics has a tight grip on what passes for “stimulus.” We should be more demanding about this kind of redistribution, as that paragraph above demonstrates with accuracy rarely seen of late. The word “stimulus” does not apply broadly, as is obvious by BoJ’s panicked move here.
That said, again what do stock prices say about all of this? The Nikkei cannot be enthralled by the prospects of a worse recession than that of 1997, and surely cannot be fooled by an elevation of QQE that contributed to this ruin in the first place. Markets may not be efficient, but there is certainly some efficiency still in there somewhere.
At this point in time, everybody should be asking themselves what stock prices are actually discounting, and not just in Japan.
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