The Bank of Japan threw a shock-and-awe bombshell into their markets, and world markets, by announcing a massive program of thin-air money printing designed to finally crush the dreaded deflationary monster that has been stalking the Land of the Rising Sun for two decades.
The plan, quite simply, is to fully double the monetary base of Japan in just two years. Of course this is how you get inflation – you print money, which creates some awkwardness for the other central banks that are skirting the question of future inflation from their own money printing efforts.
Here are the pertinent details:
BOJ Launches Bold Plan to End Deflation
Apr 4, 2013
"I will not use my fighting power in an incremental manner," Mr. Kuroda told a news conference following the two-day meeting, one of the most closely watched in the central bank's recent history. "Our stance is to take all the policy measures imaginable at this point to achieve the 2% price stability target in two years."
Those measures include the doubling of its holdings of Japanese government bonds and exchange-traded funds over two years. As a result, the BOJ would be buying ¥7.5 trillion ($79 billion) of JGBs a month, up from the current ¥3.8 trillion. The central bank will also expand purchases of real-estate investment trusts.
First, you have to love the linguistic, perhaps Orwellian, mash-up of ideas contained within the phrase “2% price stability.” If prices are escalating in an exponential manner, which anything that is constantly growing by some percentage certainly is, then we note that this word ‘stability’ does not mean what bankers think it means.
I know, I know; they are just using marketing efforts to get their plans accepted by the general public. But it still comes off as a bit odd.
The real shocker is the size of the program, which weighs in at $79 billion per month. For context, that is 93% as large as the United States’ own $85-billion-per-month printing efforts, while the Japanese economy is only one-third as large. So in terms of weighted impact, the Japanese efforts are nearly 300% larger than the U.S. printing efforts.
by nate 
