Thursday, November 17, 2016

Our financial markets are fake

"The Bank of Japan ...announced its first operation to buy an unlimited amount of securities to maintain its yield-curve target the wake of a global bond sell-off in the past week that had driven up yields across the globe -- and in the process put pressure on Japanese government bonds as well.

"buy an unlimited amount of securities"
with money created by pushing a button on a computer

“The aim is to send a warning to markets about a significant surge in rates,” said Keiko Onogi, a fixed-income strategist at Daiwa Securities Co. in Tokyo...

Kuroda said in parliament following the announcement that the central bank won’t automatically allow Japanese rates to rise if rates rise in the U.S. He reiterated the BOJ is aiming for a 10-year yield of “about” zero percent...

Artificial stabilization leads to higher levels of instability

...the BOJ said it stands ready to conduct fixed-rate JGB purchase operations at set or unlimited amounts “in case of a spike in interest rates” to prevent yields from “deviating substantially” from target levels.

About $200 Billion per month is created from nothing world wide
to keep the population calm

Bonds worldwide lost more than $1.2 trillion last week, surpassing the taper-tantrum of June 2013 as the largest ever slump in market value...

Japan wants its currency low to make its exports less expensive
in US dollar terms, which is essentially dumping by other means

“The BOJ will have welcomed the rise in Japanese stocks and decline in the yen following the Trump Shock, but they’ve shown they aren’t going to stand for a jump in JGB yields..."