An advisor to Japanese prime minister Shinzo Abe says Bank of Japan Likely to Take Bold Easing Action at its next meeting in September.

The advisor, Etsuro Honda, calls it the “Spirit of Abenomics“.

Etsuro Honda Quotes

  • “Monetary policy hasn’t been eased enough.”
  • If the central bank began to rein in its stimulus after the review without achieving its 2% inflation target, “we would never, ever be able to get out of deflation.”
  • There is “more than a 50% possibility of bold monetary easing measures” in September.
  • Yen’s strength “is clearly excessive”.
  • “I think it is fine for us to take bolder policy measures [on the yen], no matter what the U.S. may say.”
  • “The bank should raise its monetary base target—or the amount of cash it pumps into the banking system—by 25% to ¥100 trillion (around $1 trillion) a year. It should do so mainly by buying Japanese government bonds at a faster annual pace than the current ¥80 trillion.”
  • The effects of quantitative easing may be diminishing compared with a few years ago, but “what we should say is, ‘Effects are diminishing, so let’s do more.’ This is the spirit of Abenomics.”

Questions of the Day

Q: Who is this genius?
A: Honda is Japan’s ambassador to Switzerland.

Q: How much influence does an ambassador to Switzerland have over Abe?
A: Uncertain (darn it, there’s that word again).

Spirit of Central Banking

Shinzo Abe

Not only does Honda summarize the “Spirit of Abenomics” rather well, he summarizes the “Spirit of Central Banking” in general.

Yet, we can improve upon his spirit thesis a bit. Here is the correct phraseology as applies to central banks in general.

“Trust the models. If it doesn’t work, keep doing it until it does work.”

Mike “Mish” Shedlock