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Japan to keep printing money for years to come, so learn to enjoy it

Japan to keep printing money for years to come, so learn to enjoy it

The Bank of Japan will have to mop up the entire issuance of public debt for years to come, covering the budget deficit with printed money

There are no one-way bets in global finance, but Japan's stock market comes close. The authorities are about to funnel large sums into Japanese stocks openly and deliberately under the next phase of Abenomics, both by regulatory fiat and by purchasing the Nikkei index directly with printed money.

Prime minister Shinzo Abe is unshackling the world's biggest stash of savings, the $1.3 trillion Government Pension Investment Fund (GPIF). Officials say the ceiling on equity holdings will rise from 12pc to around 20pc as soon as August, opening the way for a $100bn buying blitz.

Fund managers are suddenly in a race to get there first. Japan Post Bank – where Mrs Watanabe dutifully places the family money, confiscated from her Salaryman each month before he can spend it – is itching to rotate more of its $2 trillion holdings into equities before inflation pummels the bond market. So is Japan Post Insurance, no minnow either at $850bn.

Mr Abe's move comes sooner than expected and amounts to a market shock, though nobody should be shocked anymore as he keeps doubling down on the world's most radical economic experiment.

The Nikkei index stalled in December after rising almost 100pc since September 2012, even though the Bank of Japan (BoJ) is still showering the economy with money, buying $75bn of bonds each month. The BoJ's balance sheet will reach 70pc of GDP by March 2015, three times the US Federal Reserve's.

Keep reading Japan to keep printing money for years to come, so learn to enjoy it – Telegraph.

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