Japan’s Solution To The Earthquake-Tsunami Problem: Inflate The System!

Central Bankers are almost so predictable.

For almost every social problem that crops up, the intuitive measures adapted appear to be always based on the path dependency of inflationism.

It’s no different with Japan.

From the Wall Street Journal, (bold emphasis mine)

The Bank of Japan jumped into action Monday to temper the economic blow from the earthquake, tsunami and nuclear emergency that hit northern Japan, doubling the size of its asset-purchase program and pouring a record 15 trillion yen ($183.17 billion) into money markets to ease liquidity concerns.

"What we were most concerned about was the possibility that increases in anxiety and risk-aversion moves would negatively affect the real economy, so we judged it appropriate to mainly boost purchases of risk assets," BOJ Gov. Masaaki Shirakawa said after the bank's policy board meeting, which was cut to one day from two because of the crisis.

The board boosted its purchases of riskier financial assets, such as corporate debt, exchange-traded funds and real-estate investment trusts, by a total of 3.5 trillion yen. It also will buy an additional 1.5 trillion yen of government debt.

That doubles the size of the central bank's asset-purchase facility—part of a temporary fund established on the bank's balance sheet—to 10 trillion yen. The BOJ also has a program under the fund to provide 30 trillion yen in three- and six-month loans at 0.1% interest.

To revise the popular quote of the late Senator Everett Dirksen, "A billion trillion here, a billion trillion there, and pretty soon you're talking real funny money."