HOT: Bank of Japan EXPANDS Stimulus

Following the footsteps of the ECB and in the face of today's reported collapse in household spending, the BoJ expands stimulus to send the Nikkei flying by over 4% (as well as global stocks) as of this writing.

From the Financial Times:

Japan's central bank has given in to calls to crank up its monetary stimulus programme as the early gains from prime minister Shinzo Abe's economic revival campaign have faded.

The BoJ said in a statement that it would expand the country's monetary base to Y80t per year, from the Y60t-70t level it has targeted since last April in what was already an aggressive asset purchasing scheme.

Data released earlier on Friday showed the bank is far from achieving the 2 per cent inflation target it had set for next year.

The BoJ has pursued this goal as a means of dragging the nation out of the deflation that for decades had drained corporate confidence and prompted consumers to put off big purchases as a hangover from the late-1990s banking crisis.

Governments have become so desperate as to anchor on the monetary pixie dust for economic salvation.

Yet as I previously wrote

It’s a wonder how the Japanese economy can function normally when the government destabilizes money and consequently the pricing system, and equally undermines the economic calculation or the business climate with massive interventions such as 60% increase in sales tax from 5-8% (yes the government plans to double this by the end of the year to 10%), and never ending fiscal stimulus which again will extrapolate to higher taxes.

What all these does will be to extend and pretend in the hope that things will improve but in actuality would only accumulate more imbalances until the system snaps. The BoJ's actions signifies as doing things over and over again yet expecting different results.