China, Japan Do the QE Thing While U.S. Markets Sleep

By Tom Luongo in Currency Articles | October 31, 2012 20:45 | Tags: , , , , ,

On Monday the Bank of Japan announced another addition to their near-limitless QE program, ¥11 trillion to be precise.  The market was hoping for ¥15 trillion and as such the Yen promptly rose by 40 basis points.  This is what passes for markets these days.   The front-running of what traders expect central banks to do or not do has reached near-biblical proportions with everyone running around trying to read the tea-leaves of those who have been exposed as having no real understanding of how an economy works.  Central planning and the creation of afinancial state have destroyed the very concept of risk assessment and value creation, and have replaced it with word balloons and faulty models.

I think at this point the only way for the Yen to sustain itself above 80 is for the BoJ to announce an infinite QE program not just in scope but in time, as in “we will print an infinite number of Yen in an infinitesimally small amount of time to provide the maximum stimulus to our economy.”

Now that’s a statement a money-junkie can get behind.  No beating around the bush, just good ol’ to infinity and beyond.

At the same time China announced $356 billion in reverse repo operations to liquify its banking system and provide its economy with a little kick.  Maybe they decided that those extra Yuan were a good idea in the face of the abnormally low price Gold is continuing to print at on the COMEX and thought, “Hey, you know, there’s good value here.”

Like I said before, is there any way of knowing anymore?

About Tom Luongo
Tom is a professional chemist and self-taught economist who has been following and trading stocks for nearly 12 years. He has no formal ties to the financial industry and considers that an asset in his analysis of the interplay between monetary policy and capital markets.

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