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Ben Bernanke's Tightrope Act

There's an interesting section in Richard Duncan's THE DOLLAR CRISIS which explains just how Japan's ministry of finance worked with Bernanke to lower interest rates there. :

my ocr is down...but oh well..
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By early 1999, the japanese government had infused 10 trillion yen (83 billion USD) in capital into the banking industry.

In addition to that, the gov. spent aggressivley on fiscal stimulus programs to suport economic growth. In 2002, japan's deficit is expecte to amount to more han 7 % of Japans' GDP.

Now, there are growing concerns about how much longer the Japanese government will be able to continue its aggressive fiscal stimulus campaign. No other industrialized country has accuulated such large government debt in the post-war era. Tehse and other concerns prompted S & P to lower japan's credit rating twice in 2001 and a third time in 2002. Japan is not alone in its fiscal distress. many countries areound teh world are in distress- often resulting from systemic banking crises.

In May 2003 , Gov Bernanke visited Japan and conducted a series of meetings. he made a speech which stated that, in his opinion, the Fed would do whatever it took to keep the US from falling into deflationary recession, even if that meant printing money and buying treasury bonds to drive down their yields at the long end.
Between Jan 03 and end of march 04 BOJ printed 35Trillion Yen which the MOF used to buy US $320 BILLION. wITH those dollars, the Japanese authorities bough US dollar-denominated assets, most probably US tREASRY bonds and agency debt.
Was the BOJ/MOF conducting Gov Bernanke's unorthodox monetary policy on behalf of the Fed? There is no question that the BOJ created money on a very large scale, as the Fed would have been required to do under Bernanke's scheme.
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