8 To 12 Trillion New Yen Per Month? Stick A Fork In It.

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Includes: FXY, JYN, YCL, YCS
by: Vincent Cate

On December 30 the Bank of Japan announced that it will start making 8 to 12 trillion new Yen per month. To get an idea of the scale of this, the Government of Japan averages less than 5 trillion per month in taxes collected.

On April 4, 2013, the BOJ announced it would double the monetary base in 2 years. This came to around 50-70 trillion Yen per year for 2 years. The monetary base seemed to go up about 0.6% every 10 days.

However, as we started to near the end of the 2-year time period a new policy was announced on October 31 of 80 trillion Yen per year with no end date. This was 10 to 30 trillion Yen per year more than previously. The monetary base seemed to go up around 1% every 10 days.

If the December 30 rate stays fixed for the whole year, then multiplying by 12 gives a new yearly target of 96 to 144 trillion Yen. After the initial 2-year period is over, in April 2015, instead of stopping it now seems they will be printing about twice as fast. The monetary base should go up well over 1% every 10 days.

However, one familiar with how these things work, or able to spot a trend, should not expect a fixed 8 to 12 trillion Yen per month for the whole year but instead to see more increases in the rate of Yen printing. If you did not spot the trend, read the previous 3 paragraphs again.