FN: Sounds like Japan v2.0 to me...
The recent change in U.S. and U.K. monetary policy is very similar now to what the Japanese tried, where Quantitative Easing (QE) was forced onto a captive debt market. The full consequences of which will only know become obvious: De-facto sovereign default.
It is Japan we should be worrying about, not America: "Japan is drifting helplessly towards a dramatic fiscal crisis. For 20 years the world's second-largest economy has been able to borrow cheaply from a captive bond market, feeding its addiction to Keynesian deficit spending – and allowing it to push public debt beyond the point of no return."
Some angry ninja quotes from about the same time last year:
I Give You The Stupidity Trap... Errr... Liquidity Trap (11/10/08):
"Awesome. Just awesome. What could possibly go wrong in a zero rate world? Oh wait, all those under funded pension plans can’t earn the yields they need to fund the outrageous promises that were made to indignant, arrogant Baby Boomers during this Age of Entitlement."
Japan v2.0: GLOBAL Liquidity Trap (09/18/08):
"We are heading for a Liquidity Trap. Believe it. I see Japan v2.0… on a GLOBAL scale."
Japan v2.0 (09/18/09):
"Think ZERO percent interest rates and think DEFLATION. Think LOST DECADE. Think DEPRESSION. Now make all that GLOBAL.
That is what we have to look forward to."
Open Thread: Make the Bear Case
1 hour ago