BoJ: QE or helecopter money, what is the difference? - Rabobank
|Analysts at Rabobank explained that the G20 finance ministers and central bank governors, shepherded by another French IMF chief under criminal investigation, have just announced “the global recovery continues but remains weaker than desirable.” (Ba-doom tish!)
Key Quotes:
"As this is the same “recovery” driving anti-globalization populists heaven knows what a “slowdown” would bring…Of course, the G20 realise those risks. Indeed, their communiqué noted “the benefits of growth need to be shared more broadly within and among countries to promote inclusiveness”. (Ba–doom tish!) Yet that would require Germany and China to reduce their huge trade surpluses, on which there was no agreement, as well as higher taxes on wealth, capital gains, and top incomes, on which there was no agreement, and higher public spending, where there is at least grudging movement now.
On that front consider the BoJ have stated again that helicopter money is not allowed: however, fiscal and monetary policy co-ordination is. (Ba-doom tish!) What’s the difference? At this stage of the economic - and political – cycle does anyone believe central banks are going to run down their balance sheets even as public spending rises? The expectation remains the BoJ will have to increase QE once again this week as the government boosts spending; but it isn’t monetary financing, honest."
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