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Was just poking around on FRED looking for some Japan data and remembered this thread.

Now if we recall the previous argument on this thread was essentially whether or not Abenomics would raise rates (under the assumption that long rates are a proxy for inflation/growth expectations):

Now, admittedly back in 2013 I was a little wet behind the ears on this stuff, but from my understanding an increase in nominal rates requires a reduction in the size of CB balance sheet relative to GDP. That implies a necessary balance sheet reduction or increase in GDP.

Let's take a look back, with the power of data! The fun all started in Apr 2013, so these charts are all plot from Jan 2013 to current. I'm not trying to start an argument, but interesting to look at the charts with the benefit of hindsight.

First up, rolling (monthly) YoY percentage change in BoJ total assets. Huge balance sheet expansion here:
[ATTACH]64161[/ATTACH]

Next up, rolling (quarterly) YoY percentage change in Japan GDP. Unfortunately not enough growth there to allow an increase in nominal rates based on the relationship highlighted in my previous post:
[ATTACH]64164[/ATTACH]

and of course, the proof being in the pudding, 10Y JGB rates (short term rates are even worse), we can see the relationship did hold true, as the balance sheet of the CB expanded, rates (time cost of money) declined even further:
[ATTACH]64163[/ATTACH]

Rolling (monthly) YoY percentage change in CPI. Yay inflation! But, if we think about it for a second, this means that real GDP growth negative since mid 2014 and real interest rates negative basically since Abenomics started:
[ATTACH]64165[/ATTACH]

So where did it go?
[ATTACH]64162[/ATTACH]

Now this might make me seem bearish on Japan or whatever, but taking a step back to look, Japan hasn't done too bad:
* Raised asset prices
* Loosened monetary policy
* Boosted nominal GDP
* Weakened currency vs consumer partner currencies like EUR and USD
* Strengthened or maintained currency vs producer partners currencies like AUD and critical industrial imports like oil.
* Didn't lose significant JPY value to gold.

Could've been worse.

<blockquote data-quote="sinner" data-source="post: 881597" data-attributes="member: 21771">Was just poking around on FRED looking for some Japan data and remembered this thread.Now if we recall the previous argument on this thread was essentially whether or not Abenomics would raise rates (under the assumption that long rates are a proxy for inflation/growth expectations):Now, admittedly back in 2013 I was a little wet behind the ears on this stuff, but from my understanding an increase in nominal rates requires a reduction in the size of CB balance sheet relative to GDP. That implies a necessary balance sheet reduction or increase in GDP.Let&#039;s take a look back, with the power of data! The fun all started in Apr 2013, so these charts are all plot from Jan 2013 to current. I&#039;m not trying to start an argument, but interesting to look at the charts with the benefit of hindsight.First up, rolling (monthly) YoY percentage change in BoJ total assets. Huge balance sheet expansion here:[ATTACH]64161[/ATTACH]Next up, rolling (quarterly) YoY percentage change in Japan GDP. Unfortunately not enough growth there to allow an increase in nominal rates based on the relationship highlighted in my previous post:[ATTACH]64164[/ATTACH]and of course, the proof being in the pudding, 10Y JGB rates (short term rates are even worse), we can see the relationship did hold true, as the balance sheet of the CB expanded, rates (time cost of money) declined even further:[ATTACH]64163[/ATTACH]Rolling (monthly) YoY percentage change in CPI. Yay inflation! But, if we think about it for a second, this means that real GDP growth&nbsp;&nbsp; negative since mid 2014 and real interest rates negative basically since Abenomics started:[ATTACH]64165[/ATTACH]So where did it go?[ATTACH]64162[/ATTACH]Now this might make me seem bearish on Japan or whatever, but taking a step back to look, Japan hasn&#039;t done too bad:* Raised asset prices* Loosened monetary policy* Boosted nominal GDP* Weakened currency vs consumer partner currencies like EUR and USD* Strengthened or maintained currency vs producer partners currencies like AUD and critical industrial imports like oil.* Didn&#039;t lose significant JPY value to gold.Could&#039;ve been worse.</blockquote>

[QUOTE="sinner, post: 881597, member: 21771"] Was just poking around on FRED looking for some Japan data and remembered this thread. Now if we recall the previous argument on this thread was essentially whether or not Abenomics would raise rates (under the assumption that long rates are a proxy for inflation/growth expectations): Now, admittedly back in 2013 I was a little wet behind the ears on this stuff, but from my understanding an increase in nominal rates requires a reduction in the size of CB balance sheet relative to GDP. That implies a necessary balance sheet reduction [b]or[/b] increase in GDP. Let's take a look back, with the power of data! The fun all started in Apr 2013, so these charts are all plot from Jan 2013 to current. I'm not trying to start an argument, but interesting to look at the charts with the benefit of hindsight. First up, rolling (monthly) YoY percentage change in BoJ total assets. Huge balance sheet expansion here: [ATTACH]64161.vB[/ATTACH] Next up, rolling (quarterly) YoY percentage change in Japan GDP. Unfortunately not enough growth there to allow an increase in nominal rates based on the relationship highlighted in my previous post: [ATTACH]64164.vB[/ATTACH] and of course, the proof being in the pudding, 10Y JGB rates (short term rates are even worse), we can see the relationship did hold true, as the balance sheet of the CB expanded, rates (time cost of money) declined even further: [ATTACH]64163.vB[/ATTACH] Rolling (monthly) YoY percentage change in CPI. Yay inflation! But, if we think about it for a second, this means that real GDP growth negative since mid 2014 and real interest rates negative basically since Abenomics started: [ATTACH]64165.vB[/ATTACH] So where did it go? [ATTACH]64162.vB[/ATTACH] Now this might make me seem bearish on Japan or whatever, but taking a step back to look, Japan hasn't done too bad: * Raised asset prices * Loosened monetary policy * Boosted nominal GDP * Weakened currency vs consumer partner currencies like EUR and USD * Strengthened or maintained currency vs producer partners currencies like AUD and critical industrial imports like oil. * Didn't lose significant JPY value to gold. Could've been worse. [/QUOTE]

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