Japan vil forsøke å bryte den økonomiske stagnasjonen ved å la yen bli mindre verdt. Det vil øke eksporten. Men for å kunne betjene statsobligasjonsgjelden vil man trykke penger. Japan risikerer å utløse en inflasjonsspiral som kan rive verdensøkonomien med seg.

Skriver Scott Minerd, i Guggenheim partners i Financial Times.

Japanese authorities have embarked on a precarious policy of depreciating the yen, raising domestic inflation to 2 per cent, and running larger fiscal deficits in an attempt to end decades of chronic stagnation. This policy cocktail, designed to increase domestic spending while improving export competitiveness, threatens to rekindle uncertainty and upheaval across the globe.

 

Rising domestic inflation would result in negative real returns for Japanese government bonds (JGBs), while the depreciation of the yen would further discourage foreign investment. This could lead to capital outflows as global investors seek to escape the certainty of negative real returns on yen-denominated assets. Even Japanese equities, which should perform well under the new policy, would fail to attract hard currency investment as investors would hedge their yen exposure.

None of these factors would have been a problem 10 years ago, when Japan amassed large annual increases in domestic savings. But since then, the ratio of retirees to the working age population has increased and Japan no longer generates enough domestic savings to finance the deficits proposed by Prime Minister Shinzo Abe. Within the next few years, Japan’s domestic savings will likely turn negative due to the protracted period of dis-saving caused by the country’s ageing population.

So who will finance Mr Abe’s fiscal stimulus programme? With a 2 per cent inflation target and the need to expand the money supply, the Bank of Japan will be a willing buyer, at least for a while. As the BoJ reaches its inflation target, monetary policy will need to be normalised. This would reduce or eliminate central bank purchases of JGBs. As the BoJ steps aside, interest rates would begin to rise in order to attract private sector capital.

The current size of Japan’s public debt is approximately 230 per cent of GDP, with total interest expense on JGBs representing about 40 per cent of government receipts. Were interest rates to increase by 300 basis points over the next five years, which is in line with Mr Abe’s stated objective of bringing inflation from -1 per cent to 2 per cent, interest expense would expand to approximately 80 per cent of present total government revenues, with the prospect that this ratio could continue to rise.

 

http://www.ft.com/intl/cms/s/0/502b369e-8c85-11e2-8ee0-00144feabdc0.html#axzz2OGuxAgZA