Monetary Inflation Rises With the Sun in Japan

Monday, August 13, 2007

The Bank of Japan (BoJ) was the first one in the ring for this week's round of money printing. According to a report from Reuters the BoJ injected 600 billion Yen or $5 billion on Monday and now it remains to be seen how much the European Central Bank (ECB) will replace after the weekend-repo from Friday matures.
The new mountains of money have no corresponding value in the real economy, adding to the process of monetary inflation central banks are supposedly so keen to avoid.
I have not verified the data - the ECB's website has become harder to navigate and changes frequently - but it is said that the ECB's unprecedented move led to an expansion of the monetary basis by 7% in 2 days. Call it monetary inflation on speed. I think not even Zimbabwe is that fast at creating new money.
Welcome to the most thrilling week in years that has also a lot of new economic data to offer, starting with retail sales and business inventories today.

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