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Pastimes : All Clowns Must Be Destroyed
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To: LLCF who wrote (37914)6/5/2000 2:02:00 PM
From: pater tenebrarum  Read Replies (1) of 42523
 
DAK, the money supply doesn't explode in spite of zero rates because there's no credit demand in Japan. the money is sloshing about in MM funds with no takers. also the banks are reluctant to lend due to the many bad loans on their books. instead they take the cheap ST money and put it in government bonds to earn the relatively riskless spread. while the Yen was still falling, the carry trade was a main credit generator, but that carry trade blew up in late '98. it may be coming back though, since the BoJ has drawn a line in the sand at 100Y to the dollar.
perversely, the constant BoJ interventions have led to a big build-up in forex reserves, that represent a big supply overhang.
i admit that the Yen is a strange animal...
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