TODAY’S CURRENCY AND FINANCIAL WARS 137■ The BOJ, Currency Wars and Money Printing
Gone Wild
On Oct. 31, 2014, staffers at Japan’s central bank were sweat-
ing bullets...
They’d worked past midnight, drafting a proposal to shift
the Bank of Japan’s dangerous yen-printing experiment into
higher gear.
The staffers’ boss, BOJ governor Haruhiko Kuroda, was
concerned the Japanese public would maintain a deflationary
mindset. The public was hoarding cash, expecting prices to
drift lower forever. In Kuroda’s view, this is a problem in need
of fixing.
Kuroda wants to shock the public out of its deflationary
mindset. Nothing short of a revolution in inflation expectations
will suffice.
For the past two years, Kuroda had nudged the Japanese
public into expecting higher prices. In anticipation of infla-
tion, Kuroda’s theory says, there would be a spending spree.
The spending spree might be enough to revolutionize Japan’s
consumer psychology.
Ahead of the BOJ’s Oct. 31 meeting, Kuroda must have
been nervous his policy proposal wouldn’t receive a major-
ity vote. He proposed accelerating the yen-printing program
begun in 2013. Previously, the Japanese monetary base was
growing at an annual pace of about 60–70 trillion yen. Kuroda
proposed an acceleration, to 80 trillion yen per year.
After a heated two-hour debate, it came down to a cliff-
hanger: Kuroda and his deputies were reliable “yes” votes; two
skeptical board members, as expected, voted “no”; and the
four other members split down the middle.
With a 5–4 vote, the BOJ launched a major new battle in
the global currency war...
Immediately after the vote became public, the U.S. dollar
jumped in value against the yen. Japanese stocks spiked. The BOJ