Japan has to print more cash as bank runs continue from
negative interest rates, 4/7/16, Examiner
When a government or central bank
decides to embark on a monetary policy of negative
interest rates, there are ramifications that must
be addressed in their banking system to protect against the people revolting by
taking their money out of these institutions. The first is the implementation
of capital controls, which could be as innocuous as limiting the amount of cash a
citizen or business can move offshore, or
as draconian as putting limits on how much money these same entities can take out of the bank in a
given time period. And the second is the elimination of cash altogether, and making the currency an entirely
digital construct.
But on April 7, Japan has decided on a third option due to the ongoing bank
runs that are taking place by their citizens following Haruhiko Kuroda's move
to institute negative interest rates at the beginning of the year. And that
option is to simply print more ¥10,000 yen notes since the banks have nearly
run out of the larger currency in the aftermath of the Japanese people stuffing
their cash in personal safes or alternative locations.
NIRP by definition is deflationary, and as such as prompts consumers to
delay consumption, and as a result to save as much as possible, if not in the
banks where their savings may soon be taxed under NIRP regimes, then in cash. And nowhere if the failure of NIRP - and unconventional monetary policy
in general - more evident than what just happened in Japan, where according to
Japan Times, the Finance Ministry plans to increase the number of ¥10,000 bills
in circulation, amid signs that more people are hoarding cash.
It will print 1.23 billion such notes in fiscal 2016, 180 million more
than a year earlier. The number of ¥10,000 bills issued annually leveled off at
around 1.05 billion in the fiscal years from 2011 to 2015.
The paper adds that some financial market sources believe it is because
more people are keeping their money at home rather than in banks, because
interest rates on deposits have fallen to almost zero after the Bank of Japan
introduced a negative interest rate in February.
Actually make that most market sources, because the failure of NIRP is
now too staggering for even tenured economists to deny. As for Japan, Kuroda
appears to have made the country's chronic over-saving problem even worse.
The total amount of cash stashed at home is estimated to have surged by
nearly ¥5 trillion to some ¥40 trillion in the past year, Hideo Kumano, chief
economist at Dai-ichi Life Research Institute, said. - Zerohedge
Even outside Japan, the sudden rise
in nations going to negative interest rates are being complimented by a push for the banning of cash, and limiting people's options in leaving the banking
system entirely to protect their money from being summarily 'taxed' by fees
under this policy. And these policy moves are also in part responsible for the
rising price for gold, which is being seen as a much greater haven of safety for
those holding large amounts of sovereign currencies.
As more and more countries attempt
to force their people into spending cash in an effort to boost declining
economies, the more these same individuals will rebel by taking their money out
of banks and putting it into safe havens like gold, offshore assets, or even
personal safes. And for the Japanese government, they must believe there is a
strong possibility for civil unrest if capital controls are implemented as they
are instead willing to allow a run on the banks to occur, and aiding this by
printing many more high denomination bills to accommodate it.
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Comments
The next
trend in Japan should be an increase in armed robbery of old Japanese who are
riding their bikes to pay their electric bills, followed by an increase in
pagoda break-ins by safe-crackers.
Norb
Leahy, Dunwoody GA Tea Party Leaders
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