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Haruhiko Kuroda

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2023-03-16
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2023-03-16
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  1. “That in such that they could pay banks to buy JGBs. They have yet to do that, but Corota did hint that that is a possibility at the second to last policy meeting. So between all that, BOJ has amassed an absolutely insane amount of JGBs creating a giant sovereign bond bubble where the most indebted nation in the world can borrow at a fraction of what the risk free US treasury rate is. That's what's called a bubble. It makes no economic sense, like no economic gravity applies here. Okay, so after all this heavy-handed buying of JGBs, what is the state of the JGB market like a health check, if you will, of the market today, as Corona leaves office?”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  2. “Whenever I hear about how BOJ must get in line with the rest of the world Why? Why? Do what others are doing for the sake of it, like globally coordinated policy nonsense that you hear out of like IMF and the World Bank? No. BOJ has, will and always only will do what BOJ feels is appropriate and couldn't care less what others are doing, even if it means currency depreciation like we saw in 2022, clearly on display. So if that's your thesis of BOG scrapping yield curve control, like that it needs to get in line with the rest of the world. That's the wrong way to go about thinking about it. So between QQE1 and 2, negative rates, yield curve control, and now these most recently launched fund supply ops in which the bank lends funds to banks at very low rates with the hopes that they will take those funds to buy JGBs so that the BOJ doesn't have to themselves. They could also implement a negative rate on the bank.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  3. “Then in January 2016, BOJ shocks again by cutting rates negative despite Corota explicitly insisting that negative rates will not be implemented in Japan. And he says this as recently as like a week before implementing negative rates in Japan. He says this to parliament. He says this overseas at Davos. But that was a kind of a critical lesson learned by Korota at the time because no more shocking markets, right? Just in case the policy won't be received well because once it's out there an official policy language you can't take that back, right? So from January 2016 to Brexit day in June of 2016, dollar yen falls from above 120 and then it actually cracks it below parity and actually prints 99 on Brexit day. Stocks go on a one way.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  4. “Think about QE is that it has diminishing effects, right? You have to do more of it to get the same results and then the more that markets expect it, the lower the sort of efficacy of it. So now that Abe put Japan in recession in 2014 and shot himself in the foot, Krota shock launches another massive round of QQE as a Halloween surprise in October of 2014. Markets are completely caught off guard. Dollar Yen breaks out of its like 3 yen trading range around that 100 level that's been for that entire year surges to the 120 handle. Niki rallies like another 30% from there. JGBields drop and seeming to be back on track, maybe.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  5. “by economic policy economics three arrows. The first is bold monetary policy. Second is about fiscal policy. And the third arrow will continue sparking private investment. Japan economy is just about to break free from chronic deflation. Pandit used to say that Japan was at task land of setting sun. They said that for a country as mature as Pen growth would be impossible. Can you hear any such voices now?”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  6. “They publish a book after he got killed, but he was in the middle of basically writing a book about his kind of experiences, all that. And he rehearses the bank pad as a subsidiary of the government, right? He talks about sending out COVID checks, right? Our grandchildren don't have to pay for that because the Bank of Japan buys the government bonds. So there's no problem. The BOJ is a subsidiary of the government. Quite a quote. Either way, that's what he runs on, and he has a Massive Landside win, and because he comes in with a clear message, like, it's the economy stupid. Here's how to fix it, right? But in order to make it a reality, he needed an operator at the BOJ to execute on arrow one, who was as full-throated as Abe was during his campaigning by my Avonhommix.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  7. “A new guy to his same counterpart appears like this is our now latest finance minister. Back to Abi. Okay, so during his time out of office, he basically studied up on economics a lot, and in doing so, he came up with this one policy initiative called autonomics, which I discuss with Jack Farley recently in Blockworks. Autonomics consists of three arrows, arrow one, regressive monetary easing, arrow two, fiscal stimulus, arrow three, structural reform. That arrow one monetary stimulus, that's the key to everything, okay? So regarding central bank independence or debt monetization, is there central bank independence? There's central bank codependence Japan. Is Japan monetizing a set? Absolutely it is. And it's not a secret. It's an Abe campaign platform. It's very openly there. And in fact, in his book, in his memoirs, but he just”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  8. “Then ex prime minister Shinzu Abe, who was rerunning for his big comeback to become Prime Minister again, saw Abe was prime minister prior to, but for a very short-lived tenure, which was followed by political chaos in Japan, where Japan was turning over prime ministers as if it was UK in current times. So that was also the period where Krota's predecessor, Shirokawa, was heading the baggage pan. Just a quick comment on Shirakawa, because she takes a lot of shit, by which I mean from people. And to be fair to Shirkawa, his term span from April 2008 started 2008 to March 2013, right? So Lehman as a welcome gear. Then Japan earthquake, then he served five different Japan prime ministers. So in his book, he writes about, I was getting ridiculous. Every time he would go to a G5, G20 gathering or whatever, he'd have to keep introducing”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  9. “The president of the Asia Development Bank. That's where he truly has an international role far more than being like a G5 central bank head, no matter what the country is. And he was intensely working with Asia developing nations, with dollar denomination debt and are at the whim of the Fed policy and the dollar. And so he's very familiar with this notion of peg currencies, even though the yen is not one. And so he has that experience and that kind of knowledge background as well, right? So very well-rounded with sort of how sovereign debt currency, all that works. Then it was his international attributes that really kind of shaped his worldview of Japan. And basically Japan's economic”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  10. “Hierkel Coruto will forever be remembered and known for his role as governor of Bengal Pan, but Korota actually spent the first 40 years of his career at the Ministry of Finance, four times longer than on the fiscal side than the monetary side. He joined immediately after graduating from University of Tokyo. He then got an Oxford degree in economics and then rejoined the Ministry of Finance. He was the ranks through the decades basically using kind of his international mind frame, his English fluency to his advantage. That's something that's very rare, a rare asset in Japan. Even today, and then within the Ministry of Finance, he eventually took the vice minister of finance for international affairs position. That's the chief currency position of the country, which means that that's the person who would be directly involved with FX interventions. And so keep that in mind. I'm sure that many of you know exactly where that's going to be going. Then after that, Corota becomes...”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  11. “Like some retirement party. And also, this is not the end of an era. Okay, it might be the symbolic end of an era, but an era that carries on. This is the reason why I'm doing this look back at Karota's tenure. It's not for a history lesson. I'm doing this because we have to look back at what he's done. That's the only way to be able to look forward to find out what's, to try to think about what's next. Okay, so first things first, who the hell was Corota pretty BOJ? So clearly he's a very sharp guy with a multifaceted career in economic policy and very much international experience. He's an international guy, right?”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  12. “That part falls on the government and this endless spending and debt issuance, and there, of course, the blame first and foremost, but who is enabling this? The unconditional creditor and buyer of government debt, central bank. So BOJ isn't exactly completely innocent party here either. And although Corota's tenure may be over, it really doesn't matter for all intents and purposes because corrodonomics doesn't just walk out the door in a cardboard box with his highlighters and hole punchers. Crotonomics is here to stay and the incoming governor Uida will inherit the current status that the BOJ is in. It's not a sketchpad that you just shake. Again, BOJ policy runs the personnel, not the other way around. That's why Croita is the most consequential central banker. That's why it's worth taking a look at his historic tenure and how he's completely and permanently transformed the landscape and the world at large.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  13. “Pressing the nuclear option will work. Like, if you detonate a monetary nuke on a barren planet, is anyone going to feel it or hear it, right? Korota executed in diving headfirst into uncharted waters and once doing so, he never relented, so much so that in the course of this past decade under Corota, the BOJ now finds itself in a position where there is no turning back, regardless of who's at the helm. The Bank of Japan's policy is no longer run by the personnel, rather the personnel are being run by the policy. You can't unwind five hundred trillion yen long JB portfolio into something that you've destroyed that no longer exists as a market. You can't let borrowing costs increase to fair value of the world's most indebted nation as measured by debt GDP with a demographic picture that points to increased debt burden and increasing deficits. And of course, yes.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  14. “Potentiums or didn't stand up to incoming live fire the way that Crota has. Bernike, Yellen, Powell, Lagarde, whoever. Probably the worst in Corota's book is RBA's Governor Lowe, who attempted Yields curve control for like a year and a half, and then threw in the towel, and it wasn't even real yield curve control, probably in his book because it was done at the front end of the Aussie yield curve, rather than, you know, which is close to like the cash rate itself. But Kroto's worldview was that the longer that Japan muddles in and out of like half measures and fluctuates between easing and tightening and walking on eggshells because the post bubble BOJ didn't want to repeat a runaway asset bubble again, right? The longer that Japan isn't smacked out of deflationary comatose, the more permanent it will become. And at some point, no amount of”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  15. “Who would actually carry out the radically unthinkable and to stick with it until desired outcomes are realized? Come hell or high water. And after an unprecedented decade long dual tenure upon reappointment for better or force, I think that we could objectively conclude that Kuroda indeed has faithfully carried out his job against enormous headwinds and pressures that every other central banker would and had buckled under. So take Crota's predecessor, Governor Shirkawa, right, who didn't like openly criticize him personally, but he did vocalize his opposition towards the BOJ and that his notion that deflation was so entrenched that it needed shock therapy and Shikawa was the one who invented QE in the first place and still Kro is like that, right? And compare Kuro to like other major central bank heads, right, with regards to policy pivoting at the Fed, the ECB, the PBOC, the Bank of England, the RBA, whatever, right? Everyone's pivoted or taken.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  16. “Ken Corrod himself theoretically do it? I don't have those answers, but those are real questions worth exploring. And hence Corota is the most consequential. Now, just to be absolutely clear, I'm not fearmonger here, and nor am I even doing like a Korota's the Devil blame game or anything like that, okay? I'll express my opinions on the matter later if you want. Not that you should really care what I have to say. I'm just going to lay out the facts objectively just to inform. And so I ask that you watching this or listening to this, just do it the same, right? Without any preconceived notions for against BOJ, because ultimately look, do we care about what some guy did shuffling pieces of digital paper around Tokyo for the last decade, or do we care about our network standing and our livelihoods and well-being? Now, what separates Kurto from his post-war predecessors and his fellow G5 central bankheads? Krota was specifically chosen because he was seen as the only”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  17. “And more so the outcomes of its policy and sort of unintended consequences and all that. And just because they don't adopt like a certain policy yet doesn't mean that it went under the radar or something. It just simply means that they also watch BOJ for what not to do with their options. So again, Fed is the most powerful. But if the Fed is being directly led by an influence by the Bank of Japan who's setting precedence for others to follow based on the BOJ, then the BOJ is the most influential and consequential. And then so within this most consequential central bank, who is the most consequential governor to take the helm? And that's hands down, obviously, Governor Harvey Goeda and his decade of policy precedent setting. And then there's the matter of Governor Crota, who has blown the biggest asset bubble of all time.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  18. “But this has also been confirmed by people much smarter than I am, such as that of, again, Mike Hall from Crossborough Capital, most recently Jilliant Tett from FT and many, many others. BOJ is like the monetary laboratory, when I say that, you know, it's not just that they lead, but they're actually experimenting into uncharted territory as they go, like dropping rates to the zero bound and leaving them there, inventing QE, inventing QE. Not the first to implement negative rates, but one of the few that did, and currently the only central banks that's still in negative rate land. And obviously yields growth control. And when I say monetary laboratory of the world, I don't mean like as a spectator sport by the other majors. I mean things like summer of 2016 when ex-Fed chair Ben Bernake flies to Tokyo and helps design yield curve control and then that's unveiled as actual policy in September of that year. So basically central banks worldwide they're fixated on the BOJ.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  19. “First of all, let me just give you my personal interpretation of consequential. So, as I said, Fed Command is the most power and influence, but it does so for any given moment in time. Consequential in this context isn't who commands the most momentary influence, but who influences that which carries the most influence by breaking new ground and setting precedence for said powerful forces to then follow. And so therefore in that respect, it's hands down the Bank of Japan and Governor Crotop. Now, the two broad reasons why he's my pick, as I've expressed countless times before, BOJ is the world's monetary policy experimentation laboratory, right? I've expressed this notion that the BOJ leads other major central banks in policy framework by roughly a decade due to the kind of decade-long head start in aging demographics and debt levels.”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT

  20. “Governor Hierhiko Crota. In fact, I'd actually say that he's more consequential than central bankers who were actually in the midst of the OA crisis. And there are even, say, Greenspan and Volcker. And why?”

    2023-03-16 · Forward Guidance · Governor Kuroda: The Decade’s Most Consequential Central Banker · IDENTIFIED FROM THE TRANSCRIPT