Japan Is Fast Approaching the Quantitative Limits of Quantitative Easing

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Time for a Plan (Perpetual) B, says Jefferies.

The Bank of Japan is running out of government bonds to buy.

The central bank’s would-be counterparties have become increasingly unwilling to sell the debt that monetary policymakers have pledged to buy, and the most recently issued 30-year Japanese bond didn’t record a single trade during a session last week as existing owners opted to hoard their holdings.

The central bank in the land of the rising prices sun has set a target of 80 trillion yen ($733 billion) in government bond purchases per year in its continued attempts to slay deflation, an amount that’s more than double the pace of new bond issuance planned by the Ministry of Finance and about 16 percent of gross domestic product. Continue reading