The Bank of Japan had previously “disappointed” last December when it failed to announced more “stimulus.” Setting aside who might actually have been frustrated by the lack of renewed distortions, the Japanese central bank did make some minor alterations to its QQE regime at that time. They expanded the list of eligible collateral and extended the average remaining maturity range for their intended JBG purchases. It was also announced that QQE2 would now include ¥300 billion in new ETF purchases.

That latter sounded initially like an expansion in both Q’s (quantitative as well as qualitative) but to make room for the new ETF’s the Bank of Japan would restart selling equities that it had purchased from banks in the early 2000’s in order to keep the net level of holdings equal. That raises several questions, including what did those purchases accomplish that they can be sold finally, what good might have come out of holding those assets for so long and really what was the point?

When Haruhiko Kuroda announced yet another scheme on January 29, this time a tortured negative rate policy, he remained devoted to the same platitudes that were issued by his predecessors who first purchased equities and JGB’s a conspicuously long time ago.

The reduction will cause real interest rates to fall, with the goal of stimulating consumption and investment, Bank of Japan Governor Haruhiko Kuroda said in a news conference in Tokyo Friday. The new policy will push down rates for lending, although it won’t have a negative impact for banks, he said.

The various QE’s especially after 2008 might have had that intended effect on at least “push down rates”, though for the size and persistence of continuous QE you would expect to find a more determined correlation. In fact, JGB yields started declining on economic concerns in 2008 two years after QE1 & 2 had been shut down and months before the beginning of QE3 in mid-December 2008.

With Japan only into and out of recession the entire time between then and now, how much of the “death of money” shown above is QE/QQE and how much is the possibility that Japan has yet to really come out of one big, continuous recession? The tailing of yields at the far right, the most recent trading, is undoubtedly related to NIRP but that is only in the fact that Japanese banks are forced by it to seek out another form of liquid, risk-free. In other words, the precipitous drop in JGB yields of late already suggests how NIRP is already failing.