Albert Einstein called repeating the same thing over and over and expecting different results “insanity.” In Japan, they call it “Abenomics,” the massive money-pumping monetary-easing plan Prime Minister Shinzō Abe promised in 2012 would spur economic growth. While it did spike the equity markets, the yen got battered and the public paid for it with higher costs, higher taxes, lower incomes, heavier debt and a new recession.
Building on its failure, on October 31, 2014, the Bank of Japan launched Abenomics II. In doing so, it escalated its bond purchase by 60 percent, the equivalent of $750 billion annually. That’s equal to 16 percent of its Gross Domestic Product. And if applied to the US scale of GDP, it would amount to some $3 trillon per year.
And, adding more trick to the Halloween treat, Japan’s $1.2 trillion Government Pension Investment Fund (GPIF) announced it would cut back on bond purchases, while doubling its investment in both domestic and international equity markets.
Sound familiar? It should. It’s the same scam the US government has been using to pack the pockets of the Wall Street elite while holding our economy in check.
The implications of this Quantitative Easing shell game are appalling. Like Abenomics, the equity market gamblers were enriched, while the public lost out. It is impossible to apply any reasonable economic perspective on this practice without seeing the eventual outcome as utter failure.
Trends Research Institute analysts are hard at work preparing our Top Trends for 2015 forecast, which will be presented in front of a live audience on December 6 and published in a special digital edition Trends Journal and video presentation shortly after. We will explore the far-reaching implications of the distinctly anti-capitalist economy that will emerge fully entrenched in 2015.
With more analysts at the table this year, the consensus is even stronger: The shell game has an end to it. And it isn’t pretty.