What does the future monetary policy look like? Bloomberg explains:
…In theory, that debt hasn’t been monetized. In reality, most analysts think it has, and the sky hasn’t fallen in.
“The market does not expect the government of Japan to ever be able to repay this debt,’’ Bank of America-Merrill Lynch strategist Athanasios Vamvakidis wrote in a July report. “The BOJ may as well make it explicit.’
“Japan was the first country to cut interest rates to zero, and the first to try quantitative easing. Given its close working relations with the government, the BOJ may provide a blueprint for the latest ideas about central banking too
“Central bank independence increasingly looks like a brief historical episode that peaked around the turn of the century,’’ said Joachim Fels, global economic adviser at Pacific Investment Management Co. “Like it or not, get used to the new normal of dependent central banks.’’…