Bank of Japan

• Has engaged on a massive asset purchase program since the 2008 Recession
• Assets have eclipsed Japan's GDP in 2018
• 65x+ Leverage
• Asset purchases include both stocks and

1980s Mayekawa plan

• In 1970s-80s Japan had massive export growth to the US
• Better & cheaper exports to the US started to hollow out American Industry
• This created huge political pressure and negotiations that Japan had to deal wit
• Japans solution was to pump the Japanese Economy, thus ramping up US imports to compensate
• Biggest component of plan was loose monetary policy
• Drove massive bank lending Expansion:  BOJ required banks to increase lending, banks told branches to increase lending, branches told loan mangers to increase lending, etc.  
  • People down the line understood that they were creating a bubble, but did to since the order cam from up top
• Results in massive asset price bubble in Japanese stocks and real estate
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BOJ Criticisms

• It has purchased (and continues to purchase) so many assets that markets are manipulated and have no price discovery
• On some days no 2, 5 or 10 year government bonds publicly trade (the bank buys/owns them all)