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Japan’s Bond Market Gets KO’d (or was it QE’d ?)


This graph (courtesy of Bloomberg) is a little busy, but what it is showing you is the volatility in today’s bond market in Japan. Investors are getting frightened by the sheer magnitude of the money printing Japan has authorized, and the Yen fell 5% today against the dollar. A 5% currency move is something that you just don’t see for a widely held currency like the Yen (its saved for Argentinian pesos and the like).

Given the potential impact that this volatility could have on the markets – remember, we are printing money just like Japan, albeit not as fast (yet) – I thought it would be instructive for everyone to learn a bit more about the impact of quantitative easing if taken too far.

So, here is a short video that gives a very easy to understand explanation – one I hope everyone in Washington DC has a chance to watch.

In summary – you can’t continue to spend more than you earn – even if you are the world’s third largest economy (and maybe not even the first largest).

Use this link to watch it on YouTube

And for those of you who emailed me after the rap video from last week kidding me that I’d not post an opera video on the blog – yes, you know who you are :) – here you go:

Click Here for Today\'s Video on YouTube