Haruhiko Kuroda to Ben Bernanke: My bazooka is bigger than your bazooka.
Expectations were so high for the Bank of Japan (BOJ) meeting that new chief Haruhiko Kuroda would have to emerge in a Samurai suit to impress anyone.
He not only came out with a Samurai suit on, he came out swinging a sword—a big sword.
To achieve an inflation target of 2 percent within two years, the BOJ is doubling its purchase of Japanese bonds to roughly 7 trillion (about $79 billion) per month. That is well beyond the roughly 4 trillion to 5 trillion yen many analysts were expecting.
Remember, the Federal Reserve is buying $85 billion a month. But Japan's gross domestic product (GDP) is one-third our size, so this bond-buying program is essentially three times the size of ours. More importantly, this will double Japan's monetary base in two years, to 270 trillion yen. That is about 50 percent of the GDP of the entire country.