QE needs to be targeted to work but it is a blunt tool. If interest rates plummet, AND IF customers get cheap loans to buy things, then demand rises and prices increase until supply catches up. Thus, theoretically in economics 101 QE is inflationary. The big problem with QE is underlined: if consumers don't want loans or can't get loans (no job, credit problem such as the recent credit crash, etc) then QE doesn't increase prices.
If instead of customers getting the loans, companies get the cheap loans and use it to expand production, then supply increases with not much change in demand. That is deflationary. That is exactly the opposite of the desired goal. Yes, companies often did other things than increase production (like stock buybacks). But some companies certainly did use it to expand.
Helicopter money, while ridiculous, is at least targeted better towards consumers to increase demand.
Why give out loans when there is nothing in it for the banks. You're only going to give out a 0.9% APR car loan to people with amazing credit scores. Thats exactly how it is now.
Car Max still quotes 7%.
Wealth inequality mang.
People wonder about the effects of QE like its some kind of vague mystery. QE does exactly whats happening. Been doing it 8 years now. Wealth inequality, and loans used for financial returns instead of being used for actual capital investment and thus the standard of living is not so good but at least everybody is in business on paper. Inflation is tepid at best and seems to be in line with interest rates. What will be interesting is if the places that have gone negative will see negative growth.
Because the interest rate is so low, the cost of things people purchase with loans looking only at monthly payments has increased even though inflation is tepid. So mortgages, cars, tuition in that order. Its become much harder to pay those things off but people are carrying large debt loads and trying to live life.
The bottom line getting back on topic is that the Yen will appreciate against any currency whose bonds have a higher interest rate.
What it does to the actual people living in Japan is kind of terrible IMO. We're like awww look at those cute Japanese studying 16 hours a day and they have a special cute little word for working yourself to death. Well... if you wanna pay off your mortgage and education...
Freeters are essentially the supercharged equivalent of US Millenials etc. in response to the daunting cost of participating in the rat race getting into it so late in the game.
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