Bank of Japan should call them willie wonka bonds 'YOU GET NOTHING. yOU LOSE!'

Props to anybody who understands both the reasons and the reference.

Brilliant!

Good day sir! https://www.youtube.com/watch?v=S_TYom5_gDk

The government and Japanese institutional investors have manipulated the rates of JGB's to be so low that they "defy gravity" (to quote a Tokyo University economics study). The current low rate does not reflect the soundness of the Japanese economy, or potential risks of investing in JGB's.

I know Jose Canseco personally, and he is a great guy. Normally I wouldn't consider asking him for economic advice, but in this case he seems to know what he is talking about. With yields at almost zero, and the main buyer being the BOJ itself, it seems superfluous to bother issuing and selling bonds at all.

gaijinfoFEB. 06, 2016 - 08:26AM JST Props to anybody who understands both the reasons and the reference.

It's not really hard when he names the reference in the comment. Good to see Canseco is nailing these bits of pop-culture trivia at peak relevance though. A lesser wit would have tried tying the Bank of Japan to something a smidge outdated, like Adam West's Batman or the Jacobite Rebellion.

Does "negative interest rate" mean that the BOJ will pay me to borrow money? That seems like a win-win situation.

With uncertainty in world economy, JGB is selling well now.

Does "negative interest rate" mean that the BOJ will pay me to borrow money? That seems like a win-win situation.

Generally it means if you have money in the bank you get zero interest on that money and sometimes you must pay for the bank to hold your money (negative interest rate). If you are a rich person you get money for very cheap (1%+). The common "credit worthy" person may get a loan 5-10%. In Japan it can be hard to get a loan from a bank and you may see ~20%.

Japan is not the first to see this "negative interest" trend and it is bad timing with inflation and an older aging population that may depend on savings interest. Banks are saying we do not need the common persons money because the BOJ will give us the money for almost free anyway.

Worst I have seen: A few years ago (before BitCoin) South America was being flooded with many American dollars (currency war). At that time these countries did not want this money and you actually had to pay a 20-30% tariff to exchange your fiat American dollar into these currencies.

Does "negative interest rate" mean that the BOJ will pay me to borrow money?

BOJ will charge fee on the money city banks have in BOJ. You don't have money in BOJ.

It will all eventually unravel. Japan's economy can't really improve much in the current demographic climate. Abe and co have done well in getting the tax take upwards, but getting on top of that debt mountain is nigh on impossible. At some point the house of cards will collapse.

"Abe and co have done well in getting the tax take upwards"

By cutting the corporate tax? Just as corporations are earning record profits and paying record dividends? Yeah, right.

@jefflee tax take is up. Consumption tax big part of this of course.