Rules Are Changing Again: Japanese Government Looking For Ways To Hack Its Own Economy

Reported by Reuters today, Japan plans to switch inflation gauge; may up pressure on BOJ, the Japanese government is going to exclude energy prices from its inflationary measure, which already excluded prices on human essentials like food, etc.

Japan is not the first government that changes its economic data and inflation metrics to create room for inflationary economic policies. United States is very famous for making sure its economic data has nothing to do with reality. The problem, however, is that Japan is a tightly knitted economic system. Its economy reacts violently to any stimulus and its people suffers greatly and immediately to the capital flows. If Japanese government really proceed with this change, social unrest will likely be inevitable in near future.

I am closely monitoring the development of this because it will affect how fast money will be flowing in and out of Japan which directly impact the currency markets. My take is that it is likely to cause a boost to US dollar initially. The dynamic economic system however will backfire with a fatal blow to the European bond markets and likely induce a collapse in various fast rising markets.

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