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What Happened The Last Time A Major Central Bank “Tapered” QE?

Posted By admin On December 19, 2013 @ 6:54 am In Money Watch | Comments Disabled

Zero Hedge [1]
December 19, 2013

After having followed a zero interest rate policy strategy and facing a further deteriorating economy in an environment of falling prices (deflation), the Bank of Japan (BoJ) announced the introduction of QE on 19 March 2001 and kept it in place until 9 March 2006. The BoJ chose for a very orderly and gradual unwinding of its government securities portfolio, by continuing its regular purchases of these securities (i.e a taper and not sale).  The market rejoiced at the normalization for a week or 2… before dropping 24% in the following 2 months. Of course, that was a “policy mistake”; the Fed knows this time is different.

 

[2]

Think 24% is ok and Fed will just rescue stocks again?… things “esclated”…

[3]

to end -75%.

Awkwardly that lines up with the 1920/30s analog we have previosuly noted [4]

[5]


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URLs in this post:

[1] Zero Hedge: http://www.zerohedge.com/news/2013-12-18/what-happened-last-time-major-central-bank-tapered-qe

[2] Image: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/12/20131218_taper1.jpg

[3] Image: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/12/20131218_taper2.jpg

[4] lines up with the 1920/30s analog we have previosuly noted: http://www.zerohedge.com/news/2013-12-07/ghost-1929-re-appears-pay-attention-signals

[5] Image: http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2013/12/20131206_1929.jpg

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