April 05, 2013

The world (Japan) does not need inflationary expectations it urgently needs more rational bank regulations

While the banks, by means of minuscule capital requirements for what is perceived as absolutely safe, are reigned in from taking on exposures to what is perceived as risky, at the same time central banks allow themselves to run extremely risky monetary experiments. Something is way wrong!

Sir, in “Japan embraces monetary change”, April 5, you hold that though “an impressive package of quantitative easing… may have adverse consequences… there was no alternative.

Wrong! More than anything Japan, UK and all other Basel Committee subjects too, need to rid themselves from silly bank regulations which favor “The Infallible” and therefore discriminate against “The Risky”. Get a grip on yourselves! In the real economy, what is absolutely absent is what is “absolutely safe”.

Any quantitative easing, keeping these regulations in place, only doom the banks to dangerously overpopulate whatever is perceived as “safe havens”, holding too little capital, and thereby making the world a much more riskier place.