Bridgewater: Japan’s QE Mostly Impacts Yen, Not Broad Economy

Quantitative easing in Japan has delivered a “muted” boost in consumer lending and even the related higher end asset prices that result from the program are only benefiting households to a limited degree, a recent strategy document written by Bridgewater Associates observes.

To develop its thesis, Bridgewater looks at quarterly bank earnings announcements in Japan and uses this as one yard stick to measure how successful the Bank of Japan’s quantitative easing is at “flowing through to the real economy.”

The most significant impact of QE is on the currency, not the economy

The report notes the key benefit of central bank market stimulus is a lower national currency value, which is stimulating those fortunate enough to be in export-oriented businesses....