Bank of Japan’s Interest Hike Marks End of an American Era

For Immediate Release:
July 14, 2006
Contact:  Ian Mathias, 410-864-1652,  Bank of Japan’s Interest Hike Marks End of an American Era

Baltimore, MD:  The Bank of Japan announced this morning its decision to raise interest rates for the first time since 1999. Japan’s choice to end a longstanding zero interest rate policy will, in the mind of one expert, signify the death of a U.S. “easy money era.”

According to Justice Litle, editor of the acclaimed financial newsletter Outstanding Investments, “Japan's long-running zero interest rate and quantitative easing policies were huge drivers of the housing bubble and the sea-of-liquidity environment that has dominated these past few years.” Litle believes that the Japanese interest hike coupled with the long lost “easy money” polices of Alan Greenspan could stall the global economy and weaken U.S. markets.

 “For a long time, the trade to make was borrowing Yen at zero percent interest and investing the proceeds in high flying assets,” said Litle. “That trade is now dead, and the sea-of-liquidity environment we have been in for so long is drying up.”

Litle also claimed the absence of readily available, no-interest loans will put Ben Bernanke and the U.S. economy in a bind. “For the past seven years, persistent deflation in Japan was transformed into an inflationary force for the rest of the world,” said Litle. “Now that Japan has reneged their zero interest policy, America could feel the sting of deflation. Bernanke, in an effort to avoid a deflationary downward spiral, may be forced to print more U.S. dollars.”  

Justice Litle, editor of Outstanding Investments and contributing editor to The Daily Reckoning, has implemented sophisticated trading and hedging strategies for clients on a global scale – a broad cross section including soybean farmers, cattle ranchers, currency hedgers, energy consultants, scrap metal dealers and everything in between. He has worked with hedge funds, traded equities for a private partnership, and written multiple articles for highly respected news sources.

A product of Agora Financial, The Daily Reckoning is written by New York Times best-selling authors, Bill Bonner and Addison Wiggin. The Daily Reckoning is a daily, free e-letter that weaves information about the financial world, investing, and everyday life into an educational and entertaining format that has been engaging readers for over seven years.


For more information or to schedule an interview please contact Ian Mathias: 410-864-1652