The Bank of Japan last week announced another round of Quantative Easing.

[https://www.boj.or.jp/en/announcements/release_2014/rel141031e.pdf]

The announcement on the 31st October is incredible.

“…….effective from November 4, 2014. In principle, the Bank will announce the “Outline of Outright Purchases of Japanese Government Bonds” on the last business day of every month. The next announcement will be on November 28, 2014.
1. Amount to be Purchased Approximately 8-12 trillion yen per month in principle….”

Yes you read that correct.

What this means is that The Bank of Japan will now from November buy 8-12 Trillion Yen of (Japanese Government Bonds) JGB each month, but the government only actually issues (sells) about 5 Trillion Yen of Bonds a month.  No one will ever say but what is happening is pure debt monetisation.

[1 Trillion = 1,000,000,000,000]

so 8 Trillion YEN = 8,000,000,000,000 YEN = £44,567,200,341 GBP

That is forty-four billion, five hundred sixty-seven million, two hundred thousand, three hundred forty-one.

= £44 Billion = £44,000 Million.

So each month the Bank of Japan will spend £44 Billion = 8 Trillion YEN each month on buying Japanese Government Bonds (JGB’s)

To put things into context the Gross Domestic Product (GDP) is £3.06 Trillion.

So if the Bank of Japan executes this plan for say 6 months, this calculates:-

£44 Billion x 6 months = £264 Billion.

In 6 months of Bank of Japan purchases that equate to £264 Billion is equivalent to 8% of Annual GDP.

these numbers are huge. What will the Bank of Japan do with all these bonds that is owns ?

It will never be able release them on the open bond market, as it will flood the market and the prices of existing bonds will slump. The end game of this global policy of flooding the market with cheap capital is impossible to predict, but what are the unintended consequences ?