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In the case of Japan, a rising tide does not necessarily lift all boats. Back when the narrative was focused more on the United States in the wake of the last financial crisis, the idea was that central bank balance sheet expansion would help everyone with exposure to financial assets, namely stocks. While working in theory, in practice the results are markedly different.
Valuations have indeed risen, but one of the byproducts of quantitative easing is a widening of the wealth gap. Although the results would conceivably be repeatable, the Bank of Japan’s impact has not shown comparable success.
Even after opting ... (read more)