Here's A Rorschach Test That Says Everything About The Debate Regarding Japan

You should know what a Rorschach Test is.

It’s one of those ink blot images where you’re asked to describe what you see, and supposedly your answer tells you something about your brain. For example do you see two women here, or do you a frog?


Here’s another Rorschach Test, although this one pertains to Japanese economy.

It’s not an ink blot, but a chart of Japanese 10-year bond yields, which have been spiking since early April?

SocGenWhat do you see?

Do you see a chart that says people are freaking out about Japanese debt, and a surge in interest rates that will undermine the entire point of The BOJ’s monetary easing and Abenomics?

Or do you see evidence that at long last, markets are predicting some inflation, which is then being reflected in the market, which is what Abenomics aims to pursue?

This has become one of the biggest economic debates in the world, and the two answers couldn’t be more opposite, as one sees this as the ultimate vindication of Abenomics, and the other sees Japan’s demise?

Not sure where you stand?

Here’s Lars Christensen arguing that the rise in bond yields is a great sign >

Here’s David Beckworth arguing the same >

And in this article, Richard Koo argues that this could mean a tremendous loss of faith >

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