I don't understand one thing: why would the Japanese government maintain a ZIRP or a NIRP ? What do they have to gain by doing so?

Probably to stimulate the economy which has been stagnant in terms of GDP since the 90s

It’s to control inflation.

Basically, when currency is scarce, its value goes UP.

When currency is plentiful, its value goes DOWN.

The first scenario lowers inflation, the second raises it.

After Japans bubble economy popped in the early 90s, they had asset values FALL.

So the BoJ began stimulating the economy - trying to push UP inflation - by adding currency to the markets.

The Carry Trade illustrates one of the dangers:

Japan was trying to stimulate their own economy, to counteract the deflation caused by their bubble popping.

But money doesn’t know borders, and though the money was intended to stimulate JAPANS economy, there was nothing stopping ANYONE from purchasing that currency. It’s not like you have to live in Japan to buy Yen.

So the money (yen) was created in Japan, but ended up all over the world.

This has consequences:

* Japan ended up with mountains of US dollars. This is one of the reasons that Japan has more US Treasuries than China. This mountain of dollars lowers YOUR cost of living. Because USD is being acquired for The Carry Trade. This creates artificial demand for USD.

* Because the yen is created in Japan but is then used for international commerce, it dramatically reduces the inflation that “printing money” would normally create. This is why Japan has more debt per capita than any country by far, by a factor of over 2X

I am just an I.T. dude who invests in real estate. So what I just posted may be completely wrong.

The carry trade has existed for about four decades; that’s my summary of how it affects us, from the perspective of a small time real estate guy.

Because it means they can borrow for free

Deflation.