Whatever else you can say about the new turn in Japanese policy, it’s offering a great demonstration of the peculiarities of zero-lower-bound economics. (JGBs meet the ZLB, OK!) The key point here is that Japanese short-term rates are hard up against zero. Long-term rates aren’t, but they’re still constrained: the long rate is, to a first approximation, the average of expected future short rates;
![Japan's Teachable Moment](https://cdn-ak-scissors.b.st-hatena.com/image/square/cfb134edf543e94295d229f5224c8a8f1174c76d/height=288;version=1;width=512/https%3A%2F%2Fstatic01.nyt.com%2Fpackages%2Fimages%2Ficons%2Ft_logo_300_black.png)