The biggest issue with this is that it distorts the market in a way that normal quantitative easing doesn&#x27;t.  Normally the stock market prices are kept in check with short sellers putting downward pressure on stocks that are priced too high.<p>With the government buying so much, being long only, it makes it very hard for a fund to short a stock.  Its one thing to be right, but its another to try and short a stock knowing that you&#x27;ve got the government taking the other side of your trade.  It doesn&#x27;t matter what fund you are, they have more firepower than you, which leads to decrease in short interest, which leads to an overall inflation in market values that goes away the moment the markets get any hint that the government will stop propping up prices.<p>Or put another way, the government is now in a position where they&#x27;ll need to keep on buying and holding the stock market forever.<p>Nothing about the Japanese stock market surprises me anymore.<p>Below is a good article illustrating how one leveraged ETF got so big that it was literally moving the market at the end of ht day in its attempt to re balance itself.  Sort of a tail wagging the dog scenario.<p><a href="http:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2015-10-18&#x2F;the-etf-whale-blamed-for-moving-japanese-markets-gets-reeled-in" rel="nofollow">http:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2015-10-18&#x2F;the-etf-wh...</a><p>I guess the one good thing about Japan is that its essentially a petri dish for maco economists and macro funds to experiment with to determine what the US markets will look like if&#x2F;when the US hits an end to its economic growth.