IT'S A DEFLATIONARY EPOCH:

The Japanese central bank has a problem. For years, it has been flooding the financial markets with crazy amounts of money. The goal is to drive inflation higher, to meet its target of around 2 percent. But so far it has had little success on this front. In June, inflation in Japan hovered at 0.8 percent.   

From the point of view of the central bank, this rate, which is still comfortably high, is largely due to the climb in global crude prices. Without it, the price rise was a mere 0.2 percent, a level that's perilously close to deflation -- a situation that central bankers fear and desperately try to avoid as it can trigger a vicious cycle of falling prices and declining investment that can ultimately result in a severe recession.

But this isn't only a problem in Japan. In other regions of the world, central banks are also working diligently to push inflation up toward their target value. The European Central Bank (ECB), for instance, will continue to buy bonds worth €30 billion ($35 billion) every month until at least September. Despite their efforts, ECB chief Mario Draghi and his lieutenants have so far been unsuccessful in this regard, with core inflation in the eurozone remaining well below 2 percent.

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