Begin forwarded message: > From: Bill Totten <[email protected]> > Date: March 27, 2016 at 11:59:03 PM EDT > To: Ugly New World <[email protected]>, a-list > <[email protected]> > Subject: [a-list] Japan Goes Full Krugman > Reply-To: [email protected] > > Plans Un-Depositable, Non-Cash "Gift-Certificate" Money Drop to Young People > > by Tyler Durden > > Zero Hedge (March 23 2016) > > The Swiss {1}, the Finns, and the Ontarians {2} may get their "Universal > Basic Income" but the Japanese are about to turn the Spinal Tap amplifier of > extreme monetary experimentation to eleven. Sankei reports, with no sourcing, > that the Japanese government plans to unleash "vouchers" or "gift > certificates" to low-income young people to stimulate the "conspicuous > decline" in consumption among young people. The handouts may not be > deposited, thus combining helicopter money (inflationary) and fully > electronic currency (implicit capital controls and tracking of spending). > > Since Ben Bernanke reminded the world of the existence of government > printing-presses, echoed Milton Friedman's "helicopter drop" solution to > fighting deflation, and decried Japan for not being as insane as it could be > ... it has only been a matter of time before some global central bank decided > that the dropping of cash onto the populace was the key to economic recovery. > Having blown their wad on Quantitative and Qualitative Easing ("QQE") (and > been left with a quintuple-dip recession) and unleashed Negative Interest > Rate Policy ("NIRP"), it appears Japan has reached that limit. > > As Bloomberg reports, > > > > The Japanese government plans to include gift certificates for low-income > young people in its fiscal 2016 supplementary budget, Sankei reports, without > saying who provided the information. > > Recipients would be able to use them for daily necessities. > > The government sees gift certificates as more effective in stimulating > consumption than cash handouts, which may be deposited. > > > > As Sankei reports (via Google Translate), > > > > The government 23 days, as the centerpiece of the 2016 fiscal year > supplementary budget to organize because of the economic stimulus, cemented > the policy to include the low-income measures for young people. To examine > the distribution of vouchers to be devoted to the purchase of such daily > necessities. Although the 2015 supplementary budget, which was established in > January was the extraordinary benefits pillars of the elderly, because the > conspicuous decline in consumption among young people, hopes to work to shore > up at the pin point. Low-income measures of the past on the grounds such as > "benefit is Oyobi difficult wage hike" (Chief Cabinet Secretary Yoshihide > Suga) is for the elderly was the main. > > However, in January of Family Income and Expenditure Survey (two or more > people households), consumption expenditure of 34-year-old following of young > people in a significant negative same month of the previous year of 11, seven > percent decrease, compared to the total household average of 3.1% year on > year decline was noticeable even. Government in order to raise the level of > personal consumption to be sluggish, the determination and consumption > stimulus measures of young people is essential. Rather than the benefits that > potentially turn into savings is pointed out, we are considering the > distribution of gift certificates. Details, such as low-income earners of > interest and business scale is filled from April. > > According to the Cabinet Office survey, for which the straight-line benefits > that were distributed in 2009, many of proportion to turn to the consumer > from the elderly entitlements is more of the child-rearing households than > the household, this time of the measures expected a certain effect on the > consumption raise That's it. Per capita 3 27 fiscal distribute the yen > supplementary budget of extraordinary benefits to the elderly of the > low-income, objection such as "Why do you favor only the elderly" was out of > the ruling and opposition parties. Ahead of the House of Councillors > election, there is also aim to appeal to the support measures for young > people. > > > > And so while some might liken it to Electronic Benefit Transfer cards ("EBT > cards") in the US ... it appears this is simply a hidden way to directly hand > out free money to those that spend (lower income) and force consumption > (non-depositable or savable) and thus ... increase inflation ... So no need > for firms to raise wages after all! Well played Abe. > > > > > > One wonders how much these "gift certificates" will trade for on the black > market ... as we are sure some "spending" will be disallowed and require the > use of cash - no sugary drinks ... no Fugu (google it) ... no Sumo > tournaments ... and no BMW X6. > > And finally here is Charles Hugh-Smith {3} to destroy the idea that this > works ... > > > > In sum, the psychology of punishing the productive and rewarding > non-contributors is destructive to everyone. Have proponents forgotten that > humans are prone to emotions such as resentment? Resentment goes both ways; > the recipients of Basic Income will be getting by, but they won't be able to > build capital or better their financial stake. They are in effect Basic > Income Serfs. > > Proponents also believe that the loss of work will free everyone getting a > basic income to become an artist, composer, musician, et cetera. As I noted > in {4}, since meaningful work is the source of positive social roles, Hell is > a lack of meaningful work. > > In the myopic view of the Basic Income proponents, humans are nothing but > consumer-bots who chew through the Earth's resources in their limitless quest > for more of everything - what the Keynesian Cargo Cult worships as "demand". > > Tragically, this blindness to humanity's need for meaning and the elevation > of spiritually empty consumerism to a Secular Religion leaves the basic > Income crowd incapable of understanding this timeless truth: the only > possible result of robbing people of their livelihood is despair. > > Once meaningful work vanishes, so do positive social roles. > > This is why guaranteed income for all is just a new version of Socioeconomic > Hell. Being paid to do nothing does not provide meaningful work or positive > social roles, which are the sources of positive identity, pride, purpose, > community and meaning. > > The petit-bourgeois fantasy of every individual flowering as an artist, > musician and creator once freed of work is an abstraction, one born of the > expansion of academic enclaves and private wealth-funded dilettantes > fluttering from one salon to the next. (Ever notice how many trust-funders > have therapists? Would they all need therapists if being freed from work > automatically generated happiness and fulfillment?) > > These are precisely what basic income for all doesn't provide. To the degree > that serfdom is political powerlessness and near-zero access to the processes > of accumulating productive capital, guaranteed income for all is simply > serfdom institutionalized into a Hell devoid of purpose, pride, meaning, > community and positive social roles. > > > > > > > > As we previously detailed {5}, support is growing around the world for such > spending to be funded by People's Quantitative Easing ("QE"). The idea behind > "People's QE" is that central banks would directly fund government spending > ... and even inject money directly into household bank accounts, if need be. > And the idea is catching on. > > > > Already the European Central Bank is buying bonds of the European Investment > Bank, an EU institution that finances infrastructure projects. And the new > leader of Britain's Labor Party, Jeremy Corbyn, is backing a British version > of this scheme. > > That's the monster coming to towns and villages near you! Call it "overt > monetary financing". Call it "money from helicopters". Call it "insane". > > But it won't be unpopular. Who will protest when the feds begin handing our > money to "mid- and low-income households"? > > > > Simply put, The Keynesian Endgame is here {6} ... as the only way to avoid > secular stagnation (which, for the uninitiated, is just another > complicated-sounding, economist buzzword for the more colloquial "everything > grinds to a halt") is for central bankers to call in the Krugman Kraken and > go full-Keynes. > > > > Rather than buying assets, central banks drop money on the street. Or even > better, in a more modern and civilised fashion, credit our bank accounts! > That, after all, may be more effective than buying assets, and would not > imply the same transfer of wealth as previous or current forms of QE. Indeed, > "helicopter money" can be seen as permanent QE, where the central bank > commits to making the increase in the monetary base permanent. > > Again, crediting accounts does not guarantee that money will be spent - in > contrast to monetary financing where the newly created cash can be used for > fiscal spending. And in many cases, such policy would actually imply fiscal > policy, as most central banks cannot conduct helicopter money operations on > their own. > > ... > > So again, the thing to realize here is that this has moved well beyond the > theoretical and it's not entirely clear that most people understand how > completely absurd this has become (and this isn't necessarily a specific > critique of SocGen by the way, it's just an honest look at what's going on). > At the risk of violating every semblance of capital market analysis decorum, > allow us to just say that this is pure, unadulterated insanity. There's not > even any humor in it anymore. > > You cannot simply print a piece of paper, sell it to yourself, and then use > the virtual pieces of paper you just printed to buy your piece of paper to > stimulate the economy. There's no credibility in that whatsoever, and we > don't mean that in the somewhat academic language that everyone is now > employing on the way to criticizing the Fed, the ECB, and the BoJ. > > > > And it will end only one way ... {7} > > > > The monetizing of state debt by the central bank is the engine of helicopter > money. When the central state issues $1 trillion in bonds and drops the money > into household bank accounts, the central bank buys the new bonds and > promptly buries them in the bank's balance sheet as an asset. > > The Japanese model is to lower interest rates to the point that the cost of > issuing new sovereign debt is reduced to near-zero. Until, of course, the > sovereign debt piles up into a mountain so vast that servicing the interest > absorbs more than forty percent of all tax revenues. > > But the downsides of helicopter money are never mentioned, of course. Like QE > (that is, monetary stimulus), fiscal stimulus (helicopter money) will be sold > as a temporary measure that quickly [will] become permanent, as the economy > will crater the moment it is withdrawn. > > > > The temporary relief turns out to be, well, heroin, and the Cold Turkey > withdrawal, full-blown depression. > > Links: > > {1} > http://www.zerohedge.com/news/2016-01-29/helicopter-money-arrives-switzerland-hand-out-2500-monthly-all-citizens > > {2} > http://www.zerohedge.com/news/2016-03-07/helicopter-money-comes-canada-ontario-pledges-basic-income-experiment > > {3} http://www.zerohedge.com/news/2015-12-11/flaws-basic-income-everyone > > {4} http://www.oftwominds.com/blognov15/serfdom-hell11-15.html > > {5} http://www.zerohedge.com/news/2015-10-04/here-come-money-helicopters > > {6} > http://www.zerohedge.com/news/2015-10-07/you-never-go-full-krugman-insane-helicopter-money-calls-continue-trapped-central-ban > > {7} > http://www.zerohedge.com/news/2015-10-13/where-first-helicopter-drop-money-likely-land > > http://www.zerohedge.com/news/2016-03-23/japan-goes-full-krugman-plans-un-depositable-non-cash-gift-certificate-money-drop-yo > > https://billtotten.wordpress.com/ > http://www.ashisuto.co.jp
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