Free money!!! The LDP through the Ministry of Finance have a heart after all. Well, not quite free, because you can’t deposit it but you can spend the money which will be in the form of a “gift-certificate.” It appears the Japanese government are now in a phase of “extreme monetary experimentalism.” These gift-certificates are directed towards low-income Japanese and are to be spent on necessities (bet by now the Yakuza have something else in mind). What’s the “gift” really all about? Quantitative Easing (QE) and negative interest rates have reached their limits so the alternative: Gifts to spend to stimulate consumption.
The last thing Japan’s corporations want to do is raise wages, so why not throw some free money at the peasants to encourage them to spend it on consuming more stuff they don’t need manufactured by those same corporations. Wait until the Yakuza starts accessing these gift-certificates which they probably have already targeted to profit off from on the black market. And this says nothing of the psychology, which I don’t think effects the Japanese like it does in other countries, of punishing the productive while giving handouts to low-income surfs to keep them pacified. This free money in the form of a “gift-certificate” locks in the surf class since it looks as though there is nothing they can do to increase their chances for participating in a more equatable take of the loot.
Source: Zero Hedge
Japan Goes Full Krugman: Plans Un-Depositable, Non-Cash “Gift-Certificate” Money Drop To Young People
by Tyler Durden on March 23, 2016
The Swiss, the Finns, and the Ontarians may get their ‘Universal Basic Income’ but the Japanese are about to turn the Spinal Tap amplifier of extreme monetary experimentation to 11. 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 QQE (and been left with a quintuple-dip recession) and unleashed 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, 7% 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 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.