In case you missed it, Japan just gave the green light to a huge stimulus package aimed at "relieving inflation worries".
But honestly, that seems a bit off... I mean, isn't injecting more money into the economy only gonna make inflation worse? Plus, aren’t we already seeing high inflation in Japan?
So what's the deal with this stimulus? I’m thinking the BOJ and the government are probably bracing for a liquidity crunch or some kind of economic downturn and trying to get ahead of it.
Aahh Japan. Worlds biggest financial problem. No matter how much viagra the government mix into their food, those pandas always refuse to make kids for some reason. Now they want to stimulate them pandas even further? Gubbermint is distributing free munney buy something you fools. Make kids, have fun. Go to USA watch the world cup, best place to use your stimulation package. Stop being so grim. Life is gud. Work work work, you call that life? Work can wait. These people are so smart, their smarts are actually working against them. Cmon spend and let the inflation flow. Mfing pandas what makes you think you are better than the rest of the world?
Stimulus package nit because of natural disaster or war but due to inflation? That is counter-productive because it will simply worsen the inflation. I don't really know what is wrong with the Japanese that most of them prefer to work and not spend their money thereby stiffening their economy. Even with this stimulus package, a lot of them will not still spend the money because they rather work than spend money on leisure.
I have a question, though.
Is it that they really do not like spending money, or don't have the money? I mean, it's a different thing if they have the money, but prefer to spend it only on extremely necessary things, than not having the money at all to spend. What if it's only a narrative that the Japanese don't spend much money, and it's not entirely true?
Could it also be because the government provide or at least subsidises a lot of things, so it doesn't become expensive, so the people no longer need to spend much money? Things like transportation, healthcare, education and other bills people will ordinarily spend more money on, like electricity, gas, etc? Or it is simply what it is: a cultural thing that makes the average Japanese not be a big money spender and constantly work with no time to spend the money.
Maybe, but I think if they predict a "liquidity crisis" they would just increase the liquidity, give out more loans, lower rates and generally do stuff like that.
Paying people like this is only done when the economy is also in a recession and people don't want to or cannot afford to take loans. The stimulus packages are giving to the people to help ease their hardship during economic hardship. Like many governments did during the COVID19 recession.
I also don't think this has that much of an inflationary effect. They money these people receive is mostly spent on their cost of living (to put simply it pays the bills). That can't really cause inflation though.
Last time I checked Japan was in a looong period of deflation but that switched recently and now they are back to inflation. The government has been so used to fighting deflation that they don't know how to pivot the other way, Japan has gotten themselves out of a hole and are probably just trying to stabilize right now. A quick google shows that inflation is only 3% currently in Japan, which is often the goal for most developed countries and means goods don't rise too fast, sometimes governments try to aim for 2% inflation but it's very risky. I too don't know how a stimulus package would help at all in this situation, but I guess it can be a good way to buy votes for the next election.
Maybe someone thinks it's some kind of stimulus similar to what the US did, but when we look at what it's really about, we see that people will receive very little cash, and that most of the money will be intended for various subsidies such as electricity or fuel taxes.
To me, this seems quite targeted and reasonable, rather than handing out checks for a few thousand dollars that some people spend on nonsense, and in fact such assistance makes no sense at all. Considering everything that is happening in the country, including the decline in exports to the US for seven months in a row and the fall of the yen to its lowest levels this year, I think such a decision makes sense.
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I'm actually not sure it's because they are expecting liquidity crisis, the chances that Japan will have a liquidity crisis right now or in the next 2 years is quite low, this is because Japan central bank do print money aggressively, therefore if banks or companies need cash they can quickly get it, also japan owes most of its money to its self and not other countries. So liquidity crisis is something not to be bothered about for the cause of the stimulus package
Instead I strongly suspect that this stimulus package is like a means of stabilising their economy, Japan economy has been facing slow growth in the past few decades, the stimulus package can be a solution to strengthen business and keep a stable economy so things does not go worst.
They spend their money often but the inflation is really the heavy weight they need to carry, their purchasing power plummeted and now they're buying less because of that exact reason.
Japan is truly in a difficult situation right now with the economy and the population crisis.
I can't find any mention of the stimulus package being approved by increasing liquidity. I think they're just going to redistribute fiscal policy. Or am I missing something?
Yes, that's what I think. The discipline of maintaining deflation-stagnant for decades can apparently make them overreact. While 3% is a moderate inflation rate for other countries, they're treating this like 10%. I know Japanese people are typically frugal, so they're not used to rising prices.
Stimulus package is basically the government spending the money trying to ease the pressure of individuals and business. It might be a good thing considering the fall of economic activities but this one particular from the government of Japan is mostly being spent on things that won't benefit Japan.
Japan has one of the lowest fertility rate and its population is basically crashing down. Subsidies on energy, rice and a one time cash handout for child seems a good thing but it's very low. $128 for a child won't even cover a month expense for the child. While all the rest are going to buying weapons and contracts.
Japan is doing the wrong thing in wrong time, while theirs priority should be on making Japan more livable and keeping the population manageable, they are giving away contracts to people and companies out of the country.
Hey mindrust, I thought pandas where endemic to China, not Japan
Although I respect their culture, I think that your comment is quite appropriate. Yes, I really miss a greater work ethic in my country (Spain is known as the country of the "pandereta" -tambourine- for some reason...) but the case of Japan is extreme. Like you said, they're so smart that it seems they lost focus on what is really important in life, like starting a family or enjoying simple contemplation.
Extremes are not good, and practical examples like Japan's exemplify it very well. Their latest greatest export to the world, the "Single's Day", should be taken as a warning. (Oh no! I just searched it and it's native to China, again... Never mind, the underlying idea is still valid).
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That's absolutely why I posted that there might be a hidden reason why they're doing that, which they don't want to tell the general public to avoid causing a panic.
But if there are hidden leaks and cracks in their economy, and if indeed it's time to crash, THEN it will crash without any warning.
Is the economic stimulus package just about encouraging the spending of money worked for?! ...it goes beyond just that, even with the subsidies to inspire spending culture or habit. I think when it comes to spending by the Japanese it has to start with the renewing of their minds towards it because even the subsidies may not really be effective as expected. Maybe many of the citizens needs to know the importance of money circulation through spending, that it facilitates economic growth but hoarding inhibits ...
If you didn't posted this, I will never know that they have approved a $135-B stimulus.
That is true, AFAIK they are still in recovery and have got a lot of package offered not only to their citizens to boost a lot of industries including tourism but also to tourists.
What I am thinking is another money from them to pour in to Bitcoin?
Kidding aside but that's how they simply want to lessen the inflation but later on, they'll have to deal with its consequence.
I see that no one has commented (probably not even read my post) which very clearly states in what form these stimuli will be paid out, and then you wouldn't get lost in theories that this money is something that will result in something completely bad. $130 dollars per child or $20 in food vouchers per person is not something that will allow anyone to invest in something like Bitcoin or any similar investment.
I was thinking that it's a plain cash but thanks for correcting me.
Should it be in cash, the beneficiaries will have more extra cash if it's $130 per child and they'll surely put it into good use since Bitcoin in Japan is no longer a myth.
I now understand that it's for the subsidies but I think in the end, it'll still going to cause an additional inflation.
It would have been good to include some information about the stimulus check you know, so that we can evaluate what is going on here.
Here's what beloved AI says and another source.
I am not sure if this is accurate because 7,000 yen is like 45 US dollars? On another source I found this:
These amounts still seem low though. $20 rice voucher per person? How does that really help?
It is certainly possible but without any data that would just be a conspiracy theory. Do you have something?
Very few people can actually properly afford to have kids in this economy. Nobody intelligent is going to have kids before they are ready, that is why so many undeveloped migrants are having many kids in the European Union. They don't even spend most of the money that they get for kids on the kids themselves, you will see them feeding them cancerous budget food. Funny how incentives sometimes do the opposite of what is intended.
I'm not actually sure if those numbers, per person, is actually right, BUT what matters is the total amount of money that's being injected into the economy. They wrote that it's the largest liquidity injection since COVID-19, then it must be relatively massive.
I don't have "something" but a mere question. "WHY"?
If the economy is OK, then why the liquidity injection despite the rising inflation?
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Relatively massive to what, the COVID stimulus? It is not. The COVID one was in total more than $1 trillion according to AI. So this one is just a bit more than 10%. I guess the news headlines can be quite misleading since something can be the biggest stimulus since the COVID one but still relatively small compared to that one. Still that does not mean that it is small overall, when not compared to the COVID one. It is still pretty big since there is no observable crisis of that kind going on.
Well that is fair to ask still, I just wanted to check if you had something more. The issue here is that economies all over the world are not in a good situation. Some are better off than others right now, but no place is experiencing those golden times. The question is always what do you do to improve the situation? There are many measures of relief that are tried, some work better than others. For example a direct stimulus that gives you money to spend on whatever you want is among one of the worst options. Many people, especially poor ones will squander it on shit that will actually not help their situation at all. People are just terrible with easy money. Something like reducing taxes on gasoline is slightly better, but more systemic improvements are the best.
I am not saying that there is no issue here, but I want to see some data that indicates this so that we can explore it more deeply.