Home > Uncategorized > Japan Goes Full Krugman

Japan Goes Full Krugman

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.


{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


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