No insight into Japan, but the US in particular should be aggressively shoveling money at business payroll as well. Some reasons why:
First is to keep workers out of state unemployment insurance programs. These differ per state, but are often deliberately miserly and/or burdensome so that they motivate recipients to go find a new job. But we don't want the unemployed to hit the bricks. Payroll support is then a more easily-administered form of federal UI. (Plus state UI is written in COBOL, they will literally crash.)
Also, retaining workers will help to ensure a V-shaped economic recovery. Once the health crisis ends, retained workers can just go back to work. But layoffs followed by rehires means more retraining (not retaining), and a slower recovery.
The point is that we literally cannot pinch pennies now: anything we "save" will hit us twice as hard as a new entitlement cost, or a cost to the states, or in reduced tax revenue, or whatnot.
Money is a fiction; the real risk is mouldering factories and disused skills. If a year from now the US is trillions more in debt, and prices are 2% higher, YET we are healthy and working and productive, we will have been successful in countering the health and economic crisis. We should be so lucky.
What I saw today driving through the neighboring small town - half of the main street shops and restaurants are closed. Not just temporarily, but the space is empty and there is a big "for rent" sign in the window. I've been going to some of those restaurants for decades - and now they are all but a memory.
It is not enough to give corporations money for payroll - in NY large part of the cost of running business is the space itself. Also I don't understand all these "lending" programs - all they do is defer an even larger payment for later - most of the businesses will not be able to repay that if they have been closed for months. You are basically taking a loan to pay the rent so you can go bankrupt later. Doesn't make any sense.
I don't know what to do but we need to give money and healthcare to people independent of work. Let businesses fail (big and small) and rebuild new ones once this blows over. Corporations will only buy back stocks and and line shareholders' pockets with dividends. Single digit percentage points of the stimulus money will reach employees.
Bankruptcies aren't that bad - usually companies are not dissolved, but go through restructuring and gain a new management team (which one, knowing there is no bailout in the future, will plan better for emergencies like this one).
What we are doing now is perpetuating corporate negligence that will now factor in 100% government bailout and run on even thinner margins and bigger stock price growth and dividends for the shareholders.
It’s more efficient to implement a universal basic income.
Having to funnel it through businesses just adds dead weight. Many businesses are no longer economically viable or sustainable, and that will only continue to accelerate as time goes on. We place far too much emphasis on jobs, which doesn’t work in the age of automation as humans become, at least productivity-wise, more and more unnecessary.
Once you decouple a person’s worth from their productivity though, then you can start to better see the inherent value that exists in everyone which is both foundational and immutable.
US included a payroll protection program (PPP) in the CARES act last month, which pays for payroll for small businesses with some forgiveness provisions. The forgiveness terms are very roughly summarized as, "don't lay anyone off and the government will cover 8 weeks of wages for anyone making less than $100k / yr". News this week is that a second round of funding will go out for the program.
Yep, companies are losing the ability to pay employees all over the US right now. Stay at home orders are almost certainly the right thing to do - the government needs to make it easy to do them.
I am curious, why stopped at a one time 1,200 dollar check?
If the Congress had already ordered to print money, they surely can do more than that and for longer. Instead they delegated to existing programs for the rest, which aren't optimized enough to roll out that much money at this short period of time.
Hey, if anything can handle the volume it's the cobol.
But you'll also have an explosion of the bugs and exceptions noone ever wanted to pay to fix that get manually sorted every morning by the two 67 year and twice retired old devs who didn't get laid off to save money.
The $600/wk benefit that the Feds added was precisely to make unemployment sufficiently generous that people would not be motivated to go find a new job right now.
How easy it is for some to back and say that the government should be doing this or that. As these attitudes of entitlement continue to supplant those of self reliance, what happens?
"...Payroll support is then a more easily-administered form of federal UI. (Plus state UI is written in COBOL, they will literally crash.)"
Given how PPP just played out and considering the history our government has with opacity surrounding public-private finance...do you believe that such a broad strategy in US could be done with competence and integrity? If so, how?
"The point is that we literally cannot pinch pennies now: anything we "save" will hit us twice as hard as a new entitlement cost, or a cost to the states, or in reduced tax revenue, or whatnot." Could you elaborate on this premise?
"Also, retaining workers will help to ensure a V-shaped economic recovery."
There is no ensuring of anything! Positioning it as "will help ensure" is a linguistic setup strangely reminiscent of how politicians like to manipulate words (and people).
But "Money is a fiction"...what does this even mean?
The health crisis doesn't "end" by itself. I'm sure most people would rather get back to work than stay at home and receive free money. Let them do that.
This is true, and even the negative consequence- "trillions more in debt"- is a (to a first approximation) fiction.
Central bank balance sheets are supernatural entities of essentially infinite capacity. We need to use them now.
We don't necessarily know how to properly measure the various economic entities and activities we care about when balance sheets are used this way- but that's an accounting problem. We can clean it up in post.
My take you could very quickly funnel money through payroll companies. They have all the contact and banking information needed. Lots and lots of small businesses use payroll companies.
Steps would be pretty easy, business sends paperwork to the payrol company, they cut the checks, and bill the Feds.
Many small business are minimally impacted. A small government contractor updating a website is hardly going to need additional government assistance when everyone is already remote.
Trying to hand out money to all small business is a nightmare which does not actually accomplish much for the money.
1. Cancel rent payments, mortgage payments, and property taxes. People simply stop paying and stay where they are, no enforcement burden and no distribution necessary.
2. For landlords who cannot sustain the loss of cash flow, offer to buy them out at market price and then hire them as property managers for their previously owned properties.
With essentially zero overhead, you've eliminated small business's first or second largest expense (payroll and rent). If they still can't make payroll, it's not a super huge deal since those employees also have their rent frozen.
Now the economy can hibernate.
When we're ready to resuscitate it, do a direct stimulus check as you reopen businesses. Let money start flowing without any component going to rent for some amount of time until we're back on solid footing.
So I know a guy that he bought some real estate he owns 3 properties I think. He isn't a millionaire just a software engineer working the 9-5 and the properties exist mostly to help him prepare for retirement. Now he has some money set aside so that if one of his properties goes dormant he can cover it for a while, but if he were to lose all three of them at the same time. That would be bad.
Then you suggest the government can just buy him out at market rates. Who decides what the market rate is? What if the government decides to value the property for $50,000 less than it is worth?
Well suddenly he has just had $150,000 taken from him by the government. When things restabiloxe what do we do then? The government owns tons of housing? Who is going to manage and administer that? If they dump them than all that you've done is transferred the properties from small owners to massive multi-million dollar firms that managed to take the hit. What about people who got laid off and still don't have a job after it is over? Because it was a result of the coronavirus do we just continue to say it's okay don't pay rent? If we do that guarantee a year from now tons of properties won't be paying rent still.
It sounds like an easy and simple fix but it is usually more complicated than that and drastic decisions made will often have downsteam effect for years and decades that we can't see now.
> Cancel rent payments, mortgage payments, and property taxes. People simply stop paying and stay where they are, no enforcement burden and no distribution necessary.
This is something I'm confused about. The US government goes through great lengths to support constituents with an array of welfare programs, but goes through equally great lengths to take a lot of that money back from people. It seems awfully inefficient, and supporting those diametric systems seems like an awful waste of time, energy, and money.
Many people think this way. It is intuitive. It is also mistaken.
It is simply not how this incredibly enormous, incredibly complex system has been set up. What is underappreciated is that in contrast to 2008, which was a financial system crisis- what we have now is implicitly a legal system crisis, on top of obviously a medical system crisis.
Why legal?
1. The flows of money are contractual
Every flow is a contract. Rent, mortgage, other kinds of loans, expenses for utilities, internet, the entire food supply chain, Whatever. All contracts. Nearly all are private contracts- person to person, person to business, business to business.
We are talking- hundreds of billions of individual contracts just in the US. At least.
2. Ending a flow means breaking a contract
Many of those contracts have termination conditions and remedies and so forth. Many of those conditions are bespoke. Various kinds of courts have authority to handle contract termination and enforcement. We are about a billion courts short of the number needed to deal with this at scale. And the court system simply does not scale- there are no procedures, no mechanisms to deal with these kinds of systemic consequences.
3. There is no legal authority to break them at scale
There is simply no legal authority by which those contracts can be terminated. Not Mayors, not Governors, not the President, not the Supreme Court, not Congress- can say- "rent is cancelled" at scale.
This is the absolute essence of the American system. It is a system of laws, not of men, our criminal President to the contrary.
That is why individual localities are passing "no eviction" laws and so forth that prevent certain kinds of remedies, without impacting the payment requirement itself.
4. There are almost no "terminal" transactions.
Even if there was some legal way to nullify those billions of contracts, and there was some way by which the entire legal system did not itself become compromised- so then those flows could be stopped- what then?
The reality is that there are no "terminal" transactions.
Most rent payments become mortgage payments. Most mortgage payments become interest payments to investors, around the world. Even money that "stops" to sit in a bank account is used as regulatory collateral by the bank in which it sits to create more money. If flows stop into those accounts, the bank falls out of regulatory compliance, has to stop doing its business.
Money is like oxygen, like blood. It HAS to circulate for this body public to survive. Stopping the flows means death.
The solution to this problem is what Japan is doing- maintain the legal fictions by which society operates using the financial machinery the Bank of Japan knows how to operate. Its balance sheet- which for all intents and purposes is an entity with infinite capacity- can maintain flows indefinitely until the medical system can master this enemy and then everyone can return to their regular business.
It is a leap for everyone to understand this- to appreciate this aspect of money that runs contrary to everything we have been told and experience on a personal level. It is not your money, or my money. It is not even our money.
For societies of humans, the flow of money is an ecological assumption that we created and have to maintain.
We are in need of the Einstein to write the Special Relativity paper that demonstrates that our Newtonian physics understanding of money, as an asset and so forth, while convenient in our ordinary every day lives, is wrong at societal scale.
>> 2. For landlords who cannot sustain the loss of cash flow, offer to buy them out at market price and then hire them as property managers for their previously owned properties.
But who's going to decide on the value? And pay for it? If the goal is to help US population, why not just use that money and give to others with less wealth? Because money given to those without savings will definitely be put back into the economy.
A big chunk of money given to one person will most likely sit in a savings acct or something like it...
So how does the local government pay the police, firefighters, sanitation workers, and wastewater treatment plant workers, since property tax revenue is put on hold?
Coming to the realization that our economic crisis (primarily massive number of newly unemployed) was largely avoidable with a scheme like this vs the PPP loan program and multi-trillion money printing we got instead.
BoJ’s money printer has been going since well before cv19. They pioneered central banks buying ETFs (its even called Japanification..) I don’t believe the crisis would have been avoidable since salaries are only one part of the economy (ex:how does debt work?)
The PPP loan program was actually pretty close to this, if executed well and funded sufficiently (obviously, it wasn't). The unemployment benefit extension and hack (unemployment + $600) was the real critical mistake that we'll spend a long time fixing.
The QE / money printing is complicated, but it's worth nothing that Japan has been "printing money" for a long, long time, and QE is a mainstay of Abe-nomics (so the Japan subsidy here is absolutely coupled with aggressive QE). Battling deflation to hit inflation goals is a reasonable goal for a central bank, IMO, but obviously it's not cut and dry.
Somewhat. The economic part of the crisis is that people aren't working to create valuable things and experiences. How the support to keep people fed and sheltered is handled is critically important but it is trying to spread the burden of the crisis rather than providing an opportunity to mitigate it.
If people are banned from working the crisis isn't avoidable in any real sense.
Given that the BoJ literally can't seem to generate inflation no matter how hard it tries, this seems like a no-brainer. As close to helicopter money as they've yet come.
Given that Japanese quality of life has barely moved in decades despite the economic hardships perhaps it's time for regulators to stop focusing on the arbitrary 2-3% inflation metric which causes so much distortion in monetary policy?
Why exactly can the inflation range targeted by Central Banks never change?
Japan has in its economy a large number of small family business in sector like retail, crafting, Ryokan (hotels) or restaurants.
Some of them are two centuries old and still surviving from generations to generations.
They are part of soul of Japan and its cultural identity. Loosing them would be such a waste, not only socially but also culturally.
Many of them have seen their income going to close to Zero due to COVID19. Without government help, many of them would die and never recover.
Every time I read news like this, I wonder where all that money is coming from? As far as I know, Japan is one of the most indebted countries out there. Look at the USA too, they've printed like 2 trillion dollars during this crisis, my own country has a dept of around 50% of its GDP.
I feel like most countries have not intention of paying their debt ever, the politicians are just kicking the can down the road until one day all this explodes and all this debt is forgotten, maybe?
There's probably something I'm missing since I am not an economist.
The debt of a country is completely different from the debt of a person or a company. Basically the difference is that countries can print money, but what it means is that large amounts of debt are okay and even desirable. The U.S. in particular is in an even safer spot because the dollar is the world reserve currency.
The debt of the worlds countries will explode if and only if money goes to hell.
I'm not an expert, so I'd encourage you to do some your own research.
being in debt as a country is very different to being in debt as an individual as a country's expenditure directly correlate to its earnings. in this sense, it's unwise for a country to 'save' in the same way individuals do -- since, for example in this case if small businesses collapse causing their workers to spend less (or nothing at all) the decrease in economic activity will lower tax income to the country itself.
when it comes to the US injecting 2 trillion dollars, that's from quantitative easing which is not 'borrowed', it's just generated by the central bank of the country directly to increase liquidity. it's similar to a stock split, but for a country. The total 'value' in the economy stays the same, but the additional liquidity creates an increase in economic activity for some time which may allow investors to switch investments from short to longer term. I've seen a lot of people online who think the US had $2T lying around somewhere but it's quite the opposite.
slightly unrelated to your comment particularly but -- I wish the analysis of governments being able to spend like this from the average person wasn't either 'governments are going more into debt than they should' or 'governments have money but don't use it on their people', but 'governments have access to spending powers that individuals do not, which can massively benefit an economy in the way no other entity's spending can'.
> There's probably something I'm missing since I am not an economist.
What you are missing is that these countries are leveraging their positions as reserve currencies both for global corporations and also other countries.
This crisis strongly benefited the USD, EUR and JPY. The demand for these currencies (especially the USD) is in the trillions. In the unfortunate event that the European Union is dissolved and countries like Italy/Spain decides to switch to their own, most people/companies holding EUR will decide to switch to ... probably USD/JPY as they don't really trust their home currencies much.
That's why the U.S. has an (or multiple) air carrier around the world to project power.
Germany/Austria/Switzerland have similar programs (called Kurzarbeit) which are for situations like these (where companies don't have enough work at the moment but are believed to recover), https://en.wikipedia.org/wiki/Short-time_working - what was done for the covid crisis here (Switzerland) was to simplify the application process for it.
Our trickle down economics philosophy in the US does not let the government do this. The onus will be on propping up businesses, when all they need to do was support employees. Instead we bail out whole companies and that usually means paying a lot more than just employee salaries.
This might be the right thing to do at the moment. In the long term though I'd prefer a system where stimulus package is not based on one's employment. This has the same problems as employer-tied health insurance.
> The employment adjustment subsidy has not proved popular so far, partly owing to its complicated paperwork and the roughly one-month wait for processing applications. In the current crisis, just 985 companies had applied in the two months leading up to April 17
The wait time on this seems very long. I wonder why? Lack of staff? I guess its good that they already had a program going, instead of having to build one from scratch or do what the US has done and partner with banks (Which seems to have also been plagued with hurtles)
In an extremely simplified way, from an economic standpoint, I see two ways this crisis can be handled:
1) Shovel money into businesses essentially free of charge, taking over responsibility for their payroll, giving generous low percentage loans or even free grants, and anything else that can simply be considered "free money" for company owners.
Or:
2) See this for what it is, which is an extremely high-risk investment that no-one else is willing to make. If a company was able to find a better deal on the market, they would take it. If companies are forced to apply for help from the state to survive, the state should get a (minority) share of the company and reap any potential future benefits until the owners have the money to buy their shares back.
The way I see it, in #1 we do our best to halt the crisis, but we essentially do it by giving away free money to corporations and small companies. In #2, we still do the same thing (because there's in most cases not much difference between a high-risk investment and a gift), but at least in this case the tax payer may get something for it in the future.
If public money goes to bailing out private companies, the public deserves a share of future profits, until those companies can buy the shares back at market value. I don't see a loser in this scenario, and in fact, it would be refreshing to see and end to this constant policy of "privatize profit, socialize loss".
Japan has a good bottom-up focus by addressing employee payroll and by proxy employee/employer job security during a negative economic outlook.
Grassroots money instead of helicopter money.
The government directly intervening to support employees sounds like a better effort to influence widespread impact than propping up employers to trickle down the money with vague guidelines and questionable oversight.
Businesses, in particular SMBs still need financial help, but that help should be separate from the public support help for PTEs and FTEs.
The US still clings on to the top-down approach to solve these problems, counter to Japan (not that Japan is perfect either).
Perhaps what we need to consider is some scheme to automatically fund a salary floor or salary continuation in emergency times, even if UBI is not on the immediate horizon. Presumably the currency dilution that results is no worse than what we are taking up anyways with the current piecemeal stimulus packages.
[+] [-] millstone|6 years ago|reply
First is to keep workers out of state unemployment insurance programs. These differ per state, but are often deliberately miserly and/or burdensome so that they motivate recipients to go find a new job. But we don't want the unemployed to hit the bricks. Payroll support is then a more easily-administered form of federal UI. (Plus state UI is written in COBOL, they will literally crash.)
Also, retaining workers will help to ensure a V-shaped economic recovery. Once the health crisis ends, retained workers can just go back to work. But layoffs followed by rehires means more retraining (not retaining), and a slower recovery.
The point is that we literally cannot pinch pennies now: anything we "save" will hit us twice as hard as a new entitlement cost, or a cost to the states, or in reduced tax revenue, or whatnot.
Money is a fiction; the real risk is mouldering factories and disused skills. If a year from now the US is trillions more in debt, and prices are 2% higher, YET we are healthy and working and productive, we will have been successful in countering the health and economic crisis. We should be so lucky.
[+] [-] capdeck|6 years ago|reply
It is not enough to give corporations money for payroll - in NY large part of the cost of running business is the space itself. Also I don't understand all these "lending" programs - all they do is defer an even larger payment for later - most of the businesses will not be able to repay that if they have been closed for months. You are basically taking a loan to pay the rent so you can go bankrupt later. Doesn't make any sense.
I don't know what to do but we need to give money and healthcare to people independent of work. Let businesses fail (big and small) and rebuild new ones once this blows over. Corporations will only buy back stocks and and line shareholders' pockets with dividends. Single digit percentage points of the stimulus money will reach employees.
Bankruptcies aren't that bad - usually companies are not dissolved, but go through restructuring and gain a new management team (which one, knowing there is no bailout in the future, will plan better for emergencies like this one).
What we are doing now is perpetuating corporate negligence that will now factor in 100% government bailout and run on even thinner margins and bigger stock price growth and dividends for the shareholders.
[+] [-] partingshots|6 years ago|reply
Having to funnel it through businesses just adds dead weight. Many businesses are no longer economically viable or sustainable, and that will only continue to accelerate as time goes on. We place far too much emphasis on jobs, which doesn’t work in the age of automation as humans become, at least productivity-wise, more and more unnecessary.
Once you decouple a person’s worth from their productivity though, then you can start to better see the inherent value that exists in everyone which is both foundational and immutable.
[+] [-] cjlars|6 years ago|reply
[+] [-] myko|6 years ago|reply
[+] [-] tanilama|6 years ago|reply
If the Congress had already ordered to print money, they surely can do more than that and for longer. Instead they delegated to existing programs for the rest, which aren't optimized enough to roll out that much money at this short period of time.
[+] [-] tapland|6 years ago|reply
But you'll also have an explosion of the bugs and exceptions noone ever wanted to pay to fix that get manually sorted every morning by the two 67 year and twice retired old devs who didn't get laid off to save money.
[+] [-] khuey|6 years ago|reply
[+] [-] _curious_|6 years ago|reply
"...Payroll support is then a more easily-administered form of federal UI. (Plus state UI is written in COBOL, they will literally crash.)"
Given how PPP just played out and considering the history our government has with opacity surrounding public-private finance...do you believe that such a broad strategy in US could be done with competence and integrity? If so, how?
"The point is that we literally cannot pinch pennies now: anything we "save" will hit us twice as hard as a new entitlement cost, or a cost to the states, or in reduced tax revenue, or whatnot." Could you elaborate on this premise?
"Also, retaining workers will help to ensure a V-shaped economic recovery."
There is no ensuring of anything! Positioning it as "will help ensure" is a linguistic setup strangely reminiscent of how politicians like to manipulate words (and people).
But "Money is a fiction"...what does this even mean?
[+] [-] hkai|6 years ago|reply
[+] [-] jonahbenton|6 years ago|reply
Central bank balance sheets are supernatural entities of essentially infinite capacity. We need to use them now.
We don't necessarily know how to properly measure the various economic entities and activities we care about when balance sheets are used this way- but that's an accounting problem. We can clean it up in post.
[+] [-] OrgNet|6 years ago|reply
[+] [-] Gibbon1|6 years ago|reply
Steps would be pretty easy, business sends paperwork to the payrol company, they cut the checks, and bill the Feds.
Easy.
[+] [-] Retric|6 years ago|reply
Trying to hand out money to all small business is a nightmare which does not actually accomplish much for the money.
[+] [-] ethanbond|6 years ago|reply
2. For landlords who cannot sustain the loss of cash flow, offer to buy them out at market price and then hire them as property managers for their previously owned properties.
With essentially zero overhead, you've eliminated small business's first or second largest expense (payroll and rent). If they still can't make payroll, it's not a super huge deal since those employees also have their rent frozen.
Now the economy can hibernate.
When we're ready to resuscitate it, do a direct stimulus check as you reopen businesses. Let money start flowing without any component going to rent for some amount of time until we're back on solid footing.
[+] [-] hpoe|6 years ago|reply
Then you suggest the government can just buy him out at market rates. Who decides what the market rate is? What if the government decides to value the property for $50,000 less than it is worth?
Well suddenly he has just had $150,000 taken from him by the government. When things restabiloxe what do we do then? The government owns tons of housing? Who is going to manage and administer that? If they dump them than all that you've done is transferred the properties from small owners to massive multi-million dollar firms that managed to take the hit. What about people who got laid off and still don't have a job after it is over? Because it was a result of the coronavirus do we just continue to say it's okay don't pay rent? If we do that guarantee a year from now tons of properties won't be paying rent still.
It sounds like an easy and simple fix but it is usually more complicated than that and drastic decisions made will often have downsteam effect for years and decades that we can't see now.
[+] [-] anonytrary|6 years ago|reply
This is something I'm confused about. The US government goes through great lengths to support constituents with an array of welfare programs, but goes through equally great lengths to take a lot of that money back from people. It seems awfully inefficient, and supporting those diametric systems seems like an awful waste of time, energy, and money.
[+] [-] jonahbenton|6 years ago|reply
It is simply not how this incredibly enormous, incredibly complex system has been set up. What is underappreciated is that in contrast to 2008, which was a financial system crisis- what we have now is implicitly a legal system crisis, on top of obviously a medical system crisis.
Why legal?
1. The flows of money are contractual
Every flow is a contract. Rent, mortgage, other kinds of loans, expenses for utilities, internet, the entire food supply chain, Whatever. All contracts. Nearly all are private contracts- person to person, person to business, business to business.
We are talking- hundreds of billions of individual contracts just in the US. At least.
2. Ending a flow means breaking a contract
Many of those contracts have termination conditions and remedies and so forth. Many of those conditions are bespoke. Various kinds of courts have authority to handle contract termination and enforcement. We are about a billion courts short of the number needed to deal with this at scale. And the court system simply does not scale- there are no procedures, no mechanisms to deal with these kinds of systemic consequences.
3. There is no legal authority to break them at scale
There is simply no legal authority by which those contracts can be terminated. Not Mayors, not Governors, not the President, not the Supreme Court, not Congress- can say- "rent is cancelled" at scale.
This is the absolute essence of the American system. It is a system of laws, not of men, our criminal President to the contrary.
That is why individual localities are passing "no eviction" laws and so forth that prevent certain kinds of remedies, without impacting the payment requirement itself.
4. There are almost no "terminal" transactions.
Even if there was some legal way to nullify those billions of contracts, and there was some way by which the entire legal system did not itself become compromised- so then those flows could be stopped- what then?
The reality is that there are no "terminal" transactions.
Most rent payments become mortgage payments. Most mortgage payments become interest payments to investors, around the world. Even money that "stops" to sit in a bank account is used as regulatory collateral by the bank in which it sits to create more money. If flows stop into those accounts, the bank falls out of regulatory compliance, has to stop doing its business.
Money is like oxygen, like blood. It HAS to circulate for this body public to survive. Stopping the flows means death.
The solution to this problem is what Japan is doing- maintain the legal fictions by which society operates using the financial machinery the Bank of Japan knows how to operate. Its balance sheet- which for all intents and purposes is an entity with infinite capacity- can maintain flows indefinitely until the medical system can master this enemy and then everyone can return to their regular business.
It is a leap for everyone to understand this- to appreciate this aspect of money that runs contrary to everything we have been told and experience on a personal level. It is not your money, or my money. It is not even our money.
For societies of humans, the flow of money is an ecological assumption that we created and have to maintain.
We are in need of the Einstein to write the Special Relativity paper that demonstrates that our Newtonian physics understanding of money, as an asset and so forth, while convenient in our ordinary every day lives, is wrong at societal scale.
[+] [-] dba7dba|6 years ago|reply
But who's going to decide on the value? And pay for it? If the goal is to help US population, why not just use that money and give to others with less wealth? Because money given to those without savings will definitely be put back into the economy.
A big chunk of money given to one person will most likely sit in a savings acct or something like it...
[+] [-] dillonmckay|6 years ago|reply
[+] [-] tempsy|6 years ago|reply
[+] [-] aaronblohowiak|6 years ago|reply
[+] [-] bpodgursky|6 years ago|reply
The QE / money printing is complicated, but it's worth nothing that Japan has been "printing money" for a long, long time, and QE is a mainstay of Abe-nomics (so the Japan subsidy here is absolutely coupled with aggressive QE). Battling deflation to hit inflation goals is a reasonable goal for a central bank, IMO, but obviously it's not cut and dry.
[+] [-] teruakohatu|6 years ago|reply
This is the equivalent of all the workers from the top 20-30+ companies in Japan no longer working.
[+] [-] roenxi|6 years ago|reply
If people are banned from working the crisis isn't avoidable in any real sense.
[+] [-] attilakun|6 years ago|reply
[+] [-] johnzim|6 years ago|reply
[+] [-] ShorsHammer|6 years ago|reply
Given that Japanese quality of life has barely moved in decades despite the economic hardships perhaps it's time for regulators to stop focusing on the arbitrary 2-3% inflation metric which causes so much distortion in monetary policy?
Why exactly can the inflation range targeted by Central Banks never change?
[+] [-] Proven|6 years ago|reply
[deleted]
[+] [-] adev_|6 years ago|reply
Japan has in its economy a large number of small family business in sector like retail, crafting, Ryokan (hotels) or restaurants. Some of them are two centuries old and still surviving from generations to generations.
They are part of soul of Japan and its cultural identity. Loosing them would be such a waste, not only socially but also culturally.
Many of them have seen their income going to close to Zero due to COVID19. Without government help, many of them would die and never recover.
[+] [-] joebloom|6 years ago|reply
It gives both employees and businesses the ability to survive the period and come out of the other end able to get straight back into work.
But who knows how long that lasts whilst there is a likely recession on the cards next.
And so the government takes on 100 years of debt by giving future taxes to lenders.
[+] [-] sunsetSamurai|6 years ago|reply
I feel like most countries have not intention of paying their debt ever, the politicians are just kicking the can down the road until one day all this explodes and all this debt is forgotten, maybe?
There's probably something I'm missing since I am not an economist.
[+] [-] ducttapecrown|6 years ago|reply
The debt of the worlds countries will explode if and only if money goes to hell.
I'm not an expert, so I'd encourage you to do some your own research.
[+] [-] zemnmez|6 years ago|reply
when it comes to the US injecting 2 trillion dollars, that's from quantitative easing which is not 'borrowed', it's just generated by the central bank of the country directly to increase liquidity. it's similar to a stock split, but for a country. The total 'value' in the economy stays the same, but the additional liquidity creates an increase in economic activity for some time which may allow investors to switch investments from short to longer term. I've seen a lot of people online who think the US had $2T lying around somewhere but it's quite the opposite.
slightly unrelated to your comment particularly but -- I wish the analysis of governments being able to spend like this from the average person wasn't either 'governments are going more into debt than they should' or 'governments have money but don't use it on their people', but 'governments have access to spending powers that individuals do not, which can massively benefit an economy in the way no other entity's spending can'.
[+] [-] csomar|6 years ago|reply
What you are missing is that these countries are leveraging their positions as reserve currencies both for global corporations and also other countries.
This crisis strongly benefited the USD, EUR and JPY. The demand for these currencies (especially the USD) is in the trillions. In the unfortunate event that the European Union is dissolved and countries like Italy/Spain decides to switch to their own, most people/companies holding EUR will decide to switch to ... probably USD/JPY as they don't really trust their home currencies much.
That's why the U.S. has an (or multiple) air carrier around the world to project power.
[+] [-] tsbinz|6 years ago|reply
[+] [-] adev_|6 years ago|reply
[+] [-] yalogin|6 years ago|reply
[+] [-] perfunctory|6 years ago|reply
[+] [-] gen3|6 years ago|reply
The wait time on this seems very long. I wonder why? Lack of staff? I guess its good that they already had a program going, instead of having to build one from scratch or do what the US has done and partner with banks (Which seems to have also been plagued with hurtles)
[+] [-] hnarn|6 years ago|reply
1) Shovel money into businesses essentially free of charge, taking over responsibility for their payroll, giving generous low percentage loans or even free grants, and anything else that can simply be considered "free money" for company owners.
Or:
2) See this for what it is, which is an extremely high-risk investment that no-one else is willing to make. If a company was able to find a better deal on the market, they would take it. If companies are forced to apply for help from the state to survive, the state should get a (minority) share of the company and reap any potential future benefits until the owners have the money to buy their shares back.
The way I see it, in #1 we do our best to halt the crisis, but we essentially do it by giving away free money to corporations and small companies. In #2, we still do the same thing (because there's in most cases not much difference between a high-risk investment and a gift), but at least in this case the tax payer may get something for it in the future.
If public money goes to bailing out private companies, the public deserves a share of future profits, until those companies can buy the shares back at market value. I don't see a loser in this scenario, and in fact, it would be refreshing to see and end to this constant policy of "privatize profit, socialize loss".
[+] [-] siruncledrew|6 years ago|reply
Grassroots money instead of helicopter money.
The government directly intervening to support employees sounds like a better effort to influence widespread impact than propping up employers to trickle down the money with vague guidelines and questionable oversight.
Businesses, in particular SMBs still need financial help, but that help should be separate from the public support help for PTEs and FTEs.
The US still clings on to the top-down approach to solve these problems, counter to Japan (not that Japan is perfect either).
[+] [-] nl|6 years ago|reply
They subsidise salaries at a flat rate of $1500/fortnight.
[+] [-] unknown|6 years ago|reply
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