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Abenomics sputters as trade damage spreads

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By Daniel Leussink and Tetsushi Kajimoto

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As I said before printing money by BOJ they want inflation to be higher and get rid of some of that debt they accumulate.

They actually want to change the monetary system an it will happen soon after Olympics!

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Ah, yes! The three arrows of Abenomics. It should be called, the three F’s of Abenomics - Fake, False and Failed!

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But the signs that the economy is cooling after a year of expansion

The only reason the economy has lasted this long and avoided default is because of a large trade surplus with the US and solid economic ties with China.

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the government and central bank will need to devise novel ways to stimulate growth in the world’s third-largest economy in 2020

In other words, they need new ways to steal from the taxpayer.

Here's a novel idea. Why doesn't the govt issue its own interest-free money from the treasury instead of issuing bonds to and borrowing from a privately owned central bank masquerading as some kind govt institution?

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Reforms...where ?

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Consumer spending accounts for 60 percent of Japan’s GDP. How Mr Abe is planning to achieve economic revival through his government’s tight fiscal policy and after two consumption tax hikes is a mystery.

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Japan’s Abenomics stimulus program appears to be reaching a turning point...

I'm sorry...it's about to start working?!

...as growth is sputtering and the hit to exports from slowing global demand is spreading to various sectors of the economy.

Yeah, didn't think so. It was never working in the first place.

'Abenomics' will have one final Olympic boost to hide behind next summer, and then short of another national emergency that will hit the economy like a big earthquake or typhoon etc. there's nowhere left to hide.

If Abe had any sense he'd get out quick smart and leave the upcoming economic plunge to the next PM(s).

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Japan has always been about 30 to 40 years behind the West.

That is why it has always had time to acquire,copy and improve Western improvisation,ideas and inventions.

Now that it finds itself at the forefront of a demographic time bomb,a debt crisis like no other,a plummeting birth rate,a rapidly ageing population......it has no idea what to do.

Just take a look around.

I live in Tokyo and what I see is.....old,poor and third world.

Japan has changed so much in the last 5 years.........wait until the next 5 years......it will be catastrophic.

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Abe's "Animal spirits" pipe dream. His inner Keynesian voodoo economics....

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re article: Japan’s Abenomics stimulus program appears to be reaching a turning point as growth is sputtering and the hit to exports from slowing global demand is spreading to various sectors of the economy.

If Abe spent more time fixing the issues vs changing the Constitution, imagine what could be accomplished!

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Sputters!

It didn't even get off the ground!

Abenomics had all the power of a wet firecracker - a small one - and very wet!

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Japanese policymakers remain complacent about the country’s fiscal situation,

So they should be. They are borrowing their own money, which happens to be the world's safe-haven currency, from their own people and institutions at near zero percent, with basically zero inflation risk. Go for it!

However, the tax hike was a mistake. Stimulus with higher taxes is like trying to run uphill.

@greenpeas 

"from a privately owned central bank masquerading as some kind govt institution"

The BOJ is majority govt-owned.

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JeffLee;

If the BOJ is a majority govt-owned bank then why does the govt need to borrow from itself? And then charge itself interest! Why does the government put the country into such crippling debt by borrowing the principle and then make the citizens pay the loan back at interest, which wasn't created in the first place? That's the definition of a pyramid scheme and the real reason for Abenomics and why they need to keep growing the economy. Again, why doesn't the government print and issue its own interest-free money from the treasury?

And if what you say is true then the BOJ is the exception. As I understand it virtually all central banks in the world are privately owned by wealthy banking dynasties with the central bank of central banks being the BIS in Switzerland. The only exceptions are a few so-called rogue countries... and even then I'm not sure.

Do you have a link to you show where the government owns the majority of the BOJ? I'd like to be proven wrong on this.

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@greenpeas

Do you have a link to you show where the government owns the majority of the BOJ?

wikipedia on the Bank of Japan: "Ownership: Government of Japan (55%; 100% voting interest)

Public float (45%)

https://en.wikipedia.org/wiki/Bank_of_Japan

I'd like to be proven wrong on this.

Consider yourself proven wrong. Also note, the BOJ governor is also appointed by the govt, and the coupon payments the govt makes on the BOJ's JGB holdings are transferred to the Ministry of Finance, among many of examples of its position as effectively a public sector organization.

And then charge itself interest! 

Monetary policy often works that way. The buying and selling of bonds by central banks has long been conducted to move interest rates in line with a country's interest-rate policy.

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Ok, thanks for the info. It's obviously different to other central banks like the Fed then?

But my question still remains .. Even if the BOJ is part-govt owned, why does the government not print and issue its own interest-free money from the treasury?

Money should be used a mechanism for the buying and selling of goods, not for skimming a percentage (interest) off the top and putting people into debt. There is a reason why usury has been condemned throughout history. The govt is supposedly there to represent and support its people, so why does it carry out this practice and put its citizens into more servitude than necessary?

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it is really amazing, some lazy Japanese gets paid highly and some poor hard-working foreigners get paid poorly. This is sure that the Japanese economy will sink. Too one sided.

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JeffLee;

Can you also explain how this is not a pyramid scheme, where the people at the bottom (the public) always get burnt? It would seem to me that if the government had the public's best interest in mind it would not resort to this.

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@greenpeas

why does the government not print and issue its own interest-free money from the treasury?

Thanks for soliciting my points. I don't know what you mean by " interest free money." Unlike bonds or other such instruments, cash is not inherently interest bearing unless it's kept in a savings account. As for money creation, that's done by the government thru fiscal spending and by the commercial banks thru giving loans. The BOJ can to a large extend control the latter process.

Can you also explain how this is not a pyramid scheme,

If it were, it would have collapsed long ago. The last collapse, in 1992, was caused by the private sector - commercial banks giving lots and lots of bad loans while accepting real estate as collateral, whose value shrank as loans went bad en-mass.

The BOJ didnt help matters in the lead-up, but it didn't cause the situation. It you want to make a doom and gloom scenario, you'd best look at the financial sector, ie, Lehman Brothers, not the govt or BOJ.

where the people at the bottom (the public) always get burnt?

I'd blame corporate greed for that, ie, companies' wage suppression policies, and the govt's unwillingness to tax corporate earnings at a higher rate. The BOJ can't do anything about wage suppression.

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I don't know what you mean by " interest free money." Unlike bonds or other such instruments, cash is not inherently interest bearing unless it's kept in a savings account.

I meant the government issuing interest-free money through a state-run bank instead of borrowing from the BOJ at interest. Why does the govt need to issue bonds when it can issue yen directly for works projects and so on? Thomas Edison said...

"If our nation can issue a dollar bond, it can issue a dollar bill. The element that makes the bond good, makes the bill good also. The difference between the bond and the bill is that the bond lets the money brokers collect twice the amount of the bond and an additional 20 percent, whereas the currency pays nobody but those who contribute directly to Muscle Shoals in some useful way...

"It is absurd to say that our country can issue $30 million in bonds and not $30 million in currency. Both are promises to pay, but one fattens the usurers and the other helps the people. If the currency issued by the Government was no good, then the bonds would be no good either. It is a terrible situation when the Government, to increase the national wealth, must go into debt and submit to ruinous interest charges at the hands of men who control the fictitious value of gold."

Japan may not be exactly like this but who are the shareholders who own a 45% stake in the BOJ? And even if the govt owns 55%, it still doesn't make sense for the govt to go through a middle-man (BOJ) to borrow at interest. I don't know what percentage of its debt Japan must fork over on interest payments but what is certain is that a certain group of people are doing very nicely on the backs of the population.

Libya under Gaddafi had its own state bank and provided loans to citizens at zero percent interest. That was by law and the country had no external debt. Until the country was destroyed by the US/Nato it was called the Switzerland of Africa. After the invasion one of the first things the west did was to set up a central bank, charging interest of course. Up until that time Gaddafi was trying to introduce a single African currency linked to gold called the dinar. According to the article below this would have helped to raise African nations out of debt and poverty. (This was probably the real reason for the attack and invasion.) Despite his reputation he did do some positive things for his country.

https://www.globalresearch.ca/libya-ten-things-about-gaddafi-they-dont-want-you-to-know/5414289

I don't know the details but I believe the Muslims also set up a banking system in the 1970s to conform to the rules of their holy book (ie; no usury). Islamic banks supposedly invest in business and pay a share of any profits to their depositors. It's probably not perfect but at least it's a start.

Many of the products offered by Islamic financial institutions are comparable to Western or conventional finance even though interest and speculation are forbidden. - gfmag.com

The following web site gives some insights on what society might look like without a usurious banking system.

"If the Government issued its own money for the needs of society, it would be automatically able to pay for all that can be produced in the country, and would no longer be obliged to borrow from foreign or domestic financial institutions. The only taxes people would pay would be for the services they consume. One would no longer have to pay three or four times the actual price of public developments because of the interest charges.

So, when the Government would discuss a new project, it would not ask: "Do we have the money?", but: "Do we have the materials and the workers to realize it?". If it is so, new money would be automatically issued to finance this new production. Then the (citizens) could really live in accordance with their real means, the physical means, the possibilities of production. In other words, all that is physically possible would be made financially possible. There would be no more financial problems. The only limit would be that of the producing capacity of the nation. The Government would be able to finance all the developments and social programs demanded by the population that are physically feasible.

Under the present debt-money system, if the debt were to be paid off to the bankers, there would be no money left in circulation, creating a depression infinitely worse than any of the past."

https://www.michaeljournal.org/articles/social-credit/item/the-solution-debt-free-money-issued-by-society

If it were (a pyramid scheme), it would have collapsed long ago. The last collapse, in 1992, was caused by the private sector

By many accounts the financial system collapsed in 2008 and has been propped up since then through things like quantitative easing, derivatives and other paper instruments such ETF GLD and SLV to artificially keep the currencies looking good against precious metals when it's really a house of cards. And if you think about it, it has to be a ponzi scheme because the interest is never created and put into circulation, only the principal. Doesn't matter how good they are at hiding it it's still a pyramid scheme. Until it's not.

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