Japan’s households, firms continue to hoard cash as pandemic persists

Hoard = Sensibly save money in very turbulent uncertain times.

These articles are just regurgitated ad nauseam

If Leika doesn’t understand that people are simply saving cash to be safe and are being smart with their money, there should be a new writer for this column. It’s called having common sense when there’s no reason to buy things due to a low economy

Nothing wrong with saving money and not spending in times of recession. It is being responsible. People should save as much as they possibly can. The media have to stop seeing this as negative "hoarding".

Corporations are just greedy in wanting people to always spend to give them profits. Zero ethics. If this is their business model, even in a pandemic and recession, they deserve to fail.

I expect Japan is going to have a strong recovery once the virus is defeated.

I expect Japan is going to have a strong recovery once the virus is defeated.

Ive been saying 15-20% up on the Nikkei in 2021, possibly more if the Olympics is held and is a huge success. Once the pandemic is declared over, possibly in April, Japanese will throw their around to unprecedented levels. But until then, nothing wrong with being cautious and sitting on the cash. Sick of all this "hoarding" talk.

We have been traveling and spending. On rabbit island. Just because their is a world wide pandemic doesn’t mean life should stop.

Fighto!Today  07:28 am JST

Once the pandemic is declared over, possibly in April, Japanese will throw their around to unprecedented levels.

Yeah, sure. Right.

a new lending facility aimed at channeling funds to cash-strapped firms via financial institutions. But no channeling of funds for cash-strapped tax payers? It's no wonder people are saving as much as they can there is no support from Government.

Buy bitcoin.

Visas, Paypal, Mastercard and Tesla are. Why aren't you?

The BOJ eased monetary policy twice last year to cushion the economic blow from COVID-19, including by creating a new lending facility aimed at channeling funds to cash-strapped firms via financial institutions.

The money printers go BRRR... and the channels of funds become a torrent for firms and financials.

Seems like the pandemic is a good opportunity to give up on a consumer economy and the value of labor and just have the entire GDP flow to select Keidanren affiliated firms. Then we can passionately urge them for some trickle down sustenance.

It would vary little from the current state of affairs.

In the meantime the news has reported how Nitendo made a lot of money as people stayed home to play video games. Nothing wrong saving your money and that is not hoarding

In times of recession and uncertainty, people and firms spend less and save more, causing consumption to dry up. It’s only government spending that can kickstart the economy. The US and other major countries are planning massive spendings but Suga has been refusing to do this .

I've been trying to save money, too, though I wouldn't call it hoarding. But when the pandemic is over, like most people, I'm going to spend spend, spend. I'll travel and buy things that I need for my apartment, dine out more. Saving now will be good for the economy later.

After the Corona, the elderly people will rush to spend their huge money for traveling and eating. And Japan will be flushed with Chinese people who will hesitate to go to Europe and the USA. (I think they will worry about possibility of facing dangerous situations.) 

Conclusion: we should probably buy the shares of the companies related with travel, although we should pay attention to cancellation of the Olympics.

I am also hoarding my money. Like a miser. I might need it if things turn worse.

I suspect C19 is going to drag on for a while longer. It has hit some people and some businesses' finances hard, which will also have an effect for time to come. It is easy to see an explosion of pent-up demand as travel restrictions etc. are removed, but it will take much longer to see and know if we are back to normal.

Saving money is not like hoarding toilet paper.

I consider myself lucky because I have bought and paid for my house. I have somewhere to live. I am so glad I don't have to pay rent or a mortgage every month.

I can imagine how hard life must seem for many people in the Tokyo area. Many don't even know if how long they can keep their job or the company they work for can stay in business. All those blue sheets on the riverside and in parks reinforce the belief that people should save for a rainy day.

Excellent comments here calling this article out as yet another piece of slanted BoJ propaganda. Especially in times like these, the worker is a fool not to save diligently!

I thought it was a typically good Leika Kihara article myself, although the hoarding word was out of place.

It’s only government spending that can kickstart the economy.

Dead wrong!

The economy will do better without government meddling, once the pandemic is dealt with.

Government spending is tax. And it doesn’t work at all.

Japan has racked up 1.1 quadrillion yen of public debt and has a crap economy to show for it over the last three decades.

This is like 30,000,000 yen if liabilities on each household.

Of course people are saving. How else will their families pay this off in future? But in the midst of the pandemic it’s natural, and nothing for the economy butchers in central government to concern themselves over.

Government spending is tax. And it doesn’t work at all.

The article mentions this corporate welfare and financial bailouts.

The BOJ eased monetary policy twice last year to cushion the economic blow from COVID-19, including by creating a new lending facility aimed at channeling funds to cash-strapped firms via financial institutions.

I suppose you are also against this type of macroeconomic government manipulation that benefits financial institutions and the corporatocracy exclusively, while excluding the vast majority of the working public?

This is the mother lode of debt.

That’s a bs, bare of any logic. If that really were true, than everyone would pray for never ending corona and all citizens will cry when it’s over and come out of the pandemic as billionaires. Now guess, what will really happen instead? lol

I still think everyone should spend like crazy because you will eventually die.

You are so right about this one @BLVTZPK: God help Us all.

And, ...that’s why they call you “Smartacus” 9:11a JST “been trying to save money,...wouldn't call it hoarding. when the pandemic is over, I'm going to spend, travel and buy things that I need, dine out more. *Saving now*... *good* for the economy later.

@fxgai

Of course people are saving. How else will their families pay this off in future?

They won't. There's nothing to "pay" because Japanese authorities dont borrow their own currency, as they are the ones who issue it. If Japan had to actually borrow a large amount of money, like Argentina, inflation and interest rates would have been sky-high ages ago. The reality is that both are near zero.

Please don't worry too much. Japan has the public livelihood system which also covers foreigners living in Japan. And medical fees are free in this system.

To stimulate the economy the Japanese government should have a mass vaccine week and give adults Y150, 000 in spendable vouchers (not cash) that have a use by date. This would reassure health concerns and provide economic stimulus that can't be "Hoarded" in a bank account.

Not really "hoarding". A lot of the things people used to spend money on daily are either closed or their business is restricted to curbside delivery. No dining out with business guests, relatives or friends. No late nights in the pinball parlor or internet cafe. People telework and don't spend their usual amounts of money commuting. I haven't had to change oil or buy new tires in ages. So it's less about hoarding as about not having the opportunities to spend as freely as before.

Japanese authorities dont borrow their own currency, as they are the ones who issue it

That’s entirely backwards, the only people who believe that are the ones that believe in Mickey Mouse Theory (MMT).

If the Ministry of Finance were issuing yen, which it isn’t, it wouldn’t need to issue bonds in order to borrow money.

It’s basic public finance.

To stimulate the economy the Japanese government should have a mass vaccine week and give adults Y150, 000 in spendable vouchers (not cash) that have a use by date

Who do you think pays for that, Santa Claus?

The economy needs no tax payer funded largesse right now. The economy needs the pandemic dealt with. And then, everyone will go back about their business mostly as before, but with a yet again heavier debt burden hanging over their heads because some morons think that racking up a quadrillion yen of debt was a clever idea.

@dagon

The BOJ eased monetary policy twice last year to cushion the economic blow from COVID-19, including by creating a new lending facility aimed at channeling funds to cash-strapped firms via financial institutions.*

I suppose you are also against this type of macroeconomic government manipulation that benefits financial institutions and the corporatocracy exclusively, while excluding the vast majority of the working public?

That’s a lending program, not a tax payer funded central planners spend up, but to the extent it helps tide some firms and their employees over, yes it’s ok. The Bank of Japan is the central bank, however, it’s supposed to be the bank’s bank. That’s why it is a scheme through financial institutions. I’d say the prime aim was to give the pretense of “taking bold action”...

And if the working public want loans they should contact their financiers. There were laws enacted for just this purpose last year and many individuals have been taking advantage in this time of need, taking advantage of temporary pandemic schemes to delay payments on their financial services, such as mortgage and insurance payments.

Sorry, there is no neoliberal action here for you to rail against!!

@fxgai

If the Ministry of Finance were issuing yen, which it isn’t, it wouldn’t need to issue bonds in order to borrow money.

Nearly half the Japanese govt bonds issued are held in the BOJ, a public sector institution. Please explain how these securities are a form of public borrowing.

Usually when the govt spends, the accounts of people or private sector instutions are marked up in yen -- yen that didnt previously exist. That's called "money creation." That's the plain old truth, even if it undermines your worldview.

Please explain how these securities are a form of public borrowing. 

This is basic public finance.

The ministry issues the bonds to private sector primary market dealers.

There is no reason for it to be the BOJ that holds however many bonds it does, and it holds the bonds that it does ostensibly in pursuit of its monetary policy aims.

Usually when the govt spends, the accounts of people or private sector instutions are marked up in yen -- yen that didnt previously exist.

You are skipping steps, which is why what you keep regurgitating is completely wrong. MMT nutters saying that it is how it works does not mean that that is actually how public finance works.

I mean, duh, why have primary market dealers otherwise?

the plain old truth, even if it undermines your worldview.

lol!!!

Show me a bond issuance that doesn’t go through the primary market dealers, if you want to try to prove to at least yourself that you aren’t regurgitating MMT nonsense.

MMT nutters saying that it is how it works does not mean that that is actually how public finance works.

MMT, which you have yet to provide a coherent argument against beside libertarian boilerplate, has much more to say for it than your Econ 101 platitudes.

You equate central bank fiat currency , QE, and zero interest "loans" and financial stimulus to banks with if the "working public want loans they should contact their financiers".

@fxgai

You are skipping steps, 

Not the main ones. As we saw with the recent rounds of stimulus in the US, the checks were sent out to citizens almost immediately after Congress passed the spending measures in law. Where did the government get the "money" from? Not bonds, ie not "borrowing." None matching the funds existed and won't exist for a while. Therefore they can't be "funding" the debt.

Money in Japan, the US, etc. is created by the govt or central bank pressing a button, or cutting a check. Not from borrowing.