Cabinet OKs ¥2.7 tril draft extra budget to fight inflation

The government will issue new bonds to entirely finance the budget, adding to concerns about the nation's fiscal health, already the worst among major developed countries.

Just poring more money without clear plan for future Japanese economy.

If Japan opens its borders to tourists, won't it help the economy?

About 1.5 trillion yen of the extra budget will be spent to replenish reserve funds the government is using to implement some of the measures in the relief package, such as subsidies for oil wholesalers to bring down retail gasoline prices

The bottomless wealth when in comes to subsidizing LDP cronies.

The Scrooge-like stinginess when extending the barest assistance to the working populace of Japan.

The Japanese public are gluttons for punishment.

Treading water, no forward plan to make Japan a leader in the region or the world again. Other nations are dog paddling past them. Some breath stroking past.

Thinking that inflation can be handled by these ineffectual measures is massively incorrect.

I predict a growing rise in shoplifting going forward....

Cash handouts for all residents of Japan and for god's sake open up for tourism.

The government has reserves of funds and reserve of rice and fuel - why are they so selfish towards their own residents.

What is wrong with these people !

Tried to understand that by reading multiple times…lol 1.5 bln. for replenishing funds for oil wholesalers and those microscopic cash handouts and the rest of 1.2 bln. , almost the other half, only for the oil wholesalers and again to them? That means, effectively everything wanders into the already big pockets of oil wholesalers and some lesser percents to pachinko chains. Congratulations, that will keep most of us all running well….not!

@obladi

If Japan opens its borders to tourists, won't it help the economy?

Nearly 50 billion USD dollars per year get put into the economy. Countries around the world are crippling their own economies by blocking tourism. Not exactly sure what the motives are, but I have theories. Lol.

For years the government has talked of a virtuous cycle of inflation. I get that there is good and bad inflation, but feel this stimulus would be best spent increasing the wages of civil servants (teachers and nurses/care workers at the top of the list) and applying pressure to the private sector to raise wages and salaries.

These one time handouts seem to end up only having a very short term impact and ultimately let the employers push the burden to the state.

Several companies have been posting record profits, despite perpetuating the line that their costs are out of control and they have to raise prices.

The boj putting an end to money printing seems the most obvious way to reduce inflation, surely?

To fight inflation?

Abenomics WANTED it! He dreamed of it! It was his dream for Japan and and he did not akirameta! Yume kanaimashita! Congratulations Abenomics!

There is a game in Japan called "kan-keri" which literally means "kicking the can" played by children. Only this time it is the seniors who are playing the game because who cares about the future after your time is up right?

People complain when Japan helps others in need, crying out to help Japanese first. When they try to help Japanese people out they still seem to cop flack. It seems to me some just love to hate on Jgov no matter what it does. If that is the case, how do they ever expect the government to listen to their opinions, knowing they will always be negative no matter what they do?

Sceptical

You cannot be serious. Buy bonds in an environment where rates are rising? Buy a bond that yields (say) .25 % when inflation is north of 5%? Wouldn't want to have your pension fund.

Nosui

sorry but your example is spurious. Money printing IS inflation - inflation of the money supply. Which almost always leads to price rises (actually not a rise in the value of the good being priced but a devaluation of the currency being used to buy it).

JL - over the past 30 years there have been a number of factors that allowed developed nations to export inflation and that led to dramatic increases in prosperity in the receiving countries. Those days are over.

Covid accelerated this because so many countries accelerated their printing. Ukraine is a red herring in the discussion of price rises.

So the Cabinet did not OK funds to help the citizens of Japan to combat poverty over the last year and a half. Great...

Doh, they do realize that this money printing across the globe is the direct cause of the inflation, don't they?

Spend more, to save more.

Printing more money when there is decrease in supply of goods is a formula for disaster because it will make inflation high - hyperinflation.

That menu makes me want to go to the izakaya down the road now.

According to BOJ Japan does not to end QE as they believe Japan does not face significatant inflationary pressures. Meanwhile the government will spend money by issuing bonds to fight inflation? Printing money to fight inflation is not a sound long-term strategy. I think they are just praying the war in Ukraine/lockdowns in China end and imported prices fall. If they dont, there will be stagflation.

they do realize that this money printing across the globe is the direct cause of the inflation, don't they?

They don't, because it's not true. The strong inflation is overwhelmingly being caused by the twin supply shocks of Ukraine and COVID -- not because of "this money printing." Strong inflation rarely occurs after the expansion of the money supply.

Japan had been the world biggest money printer for the past 20 years and ended up with,....deflation!

@Rodney, you realize you're complaining about helping people suffering, right?

That seems a little selfish.

The BOJ has said they will buy unlimited bonds everyday so as to keep JGB yields rising above 0.25%

So, when the grossly indebted Japanese government says that they will issue even more bonds, you can rest assured that the BOJ’s unlimited buying will vacuum them up, so it is as good as money printing.

But sure, if you think buying a JGB or bond anyplace these days is a good investment, go ahead. It’s a free market.

Kaerimashita - my example was very simplified, but not spurious. The underlying principle is correct. If both supply and demand rise and the money supply also grows, prices remain stable. This is what has been happening in Japan for the last 30 years. Again, it is a simplification. However, the statement that printing money must result in inflation is simply not correct.

very "smart",all of us will pay dearly for these "western values" and meaningless sanctions against Russia,even my grandkids are in debt already...

Insanity. Printing and spending is the direct cause of the price rises. Inflating the money supply all over the world has led to this. And now we have the inflation we always said we wanted, the answer is to carry on with the same ridiculous policy? These people should all be arrested.

Many of the previous deflationary pressures (offshoring, huge asset inflation taking the pressure off consumer price inflation, low commodity prices, population decline etc) have now gone away or abated, hence the sharp rise in prices.

Printing money always eventually causes inflation.

Carrying on like this will really hurt Suzuki-san.....

There seems to be a misunderstanding, but printing money alone does not always cause inflation.

If there is only one banana available and I have 100 yen to buy bananas, the price will be (up to) 100 yen. If suddenly my banana budget is 200 yen, but the supply of bananas also increases to 2, the price will still be 100 yen per banana.

But sure, if you think buying a JGB or bond anyplace these days is a good investment, go ahead. It’s a free market.

Why sure, the mantra in the market is "Follow the Money,"

If fx in fxgai is forex as what I think it is, "Trend is My Friend." Right?

Also think Bond as a pension and you will surely appreciate it.

Let's fight inflation by creating MORE inflation.

Another great idea from our technocratic overlords.

Inflation is not a problem that you can solve by just throwing money at it. In fact, throwing more money at it just increased it. Strategically cutting taxes and getting more disposable income into the hands of families is the only way to fight inflation. However, that would mean trimming the fat from the fat cats pocketing all the profits and living off their fat bonuses.

Forget about Kishinomics. Ukraine needs it more.

When all countries’ currencies collapse, the WEF guys can implement their digital currency using block technology that will put every single individual in the matrix that only the elites control. Each purchases will be monitored basically all the buying and selling.

I don't agree and its unfair to say the Japanese public are gluttons for punishment because they don't really have any control over the governments decision.

True that neo liberal reforms have left Japanese workers precariously living and without time for labor protests.

But the French can shut down the nation to fight for a fairer society and Japanese did this too in the 70s.

Congratulations.

This wins second prize for stupidest policy response to inflation.

(The winner of course was Turkey’s turkey Erdogan, who thinks higher interest rates cause inflation. That’s hard to beat, but spending more printed money is a close second.)

We just gave a bucket load of my tax money to Ukraine, we follow USA orders to sanction Russia, whose economy is booming, while everything here is expensive, and I just ordered ochazuki water and rice dish, because I can’t afford the Sashimi set. Something is wrong.

 Printing and spending is the direct cause of the price rises. 

No it isn't.

Developed countries have been printing and spending like crazy for 30 years, only to end up with very modest inflation. But then came COVID and Ukraine and everything suddenly changed. Those economic impacts are unprecedented in modern times.

I don't read anything in this article saying "printing more money".

It says here;

"The government will issue new bonds to entirely finance the budget, adding to concerns about the nation's fiscal health, already the worst among major developed countries."

Seems lot here confuses issuing bonds with printing money. Bonds are loans from huge corporations or individuals like us in exchange for a piece of paper called Japanese Gov't Bonds or JGB's. In the US, called Treasury Bills. Short- term treasury bills, long term treasury bills and TIPS or Treasury Inflation Protected Securities. But unlike in the US, we only have long-term GB. 2,5,10.20.30 Year Yields.

Bonds are good alternative to stocks especially now that the stock prices are falling down and interest rate in most parts of the world are raising rates.

no forward plan to make Japan a leader in the region or the world again

eh? Finally, after decades of swimming against currents, they're finally reaching inflation target, AND a competitive ccurrency.

All the car makers are announcing they're ready to invest and lead.

IMO, be more concern, asset poor people might be left behind.

KaerimashitaToday  03:53 pm JST

The yields then was 0.837% and is now in its maturity. The Fed is expected to raise two 0.05% and two 0.25% rates this year and BOE is also expected to raise more rate, so as the EU. If that happens, inflation will start to fall and the need for energy will lessen and OPEC will lower the price of crude. And when that happens, time to buy new bonds again.

How can anyone in government not understand that the Japanese worker doesn’t have enough confidence to go and spend money!

Wages have been and are stuck.

People can’t go and spend what they don’t have!

Anyone in Japan, living in Japan knows this.

Businesses are cutting back on hours or closing their doors completely.

The politicos in Tokyo should be forced to get out and walk around their locales and talk to the people…

the nation's fiscal health, already the worst among major developed countries.

What's so bad about it? Japan has long proven it can issue government debt, have public sector institutions buy at least around half of it (so it is no longer real debt), domestic institutions the rest, while maintaining moderate levels of inflation and low interest rates.

Most other economies are struggling with high inflation, constraining their governments' fiscal spending ability. That is bad "fiscal health." Japan is in a relatively good place. The problem is wages, and due to a stingy private sector.

@dagon

The scrooge like stinginess

Yes i agree the government is selfish and cruel.

The Japanese public are gluttons for punishment

I don't agree and its unfair to say the Japanese public are gluttons for punishment because they don't really have any control over the governments decision.

There's not enough lawyers in Japan brave enough to band together and hold the Government accountable for following their own democratic constitution.