Japan has fallen victim to the Keynesian scam

[volpunter]

how can the numbers I used be misleading? They are taken right off the MoF and BoJ websites. Please verify if you do not believe me. You in turn link to a site that shows blanks for most every metric they listed and if there are numbers then they are from 2012. Your numbers are certainly off by a huge margin. You seem to be a guy who loves to play with words (such as "government and household spending is one and the same", you would fail any 101 econ class with such a belief). I find your statements and how you support it with completely outdated numbers more misleading than anything else (you are basically citing numbers similar to saying US government spending was this and that, omitting you used numbers before the Iraq invasion, war on terror, and QE). Then you hide behind gross and net word plays. GDP numbers are what they are, there is no net or gross, and neither is there in Japanese government debt figures. What you want to net those numbers with by the way? You wanna net the US debt holdings by Japan? Are currency reserves something the government could immediately draw from? No you can't (please study carefully what has to happen in order for that to be even remotely possible), and even if you enacted all the law changes to do so, at what prices? If Japan dumped US treasuries tomorrow I am sure you are the foremost expert on this site to estimate where US treasuries would be trading at before the second US treasury is sold. Martin, I also do not feel inclined to further go into details with you because I do not sense you are open for correction and other thoughts, you rather pervert the whole argument with slick word plays. So yes, let's leave it at that.

You believe Japan has a fair chance via quantitative easing, I concur from all past experiments regarding QE and government spending that if the past is any measure that this will utterly fail and does nothing to the broad economy (other than of course stock prices which in fact benefits a few millionaires and billionaires who hold a majority in Japanese equities, of course we all pray that Japanese pension funds will learn the lessons from over hundred years of investing and finally invest in company ownership rather than its own government debt). But hey, that is not typical to Japan, only. Check out Park Avenue 432 and you know what I am talking about. Pickety is right on.

Cheers

As of 2013, using the IMF data here (http://www.imf.org/external/pubs/ft/weo/2013/01/weodata/weorept.aspx?sy=2012&ey=2012&scsm=1&ssd=1&sort=country&ds=.&br=1&pr1.x=35&pr1.y=14&c=512,666,914,668,612,672,614,946,311,137,213,962,911,674,193,676,122,548,912,556,313,678,419,181,513,867,316,682,913,684,124,273,339,868,638,921,514,948,218,943,963,686,616,688,223,518,516,728,918,558,748,138,618,196,522,278,622,692,156,694,624,142,626,449,628,564,228,283,924,853,233,288,632,293,636,566,634,964,238,182,662,453,960,968,423,922,935,714,128,862,611,135,321,716,243,456,248,722,469,942,253,718,642,724,643,576,939,936,644,961,819,813,172,199,132,733,646,184,648,524,915,361,134,362,652,364,174,732,328,366,258,734,656,144,654,146,336,463,263,528,268,923,532,738,944,578,176,537,534,742,536,866,429,369,433,744,178,186,436,925,136,869,343,746,158,926,439,466,916,112,664,111,826,298,542,927,967,846,443,299,917,582,544,474,941,754,446,698&s=GGXWDN_NGDP,GGXWDG_NGDP&grp=0&a=#cs165) the net general government debt figure is 134.3% vs the often quoted 240% gross figure. This difference is particularly large for Japan, which is why I prefer to use the net number. Using the current average duration of 8 years for the outstanding debt provided by the MoF here (http://www.mof.go.jp/english/jgbs/debt_management/plan/e20131224overview.pdf) and the current yield of arnd 35bps for 8y JGB, I arrive at net interest payments which are, in fact, even lower now than the 1.4% figure I gave above. I sure hope this is quantitative enough for you.

Finally, let me say that, as far as I am aware, I never accused you of "having your numbers wrong". I said that the numbers you have used are misleading.

 

[AnnaG]

Crikey, with that many numbers no wonder it's a confusing situation.

My tv does 100% brightness but I know not to put it there.

 

[Martinghoul]

how can the numbers I used be misleading? They are taken right off the MoF and BoJ websites. Please verify if you do not believe me. You in turn link to a site that shows blanks for most every metric they listed and if there are numbers then they are from 2012. Your numbers are certainly off by a huge margin. You seem to be a guy who loves to play with words (such as "government and household spending is one and the same", you would fail any 101 econ class with such a belief). I find your statements and how you support it with completely outdated numbers more misleading than anything else (you are basically citing numbers similar to saying US government spending was this and that, omitting you used numbers before the Iraq invasion, war on terror, and QE). Then you hide behind gross and net word plays. GDP numbers are what they are, there is no net or gross, and neither is there in Japanese government debt figures. What you want to net those numbers with by the way? You wanna net the US debt holdings by Japan? Are currency reserves something the government could immediately draw from? No you can't (please study carefully what has to happen in order for that to be even remotely possible), and even if you enacted all the law changes to do so, at what prices? If Japan dumped US treasuries tomorrow I am sure you are the foremost expert on this site to estimate where US treasuries would be trading at before the second US treasury is sold. Martin, I also do not feel inclined to further go into details with you because I do not sense you are open for correction and other thoughts, you rather pervert the whole argument with slick word plays. So yes, let's leave it at that.

You believe Japan has a fair chance via quantitative easing, I concur from all past experiments regarding QE and government spending that if the past is any measure that this will utterly fail and does nothing to the broad economy (other than of course stock prices which in fact benefits a few millionaires and billionaires who hold a majority in Japanese equities, of course we all pray that Japanese pension funds will learn the lessons from over hundred years of investing and finally invest in company ownership rather than its own government debt). But hey, that is not typical to Japan, only. Check out Park Avenue 432 and you know what I am talking about. Pickety is right on.

Cheers

There's just no pleasing you... First, I don't have them numbers. Then, when I give you the numbers, they are in the wrong format or outdated or provided by the wrong source or whatever. If it's not the numbers, then it's me perverting the argument by playing with words.

As far as I can see, I haven't said anything revolutionary, my numbers can be easily verified and confirmed by multiple sources and my logic for using "net", rather than "gross" is pretty obvious (interest that one govt agency pays to another shouldn't count as a liability). Like I said before, I am happy to continue to disagree on this and move on...

 

[volpunter]

Martin, you gotta read more carefully. I never complained about the format. I made a mockery out of your outdated numbers and link to a website that has all the data missing. Get your act together and swallow your pride. It takes you less than 2 minutes to verify my numbers on the MoF and BoJ websites, without question, the most authoritative sources of this kind of information.

No you have said nothing revolutionary and that is precisely where you miss the point of this whole exercise. You join into the popular QE choir which has never shown to lead to any real solution in Japan (easing measures were tried many times in many different ways). Yes, what we need is revolutionary thinking, something you apparently lack.

P.S.: Interest other governments pay to Japan? To the Japanese government? Care to elaborate who ought to pay interest to the Japanese government? Are you dreaming or something? In case you refer to Japan's currency reserves, first of all they are strictly held by the central bank and not the government, hence the government cannot touch a single yen whatsoever. Secondly, hardly any of the reserves are invested in bonds, they are held in foreign currency, gold, special drawing rights (SDR) and IMF positions. Next, you hopefully do not consider domestic holdings by GPIF or even households of foreign bonds as sources of interest payments to the government, correct? See, the problem I have with your line of reasoning is that you are not precise, you are at times throwing all peas into one pot and pretend as if the Japanese government sits on huge piles of foreign debt that it enjoys frequent interest payment receipts of. That is simply not the case. The Japanese government amassed incredible amounts of debt and does not sit on any investments. And even if the government received interest payment from your "secret sources" then it does not coincide with the payment schedules the government has to meet to its domestic and foreign JGB investors. The issue is not that you disagree but that you have your way of thinking twisted in extreme ways.

There's just no pleasing you... First, I don't have them numbers. Then, when I give you the numbers, they are in the wrong format or outdated or provided by the wrong source or whatever. If it's not the numbers, then it's me perverting the argument by playing with words.

As far as I can see, I haven't said anything revolutionary, my numbers can be easily verified and confirmed by multiple sources and my logic for using "net", rather than "gross" is pretty obvious (interest that one govt agency pays to another shouldn't count as a liability). Like I said before, I am happy to continue to disagree on this and move on...

 

[Martinghoul]

Martin, you gotta read more carefully. I never complained about the format. I made a mockery out of your outdated numbers and link to a website that has all the data missing. Get your act together and swallow your pride. It takes you less than 2 minutes to verify my numbers on the MoF and BoJ websites, without question, the most authoritative sources of this kind of information.

The numbers are not outdated. Even a cursory examination would lead one to conclude that the numbers provided are correct, regardless of the year. Moreover, the data is not missing, unless you have forgotten how to use the scroll bar. Hence my point about the formatting. Again, if you disagree with the numbers I have given specifically, pls don't hesitate to correct my calculation.

P.S.: Interest other governments pay to Japan? To the Japanese government? Care to elaborate who ought to pay interest to the Japanese government? Are you dreaming or something? In case you refer to Japan's currency reserves, first of all they are strictly held by the central bank and not the government, hence the government cannot touch a single yen whatsoever. Secondly, hardly any of the reserves are invested in bonds, they are held in foreign currency, gold, special drawing rights (SDR) and IMF positions. Next, you hopefully do not consider domestic holdings by GPIF or even households of foreign bonds as sources of interest payments to the government, correct? See, the problem I have with your line of reasoning is that you are not precise, you are at times throwing all peas into one pot and pretend as if the Japanese government sits on huge piles of foreign debt that it enjoys frequent interest payment receipts of. That is simply not the case. The Japanese government amassed incredible amounts of debt and does not sit on any investments. And even if the government received interest payment from your "secret sources" then it does not coincide with the payment schedules the government has to meet to its domestic and foreign JGB investors. The issue is not that you disagree but that you have your way of thinking twisted in extreme ways.

Erm, now who's having issues with reading comprehension? I am not talking about currency reserves and never have. Whatever discussion you might be having about the interest payments on foreign debt, you're having it with yourself. So all this "throwing all peas into one pot" and not being precise, I'm afraid you gots the wrong guy. I am referring to payments owed by one agency of the Japanese government to another. Effectively, the rather obvious idea is not to count the debt that the govt owes to itself as a liability. This, again, is not revolutionary.

 

[volpunter]

at this point I must conclude that you are either (or and) a little to arrogant and full of pride or lack the intellect to follow a simple logical line of reasoning.

* Your data are from 2012, mine are from 2014, making your data obviously dated. How can data be correct regardless of the year? Yes they might have been (or might not, I did not verify) correct in 2012 but in 2014 they are not correct and lead to 1/2 the amount Japan has to pay in interest on its government debt.
* Your data are taken off some 3rd party website with 70% of content blank or missing, mine are from the Japanese Ministry of Finance (MoF) and Bank of Japan (BoJ).
* In fact I provided the calculation in the first place, I used 2014 data, and I used the best possible sources. So, if your numbers are divergent then you can beg to disagree (pretty much admitting your data are wrong and you are too lazy to check why) or it is YOUR obligation to prove my data wrong. All your numbers in the calculation, by the way, are off by a huge margin, your GDP figures, your total debt amounts, and your interest payable on existing debt. The site you linked to has simply incorrect figures that do not reflect the current environment.

WHAT? One agency owes debt to another agency? You mean a significant enough amount of JGBs the government issued were bought and is held by another Japanese GOVERNMENT agency? Ha, you must be kidding us here. Dude, please make this statement clear or shut up (and put me on ignore). So Kyle Bass is dead wrong and Japan actually does not have a government debt issue. Abe simply needs to ring up his buddies at MITI and MoF and negotiate an early retirement of the debt and all is fine in Nippon. Sorry but with every post you lose more and more of your hard-earned reputation. "The government owes itself a large chunk of its debt" -> Were you hired by Abe as an early April fool? What agency? I wanna make a bet that you will eventually come out of the closet and say "BoJ" or you will just stay silent in shame...

The numbers are not outdated. Even a cursory examination would lead one to conclude that the numbers provided are correct, regardless of the year. Moreover, the data is not missing, unless you have forgotten how to use the scroll bar. Hence my point about the formatting. Again, if you disagree with the numbers I have given specifically, pls don't hesitate to correct my calculation.

Erm, now who's having issues with reading comprehension? I am not talking about currency reserves and never have. Whatever discussion you might be having about the interest payments on foreign debt, you're having it with yourself. So all this "throwing all peas into one pot" and not being precise, I'm afraid you gots the wrong guy. I am referring to payments owed by one agency of the Japanese government to another. Effectively, the rather obvious idea is not to count the debt that the govt owes to itself as a liability. This, again, is not revolutionary.

 

[Martinghoul]

at this point I must conclude that you are either (or and) a little to arrogant and full of pride or lack the intellect to follow a simple logical line of reasoning.

* Your data are from 2012, mine are from 2014, making your data obviously dated. How can data be correct regardless of the year? Yes they might have been (or might not, I did not verify) correct in 2012 but in 2014 they are not correct and lead to 1/2 the amount Japan has to pay in interest on its government debt.
* Your data are taken off some 3rd party website with 70% of content blank or missing, mine are from the Japanese Ministry of Finance (MoF) and Bank of Japan (BoJ).
* In fact I provided the calculation in the first place, I used 2014 data, and I used the best possible sources. So, if your numbers are divergent then you can beg to disagree (pretty much admitting your data are wrong and you are too lazy to check why) or it is YOUR obligation to prove my data wrong. All your numbers in the calculation, by the way, are off by a huge margin, your GDP figures, your total debt amounts, and your interest payable on existing debt. The site you linked to has simply incorrect figures that do not reflect the current environment.

* Like I said, if you believe my data is incorrect, pls provide evidence to support such a statement. I am telling you that my numbers are broadly correct, whether they are from 2012, 2013 or 2014. As I keep saying, the different results that we're arriving at are NOT due to the difference in the data used. It's a function of using gross vs net debt.
* The 3rd party website in question is the IMF, which, in this particular case, is probably more credible and independent than the BoJ and the MoF. The content is not missing, assuming, again, that you know how to use the scroll bar.
* I didn't disagree with your calculation. I stated that your use of gross, rather than net, figures is correct, but misleading. My numbers are also correct. If you disagree, pls see above.

WHAT? One agency owes debt to another agency? You mean a significant enough amount of JGBs the government issued were bought and is held by another Japanese GOVERNMENT agency? Ha, you must be kidding us here. Dude, please make this statement clear or shut up (and put me on ignore). So Kyle Bass is dead wrong and Japan actually does not have a government debt issue. Abe simply needs to ring up his buddies at MITI and MoF and negotiate an early retirement of the debt and all is fine in Nippon. Sorry but with every post you lose more and more of your hard-earned reputation. "The government owes itself a large chunk of its debt" -> Were you hired by Abe as an early April fool? What agency? I wanna make a bet that you will eventually come out of the closet and say "BoJ" or you will just stay silent in shame...

Erm, no, I am not kidding, and yes, Kyle Bass has been dead wrong on a whole variety of things (I have been saying this for years, as evidenced by some old threads). And yes, the BoJ is, undoubtedly, one of the agencies in question.

What you (and Kyle Bass) fail to appreciate is that Japan, as a sovereign, can choose to not have a government debt issue. In fact, they have done it in the not-so-distant past (as I suggested in other threads, google Korekiyo Takahashi). And yes, this means replacing the government debt problem with a currency problem, but desperate times call for desperate measures. If you have a viable alternative that you'd like to propose, pls don't hesitate.

P.S.: I am pleasantly surprised and grateful that you speak of "my hard-earned reputation". I will take it as a compliment, especially since it's not like a reputation on ET is something I have striven for.

 

[volpunter]

you are indeed lacking intellect, how else would you equate the central bank of Japan with the Japanese government. Since when can you net off credit or debit of a central bank with government debt or surplus. What you are talking about is "monetizing debt" and is in most industrialized jurisdiction strictly illegal and prevented by a myriads of laws, some of such laws requiring an absolute majority in legislative branches of such countries to be altered. Even the ECB is currently not allowed to buy sovereign debt much less is it allowed to transfer matured debt repayment amounts back to the sovereigns who issues such debt in the first place. BoJ can purchase JGBs (also required a law change) but it is strictly forbidden to take the money it receives on any maturing debt by the Japanese government and transfer it back to the same government. Even if it was legal to do so in unlimited amounts (yes BoJ can transfer "surpluses" back to the ministry of finance but only for very narrowly defined surpluses such as surpluses from trading) all you propagate is to print money to pay off government debt. Wow, that is your solution and "desperate measure" in "desperate time".

You are the one clearly not in the know about the current situation in Japan but you pretend and talk as if you are the expert. Then you try to sell one of the worst possible solutions as if you just discovered 4d-porn. I am out of this thread, get your facts straight if you want to engage with people on an intelligent level, else have fun conversing with those who buy your tin-foil recipes.

*

Erm, no, I am not kidding, and yes, Kyle Bass has been dead wrong on a whole variety of things (I have been saying this for years, as evidenced by some old threads). And yes, the BoJ is, undoubtedly, one of the agencies in question.

What you (and Kyle Bass) fail to appreciate is that Japan, as a sovereign, can choose to not have a government debt issue. In fact, they have done it in the not-so-distant past (as I suggested in other threads, google Korekiyo Takahashi). And yes, this means replacing the government debt problem with a currency problem, but desperate times call for desperate measures. If you have a viable alternative that you'd like to propose, pls don't hesitate.

P.S.: I am pleasantly surprised and grateful that you speak of "my hard-earned reputation". I will take it as a compliment, especially since it's not like a reputation on ET is something I have striven for.

 

[Martinghoul]

you are indeed lacking intellect, how else would you equate the central bank of Japan with the Japanese government. Since when can you net off credit or debit of a central bank with government debt or surplus. What you are talking about is "monetizing debt" and is in most industrialized jurisdiction strictly illegal and prevented by a myriads of laws, some of such laws requiring an absolute majority in legislative branches of such countries to be altered. Even the ECB is currently not allowed to buy sovereign debt much less is it allowed to transfer matured debt repayment amounts back to the sovereigns who issues such debt in the first place. BoJ can purchase JGBs (also required a law change) but it is strictly forbidden to take the money it receives on any maturing debt by the Japanese government and transfer it back to the same government. Even if it was legal to do so in unlimited amounts (yes BoJ can transfer "surpluses" back to the ministry of finance but only for very narrowly defined surpluses such as surpluses from trading) all you propagate is to print money to pay off government debt. Wow, that is your solution and "desperate measure" in "desperate time".

You are the one clearly not in the know about the current situation in Japan but you pretend and talk as if you are the expert. Then you try to sell one of the worst possible solutions as if you just discovered 4d-porn. I am out of this thread, get your facts straight if you want to engage with people on an intelligent level, else have fun conversing with those who buy your tin-foil recipes.

Erm, wake up and smell the roses, my friend... What alternative naive universe do you inhabit where governments, through a captive central bank, are not capable of monetizing debt? I mean, even I, allegedly this forum's foremost central bank shill and apologist (just ask Tsing, if in doubt), am not silly enough to insist that, when push comes to shove, they will not do what the government asks of them... This especially applies to Japan, for reasons that I have mentioned.

As to me not being in the know and pretending and talking as if I am the expert, I never claimed to be an expert. I am expressing my views, no more, no less. If you feel that I sound like an expert, again, I will take this as a compliment, for which I am grateful.

Finally, I am not selling any solutions and my idea is nothing revolutionary or original. I am just suggesting the possible ways the situation can unfold and trying to be realistic about it.

 

[volpunter]

you are a fool, laws do not even allow for the monetization of debt, it has not happened so far in a single industrialized jurisdiction, you can twist your idiotic terms as much as you like but it does not change the fact that you first have to go all the way up to the supreme court to enable anyone in the US to monetize debt in the way you suggest, and same thing in Japan. The seconds governments start to print money we are all back in the cave...oh no I err, back to the Weimar Republic. Good luck with that moron!!!

And with your statement "What you (and Kyle Bass) fail to appreciate is that Japan, as a sovereign, can choose to not have a government debt issue " you can respectfully wipe your ass with: What a slap into the face of all those who live near the poverty line and were hit with a sale tax hike and soon another. Of course that was just to entertain people like you because the Japanese government has no real government debt issue. You are a fool who either posts bullshit to stir up debate or you are an outright idiot.

Erm, wake up and smell the roses, my friend... What alternative naive universe do you inhabit where governments, through a captive central bank, are not capable of monetizing debt? I mean, even I, allegedly this forum's foremost central bank shill and apologist (just ask Tsing, if in doubt), am not silly enough to insist that, when push comes to shove, they will not do what the government asks of them... This especially applies to Japan, for reasons that I have mentioned.

As to me not being in the know and pretending and talking as if I am the expert, I never claimed to be an expert. I am expressing my views, no more, no less. If you feel that I sound like an expert, again, I will take this as a compliment, for which I am grateful.

Finally, I am not selling any solutions and my idea is nothing revolutionary or original. I am just suggesting the possible ways the situation can unfold and trying to be realistic about it.