Monday, May 14, 2018

Bill Mitchell —Band of Lower bond yields do not save the Japanese Government money

I was going to write about the situation in Timor-Leste after its national elections were held on Saturday. But I will hold that over for another day as I get some more information. So today, I think we can learn a lot from an issue raised in the Bloomberg article (May 14, 2018) – Kuroda’s Stimulus Saves Japan $45 Billion, Easing Debt Pressures – which discusses the QE program in Japan and introduces several of the basic errors that mainstream financial commentators make when discussing these issues. The article traverses all the usual suspects including the misconception that numbers in official accounts are ‘costs’ to government and that smaller numbers in official accounts mean the government can put larger numbers in other accounts than it might have been able to. These articles are as pervasive as they are erroneous. Hopefully, as the precepts of Modern Monetary Theory (MMT) spread and are understood more journalists will endure scrutiny of the rubbish they write and the public commentary and debate will progress towards a more reasonable – realistic – appraisal of what is going on in the world of finance and money. This article is one of the worst I have read this year so far. And there have been some real terrors!
This is about government finance rather than Japan alone.

Bill Mitchell – billy blog
Lower bond yields do not save the Japanese Government money
Bill Mitchell | Professor in Economics and Director of the Centre of Full Employment and Equity (CofFEE), at University of Newcastle, NSW, Australia

1 comment:

Konrad said...

“Lower bond yields do not save the Japanese Government money.”


The Japanese government (like the US government) creates its spending money out of thin air by crediting bank accounts. This is exactly the same as creating points on a scoreboard by changing the numbers.

A scoreboard has no need to “save” points. The concept is meaningless.

Likewise the Japanese government has no need to “save” money. The concept is meaningless.

Blogs like Bloomberg claim otherwise in order to keep the masses in poverty.

Here is an analogy I have used before…

Once upon a time there was a village whose only source of water was a single well. The well was bottomless and inexhaustible, but the village elders told everyone that the well was about to run dry. Any villager who wanted water had to grovel before the elders, and beg for every drop from the inexhaustible well.

The elders themselves always had plenty of water. They lived in extreme luxury.

Average villagers assumed that this luxury occurred because the elders were smarter and better than the average villagers. (In reality it occurred because the elders were f**king liars.)

Once in a while a villager would realize that the elders were liars. But whenever he tried to tell the other villagers, the others refused to listen. Indeed, average villagers guarded the elders, kept the elders in luxury, and thanked the elders for every drop of water they received. They WORSHIPPED the elders.

As a result, the average villagers all lived in squalor and poverty until they day they died.

The end.