Pure ‘prescription’ MMT v. Political ‘prescription’ MMT

“Moon-bound Japanese billionaire’s secret: Work less”—Bangkok Post article, 10/22/18

Anyone employed in Japan thinking ‘work less’—in a country where all the people work such long hours that there is *literally* a word for people that *actually* collapse from sudden occupational overwork-death (Karōshi  過労死)— should be considered a space cadet.

Presenting Japanese billionaire Yusaku Maezawa who says that working less, not more, was EXACTLY the reason why he could build a company worth $8B and earn a ticket to the moon.

The short workday is the reason for the success of his company ‘Zozo’, where he encourages employees to work more efficiently and find more inspiration outside the office.

“When our employees began working differently, under the program, they stopped wasteful activities, wasteful conversations and wasteful meetings. As a result, they could concentrate more, be more productive and then go home after six hours,” Maezawa said at the Foreign Correspondent’s Club of Japan, where he held a news conference about his lunar trip.

Now there’s an idea that might also work in the US.

Let’s call it the federal ‘Less Hours On The Job Guarantee’ program.

The Pure ‘prescription’ solution is to get the person working in your office for only six hours a day to be just as productive (same output) as the person working in your competitor’s office for ten hours a day.

The Political ‘prescription’ solution is to simply pander to your employees, telling them that the government should create more jobs (Job Guarantee), create more dollars (more deficit spending) and call it a day.

If we had a jobs shortage problem, then a temporary ‘job guarantee’ program could be needed, but we don’t have a job shortage problem right now, we have a labor shortage problem right now. When companies are starving for workers, you need more workers, not more jobs. During record-breaking jobs growth, when cities are offering to pay you a bonus / pay your moving expenses / pay off your student loan debt to come work there, you don’t need the government to create more jobs, you need the government to try to get the workers that are already working in the labor force to work more productively.

When it comes to workers, that’s Pure ‘prescription’ thinking.

The same goes for dollars. We don’t need more dollars (more deficits), we need to get the dollars already in existence in the banking system working more productively.

That could help ‘defrost’ some of the $$$, to get them out from the nonfunctional (financial) economy and back into the functional (real) economy. In other words, more ‘deficits’ for more ‘this’ and more ‘that’, which always sounds so virtuous (what your listeners want to hear), isn’t always the best idea (what your listeners need). Sometimes less is more. Shortening the workweek, that’s your classic example of Pure ‘prescription’ MMT v. Political ‘prescription’ MMT.

“The answer lies in organic solutions, that unlock nonproductive savings back into productive capital. We need an eco-feedback loop that embraces human capital producing more useful output instead of continuing to increase gov’t deficits that results in just more capital producing more capital.” —Jim Boukis

Thanks for reading,

Follow Jim ‘MineThis1’ Boukis at https://www.facebook.com/InvestingMMT/

“What if during QE, the Fed had intentionally bought some Infrastructure and Green New Deal bonds issued by the federal gov’t (in addition to garden-variety Treasury Bonds)? Have we answered the question, ‘How do we pay for it?’ Yes! Is there any risk of default? No! Can the Fed simply use keystrokes to mark up accounts at the Fed? Yes! Are the savers (the 5%) being stuffed with more deficit money initially going to the functional economy (the 95%) but eventually winding up in the savings bubble like it was during QE? No! The money could have gone to fix airports, to repair bridges and for GND initiatives (instead of making it easy for corporations to buy back stock and borrow). Unlike political ‘prescription’ MMT calling for a Job Guarantee that by design does not compete with the private sector, are these productive jobs? Yes! So unlike a JG, these infrastructure and GND jobs wouldn’t cause garbage inflation? No! Does it get us closer to full employment? Yes! To this point all I see here is Pure ‘prescription’ MMT.”—Charles Kondak, 08/15/19
“The issuance of private infrastructure bonds, backed by the Fed—to ‘pay for it’—(or have the federal gov’t just issue public infrastructure bonds and then the Fed buys them back in a QE, whatever) has a Pure ‘Prescription’ MMT element to it because you are draining excessive private-sector wealth (profit/savings) back into the functional economy in an ecosystem feedback loop.”—Jim ‘MINETHIS1’ Boukis, 08/16/19
AGREED…Well said, and prophetic too—since two months later, incoming ECB President Christine Lagarde (replacing Mario Draghi) hinted about buying GND bonds during QE!



Microsoft tried a 4-day workweek in Japan. Productivity jumped 40%

CNN BUSINESS: “A growing number of smaller companies are adopting a four-day workweek. Now the results of a recent trial at Microsoft (MSFT) suggest it could work even for the biggest businesses.

The company introduced a program this summer in Japan called the ‘Work Life Choice Challenge,’ which shut down its offices every Friday in August and gave all employees an extra day off each week.

The results were promising: While the amount of time spent at work was cut dramatically, productivity — measured by sales per employee — went up by almost 40%compared to the same period the previous year, the company said in a statement last week.

In addition to reducing working hours, managers urged staff to cut down on the time they spent in meetings and responding to emails.

They suggested that meetings should last no longer than 30 minutes. Employees were also encouraged to cut down on meetings altogether by using an online messaging app (Microsoft’s, of course).

The effects were widespread. More than 90% of Microsoft’s 2,280 employees in Japan later said they were impacted by the new measures, according to the company.

By shutting down earlier each week, the company was also able to save on other resources, such as electricity.

The initiative is timely. Japan has long grappled with a grim — and in some cases, fatal — culture of overwork. The problem is so severe, the country has even coined a term for it: karoshi means death by overwork from stress-induced illnesses or severe depression.

The issue attractedinternational attention in 2015, when an employee at Japanese advertising giant Dentsu died by suicide on Christmas Day. Tokyo officials later said that the staffer had worked excessive amounts of overtime.

Two years later, a reporter at a Japanese broadcaster died after working punishing long hours. Her employer said she had clocked in 159 hours of overtime the month before her death.

That has led businesses to start searching for solutions. Some companies have begun offering employees more flexibility, and the government has launched a campaign called ‘Premium Friday,’ which encourages workers to leave early every last Friday of the month.

Microsoft, for its part, says it will conduct another experiment in Japan later this year. It plans to ask employees to come up with new measures to improve work-life balance and efficiency, and will also ask other companies to join the initiative.”

Source: https://amp.cnn.com/cnn/2019/11/04/tech/microsoft-japan-workweek-productivity/index.html?fbclid=IwAR02p6-_RlFQLDhVZ0yTsUaMSvhfq7hDG8VpM3mKz2_W_l9KtfgJv7te4y4

Dow DOWN 2.41% (-608) TWO WEEKS BEFORE MIDTERMS (!) ‘Yikes’ or ‘Yawn’ (?)

OCT 24, 2018 (TWO WEEKS BEFORE MIDTERMS): Nasdaq down 4.43% (-329)…S&P 500 down 3.09% (-84)… Dow down 2.41% (-608)

‘Yikes’ or ‘Yawn’?

As far as the stock market goes, it’s a ‘yawn’ (and get ready to start saying ‘yippee’).

YEAR-TO-DATE: Nasdaq (7006 7108) is UP 1.45%

YEAR-TO-DATE: S&P 500 (2695 2656) is DOWN 1.45% (The S&P 500 officially closed in ‘correction’, meaning down over 10%, from a record high reached on Jan 26th, from 2872, down to 2581, on Feb 8th; and today 10/24/18, while being back in correction territory during market hours, closed down 9.3%, just shy of official correction, from the record high reached September 21st, from 2929 down to 2656).

YEAR-TO-DATE: Dow (24824 24583) is DOWN 1%

“Relax…Everything is fine…There’s nothing bad out there…We still have a way to go before we see wage or profit margin compression…Right now only 2 of the 6 recession indicators that I have are checked off, the third one is the yield curve inversion that hasn’t happened.”—Logan Mohtashami 10/23/18

Two of his six recession indicators, meaning Logan only sees about a 33% chance of recession, or in other words, about a 77% chance of no recession, so this economy, this market, still has a lot more upside potential. This correction is a ‘yawn’ and get ready to start saying ‘yipee’ at the end of the year.

IS THIS A RERUN OF 1987 when another strong Republican president had the market routinely breaking records? On 08/17/1987 the Dow Jones Industrial Average closed above 2700 for the first time at 2,700.57 (+40% year-to-date). On 10/19/1987 ‘Black Monday’, stock markets around the world suffered an unexpected dramatic drop, with the DJIA closing at 1,738 after falling 508 points (-22.6%), the largest one-day drop in recorded stock market history, AND first financial crisis of the modern globalized era, BUT the DJIA ended 1987 closing at 1950—UP 1% for the year.

IS THIS MIDTERM ELECTION UNCERTAINTY of a close race? The Blue Team, down two touchdowns (the White House and the Supreme Court), are now at Fourth & Goal and they need to score, they need a touchdown (either the House and/or the Senate), for some locker room enthusiasm before the start of the second half. Blue *might* score, OR all this is just ‘noise’ posing as ‘uncertainty’ and the market has already factored in that on Nov 6th, Red will easily stop Blue at the goal line.

IS THIS ‘TAPER TANTRUM 2’? The 2018 stock market corrections and the 2013 taper tantrums were both caused by expected and actual surges in US Treasury yields. Higher interest rates can be unfriendly to stock prices. Equity markets can be spooked easier in a rising interest rate environment (as per Warren Buffet, rising rates are like increased ‘gravity’ on stocks). In 2013, the market had a tantrum over expected FOMC rate rises to come following the Fed’s announced bond buyback reductions (officially ending the ‘QE’ years); and now in 2018, the tantrum is over the Fed’s actual FOMC rate rises that recently went above the ‘accommodative’ level (officially ending the ‘easy money’ years). However, keep in mind, that the reason why interest rates have been moving up is simply because the economy is doing better, which is of course, good for stocks. For example, even with the taper tantrum in the spring of 2013, U.S. stocks closed 2013 at records, with the S&P 500 ending the year with a strong finish, posting its largest annual jump in 16 years (UP 29.6%) and the Dow its biggest gain in 18 years (UP 26.5%).

OR PERHAPS THIS IS ABOUT CHINA? Rather than being about US politics and US economics (being mostly about anything going on locally); it’s probably more likely that the US stock market jitters of 2018 are mostly about the ‘trade war’ and what it means for the world’s second largest economy (being about things going on internationally). When details of the newly-agreed U.S.-Mexico-Canada Agreement (USMCA) were made public, it soon became apparent that President Trump was doing more than just ‘saber-rattling’ against US trade deficits but also circling the wagons in an us (free-market economy) vs. them (‘non-market’ economy’) pendulum swing that threatens a paradigm shift of future supply chains / industrial clusters away from China. The deal brings the US trade relationship with Canada and Mexico into the 21st century, which also includes a modernized, high-standard and never-before-seen rider that provides strong protection and enforcement of North American intellectual property rights. In another bad omen for China, the new agreement will keep up with the fast-changing American economy that, together with the Tax Cuts and Jobs Act (that included a US corporate tax cut from 35% to 21%, a lower one-time tax on repatriated profits earned overseas, and letting companies immediately deduct 100% for the cost of new equipment in the same tax year), reduces the incentives of US company offshoring (of manufacturing jobs leaving the US). The new trade agreement means the end of the United States delegating manufacturing to China; and the beginning of a renewed focus on American nation-building, putting American manufacturing first, bringing back the aggregate demand that reopening those shuttered US factories brings their communities and creating more opportunities for American citizens to get REAL jobs to make the American economy great again—not just fake ‘job guarantees’ that political ‘prescription’ MMTers keep promising you along with more free ‘this’ and more free ‘that’.

“If America was this poor, pathetic, disgusting economy and everybody was so bad off that they needed a ‘Job Guarantee’ or ‘Basic Income’ or ‘Free college’, you’d have people leaving this country (not the other way around).”—Logan Mohtashami


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P.S. ‘Full disclosure’, I had some ‘inside information’ when writing this post and concluding that China’s economic jitters this year was mostly to blame for the jitters in the US stock market. Full disclosure, after 30 years in the financial field as a US Treasury bond broker, I retired and moved to Bangkok at the end of 2015. Since my wife of 24 years and I, moved here, the Stock Exchange of Thailand, has done well, the SET Index has gone from 1244 on 01/08/16 to 1828 on 01/26/18—UP 47% during the past two years. Until this year, however, when the US ‘trade war’ with China, the world’s second largest economy, started getting more serious and then the SET Index went DOWN 14% for 2018 after hitting a low of 1595 on 06/29/18. China is Thailand’s largest trading partner. In addition, for decades, the largest number of tourists visiting Thailand, are Chinese. So Thailand relies heavily on both tourists and trade from China. China’s stocks, the Shanghai Composite Index, dropped to their lowest level in nearly four years in September and at this writing is down 20% year-to-date for 2018. Throw a depreciating Chinese currency—the weaker yuan—into that mix; and it becomes more obvious that the Chinese are understandably tightening their belt, which affects the Thai economy, which is causing Thai stock market jitters, which is why many local Thais say their business is very slow (and why my landlord hasn’t raised my rent for 2019).

P.S.S. On 12/06/18, S&P 500 futures sank into correction territory during NY intra-day trading (for the third time in 2018) on news that Canada had arrested the chief financial officer of Huawei, the Chinese telecoms giant, the world’s second-largest smartphone maker, at the center of a spying row. Don’t let yourself think that global economic weakness this year had nothing to do with the China-US trade row; or that this ‘trade war’ with the world’s second-largest economy is just about trade deficits and tariffs. Chinese tech companies are now under intense scrutiny, driven by concerns from Washington (and Britain’s MI6 intelligence service) that they are being used by the Beijing government for spying—posing a threat to both the corporate and national security of the US and any US allies. Huawei, the Chinese telecoms giant, has long been under scrutiny over its allegedly close ties to China’s state intelligence services. After being rigorously tested, Huawei equipment was banned in the US and Australian governments. After more than a decade using equipment of Huawei, Britain’s largest mobile provider (BT) revealed that it was stripping it from its core 4G cellular network after similar moves by the US. Japan’s government plans to ban purchases of equipment from Huawei (and China’s ZTE Corp) to beef up its defenses against intelligence leaks and cyber-attacks. Taiwan is reinforcing its five-year-old ban on Huawei and ZTE which ‘have been effective in minimizing the threat that back-doors built into Chinese network equipment gives Beijing access to military and economic secrets.’ New Zealand’s government is making similar moves to cut ties with Huawei, which was founded by Ren Zhengfei, a former member of China’s People’s Liberation Army, and has been consistently met with suspicion in the West. After her arrest in Vancouver, American prosecutors are seeking to have Huawei CFO Wanzhou ‘Sabrina’ Meng, the daughter of Ren Zhengfei, extradited to the US, as they continue to investigate whether the company broke trade sanctions against Iran. “The China-US trade row could become a protracted war. Without any solid evidence, the Canadian and US governments trampled on international law by basically ‘kidnapping’ Chinese citizen Meng,” an official with the Chinese Ministry of Commerce said in a Global Times op-ed following her arrest.

“The US and China have been in a trade standoff since earlier this year. Then last weekend, the two started playing nice. This Huawei development is throwing a real wrench into that. And making it clear that there’s more to this beef than just trade.”—theSkimm


P.S.S.S. After the US stock market closed in correction territory (down 10.44% from the all-time record high) on Friday 12/07/18, a Bloomberg headline screamed: 

“S&P 500 Volatility Hammering Bulls and Bears For Two Months”

Translation: It’s a sideways market.

‘Yawn’…and IMO…once the US-China negotiators settle their differences and end this trade dispute, get ready to say ‘Yippee’.

Follow MineThis1 (who has been saying it’s a sideways market all along) at https://www.facebook.com/InvestingMMT/