Chinese Agencies Working to Boost Consumption

More signs the western educated kids are taking charge.
Instead of the public sector spending more than it’s ‘income’
seems they are working on expanding private sector debt?
And tax cuts for institutional investors to buy equities?

Good luck to them…

Chinese Agencies Working on Fiscal Steps to Boost Consumption

Jan 18 (Bloomberg) — Commerce Ministry spokesman Shen Danyang says his agency, central bank and finance ministry are working on such steps

* China will support wider use of credit, bank cards

* Agencies will submit plan to State Council

* NOTE: State-run China Securities Journal today reported govt may introduce tax cuts, other preferential policies for institutional investors to encourage long-term stockholding

20 Responses

  2. Yves Smith: In fact, monetary economists are SO BAD at reality that they are the perfect people to be coopted by the banks.

    http://www.nakedcapitalism.com/2012/01/matt-stoller-fed-transcripts-%e2%80%93-why-was-congress-in-the-dark-during-the-crafting-of-dodd-frank.html#comment-597526

    This is where economics meets psychology. How do monetary economists become “SO BAD” at reality?

    Could it be that entire departments of economics are serving as prep scools for economic hit men? For example, Univeristy of Chicago’s infamous economics department spawned the even more notorious Chicago Boys. Astute readers of this blog must surely be aware of the decades of CIA efforts to co-opt professors, reporters, and so on.

    Even if the thousands of Latin American students trained by UC in weapons-grade voodoo econ were themselves sincere, somebody at USAID, the Ford Foundation, the State Department, and UC Dept. of Econ knew exactly WTF they were really doing: preparing to attack Chile first, then the rest.

    ~~~~~~~~~~~~~~~~~~~~~~~~

    NAOMI KLEIN: You know, the most left-wing place on the planet at the moment is, interestingly enough, the first place where Chicago School ideology made that leap from the textbook into the real world, and that’s Latin America. And that happened for a very specific reason, as you know. This — in the 1950s, there was great concern at the State Department about the fact that Latin America, then as now, as it seems to do, was moving to the left. There was concern about what they called the “pink economists,” the rise of developmentalism, import substitution, and, of course, socialism. And, of course, this was a concern because it greatly affected American and European interests, because the crux of the argument of import substitution was that countries like Chile and Argentina, Guatemala, should stop exporting their raw natural resources to the north and then importing expensive processed goods to the south, that it didn’t make economic sense, that they should use the same tools of protectionism, of state supports, that built the economies of Europe and North America. That was that crazy radical idea, and it was unacceptable.

    So, this plan was cooked up — it was between the head of USAID’s Chile office and the head of the University of Chicago’s Economics Department — to try to change the debate in Latin America, starting in Chile, because that’s where developmentalism had gained its deepest roots. And the idea was to bring a group of Chilean students to the University of Chicago to study under a group of economists who were considered so extreme that they were on the margins of the discussion in the United States, which, of course, at the time, in the 1950s, was fully in the grips of Keynesianism. But the idea was that there would be — this would be a battle to the — a counterbalance to the emergence of left-wing ideas in Latin America, that they would go home and counterbalance the pink economists.

    And so, the Chicago Boys were born. And it was considered a success, and the Ford Foundation got in on the funding. And hundreds and hundreds of Latin American students, on full scholarships, came to the University of Chicago in the 1950s and ’60s to study here to try to engage in what Juan Gabriel Valdes, Chile’s foreign minister after the dictatorship finally ended, described as a project of deliberate ideological transfer, taking these extreme-right ideas, that were seen as marginal even in the United States, and transplanting them to Latin America. That was his phrase — that is his phrase.

    Naomi Klein: Wall St. Crisis Should Be for Neoliberalism What Fall of Berlin Wall Was for Communism

    http://www.democracynow.org/2008/10/6/naomi_klein

    Reply

  3. Did I miss Warren’s annual outlook for the new year? Last forecast I recall was Sept/Oct which was right on target.

    Given horizontal and vertical money are growing at a rapid pace while 10 yr tsy yields are bumping along the bottom of their 30 year down trend, things are looking very good for 2012 economy, stock market, and Obama.

    I really have a hard time seeing Europe or China takng the U.S. down at the moment. Worst case would be failure to extend payroll or some other cut to deficit ( vertical) money expansion.

    Reply

      4. @WARREN MOSLER,

        “i think i mean always and everywhere. at least until i hear an exception”

        Makes sense from the standpoint of insufficient NFAs. But seems like GDP could decline from other (rarer) types of shocks though, e.g., if they put a big enough dent in human or physical capital.

        Oh wait–that’s technically a (“real”) balance sheet effect, isn’t it??

  5. Warren,

    Isn’t this announcement just to some extent a part of a propaganda operation aimed at assuring the Americans that China is as neoliberal as the rest of the world? Certainly planting such a such news on Bloomberg time to time would increase the quality of their camouflage.

    I cannot find anything on their website:
    http://english.mofcom.gov.cn/index.shtml

    Even if they push some credit on the consumers in order to make the people more middle-class like and promote consumerism with the Chinese characteristics (of course they do it), their banks are still state-owned so a balance sheet recession can be easily resolved.

    The main goal of building socialism or communism is recursive – just building socialism or communism not increasing the well-being of the working class. People who think that the post-communist are less cynical than the Wall Street barons are simply misinformed.

    But they can be more efficient. This is the core issue.

    What really matters is whether the Chinese can overtake the US in terms of advanced technology and overall productive capacities over the next decade or two. The fate of the serfs here or there is rather irrelevant.

    Reply

  6. One thing that seems true from my reading (I’m certainly no expert though) is that the Chinese leadership is quite fearful of unemployment and the potential unrest that might result. That along with their obvious willingness to manipulate their monetary system might lead them naturally toward policies that would be considered wise by MMT standards (as I understand them). If their main guidepost is to keep everyone working, that alone may be enough. There are plenty of people who think China will crash soon, but I don’t think that will happen.

    Reply

    1. @SteveK9, Warren once told me not to worry, that Captain AMerica can go into the fed computers and change some zeroes or add or remove some zeroes to team USA’s benefit as the endgame checkmate winning move, and I told Warren, be careful what he wishes for, because those chineze boyz can go do it too for the other teams benefit – why in the world do we have chineze citizens doing US fed computer work?

      http://news.yahoo.com/man-charged-stealing-software-ny-fed-001841081.html

      U.S. charges Chinese man with NY Fed software theft

      But in this world of cloak and dagger and false flag treachery, you have to ask yourself dear reader, if/when lots of zeroes in fed balance sheets go one way or another, will the powers that be use stories like this to say, woe is us, don’t blame us the financial system crashed, blame those russian and chinese hackers – LOL! What’s in your wallet? 😉

      Reply

      1. @Save America, You have to ask yourself Stevek9, all those 1’s and zeroes floating around in your bank account statement, 401K statment, govt fed audited statements, warrens hedge fund statements, how many US spooks and white hats and black hats and religous hackers and chinese/russian white hate black hat etc etc etc have went into the matrix and playing fuddy duddy with all those 1’s and zeroes. One of my old computer science professors at Georgia Tech, one of the leaders on encryption told me he has gold coins under his bed after doing some security research for a large banking big 5 (bank of america) How silly, that an educated high IQ man like that thinks when it all goes up in smoke that some shiny metal is really gonna matter, like that silly guy Rickards who debated warren about modern money.

      2. @Save America, Zhang was hired as a contract employee in May by an unnamed technology consulting company used by the Fed to work on its computers, the complaint said.

        The code, called the Government-wide Accounting and Reporting Program (GWA), was developed to help track the billions of dollars the United States government transfers daily. The GWA provides federal agencies with a statement of their account balance, the complaint said.

        BWAHAHA! LOL! Congress is the boss right? LOL! You can’t make this stuff up LOL!

  7. OK found! Not exactly the same as what Bloomerg reported.

    Looks like an automated translation and is difficult to read but anyway…

    “In financial support policy, will seek more spending at all levels to benefit people’s livelihood and public welfare into the circulation, green consumption in the financial services, consumer credit products and will encourage management innovation, and expand the use of bank cards In tax policy, to strictly implement the policy of fresh agricultural products such as the green channel, reducing transport and logistics costs.
    Ministry of Commerce will facilitate the consumer, consumer protection, guide consumption, creating four areas to promote consumer spending. ”

    http://www.f-paper.com/?i1152801-Department-of-Commerce:-new-policies-to-promote-consumption-of-the-initial-ideas-have-been

    I AM TELLING YOU, CONSUME THIS BOWL OF SPINACH IMMEDIATELY OR ELSE…

    —

    I like this article as well.
    http://www.f-paper.com/?i1155225-You-respect-the-childs-property-yet

    “Wu Fei Hong proposal to develop the child’s concept of property rights, must be gradual, from the initial stage of the laissez-faire attitude, and slowly transition to the second phase, we have babies at home and at play through the game, share toys, baby I believe that back in my own hands after such as: go to the same toys he promised to take him five minutes later he returned to the second stage, you can try to guide the baby and kids toys, games exchange, such as three minutes after we returned to exchange toys, baby feel he has neither able to enjoy other people’s toys, it will not lose their toys. Finally, the organization babies do group activities, games, the best choice requires teamwork projects such as the building blocks together.”

    Looks that the majority of people in the US have stopped their emotional intelligence development at the “laissez faire” phase…

    Reply

  8. Warren, just out of interest. Mainstream economics is taught all over the place in the Western world, in the US. I am aware of UMKC, but which university you would recommend in the North East of the US, preferably New York City?

    Reply

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