Author: matt605

Former US Treasury Secretary says dump T-Bills. [Copy link] 中文

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Post time 2006-6-23 11:23:22 |Display all floors

"voodoo economics" in difficult times.

ha ha ha

USA wants to keep on spending.
China wants to keep American Engine of Import.

so, the Voodoo economics.
I guess, China just need time.....
and USA will take the "bitter pill" to secure it financial security eventually..

Green Dragon

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Post time 2006-6-23 11:29:51 |Display all floors

Reply #6 Greendragon's Post

The program can be fine tuned.   For example, instead of money that can be saved, it can be vouchers that have expiration dates, that have to be spent on certain items, or even certain vendors (that are deemed worthy of support).  For example, if the idea is that learning English is valuable, 1,000 of the RMB could be redeemable for English lessons, redeemable within a year (that is oversimplifying it, but you get the idea).

An exception to consumption could be that they can invest in certain securities - imagaine what it can do to the stock market.

Another exception could be that it can be coupled with a program to encourage entrepreneurship - you can pool the money or coupon if you are starting a business, and the banks may through in a matching loan.  Watch 10,000,000 new enterprises sprout overnite.  Competition will kill many of them, but the experience would be invaluable, and the surviving ones can form a solid platform for the next phase of China's growth.

5,000 RMB is a good round number.  It is not big enough to allow the folks to buy big items (like a car).  It is big enough to be exciting and cause imagination to go on high gear.

[ Last edited by tongluren at 2006-6-23 11:34 AM ]

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Post time 2006-6-23 11:45:37 |Display all floors

Reply #9 tongluren's post

Voodoo economics again! Mr.  Tong

Experience in business comes from years and years of experiments, failure, struggle and learning!!!!
Just  dumping like Uganda...under "what's that dictator's name- Idi Amin----complete mess"

sorry to use a simple example...

I have been seeing a new generation of "Chinese immigration" to Malaya from "Liaoning".....and they are doing all kind of copying...
Except for the pretty lasses, their capability to do a good facial, a good reflexology is severely lacking......yes young and willing.....yet no SIFU!

Even Singapore Spa took in experienced masseurs from Kuala lumpur who learned it from Hong Kong masters......ha ha....who learned in from Shanghai masters!!!

I might be wrong....but it is my own personal opinion. Please do not get offended by it!

Green Dragon

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Post time 2006-6-23 15:33:03 |Display all floors

Maybe, Maybe Not

Whether it is voodoo economics would depend on the amount of planning and the expertise in execution of the plan.  5,000 RMB really is not that much, and the risk taken per person is diminimus.  It is not the kind of dough that can conveniently be lost offshore, so it will end up in China's economy anyway.  It is a way of equalizing things, and giving everyone a chance.  

If it is coupled with an educational program on entrepreneurship - examples could be given of rural businesses that can be started with the minimal startup capital.  Or structures can be set up for cooperatives and for folks to pool their money - say up to 100 shares, thus totally 500,000 RMB, for a more substantial business, with standardized services (company formation, accounting, etc.) already set up and provided at reasonable costs.  A lot of these new startup will fail.  But that is just the nature of an open market.  But the ones that survive - you can't buy the kind of training with money or school studies.  So China ends up with a new class of grassroots entreprerneurs.  

Not bad for the exercise of just printing up a bunch of bills.  Actually they don't even have to be bills.  It is much better to just issue a credit of 5,000 MB to each, using the smart chip ID cards that each and every Chinese citizen carries.  That way the flow of the funds can be tracked, and corruption (e.g. village official forcing everyone to turn over the  new cash to them, etc.) can be minimized.

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Post time 2006-6-23 20:56:26 |Display all floors

Reply #11 tongluren's post

Rmb5,000 is almost one year pay for a lot of Chinese citizens!

Hey, we have good example in Singapore,
Recently they gave money to its citizen to "buy" votes...i think it was around Rmb10,000 each?
Let's see how their citizen spend that money?

Green Dragon

Note: ha ha i see where you are going...issuing DEBIT or CREDIT cards to more citizens
ha ha that's a lot of work, and the triads are going to have a "fabulous time" "conning" the state......

maybe you are also one of those "pro command economy" freaks..ha ha ha
and you also want to decide on how the "people spend" their money.......

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Post time 2006-6-24 00:32:26 |Display all floors

All Governments Influence Spending

It is elementary economics that all governments influence spending.  Sin taxes such as high excise taxes on cigarettes and liquor discourage excessive consumption in those less desirable areas.  Tax credits encourage business formation.  We are not talking about issuing scripts for everything.  That has proven not to work.  It is merely using modern technology to make the system of influencing spending more efficient.

Issuing credit cards need not be costly or time consuming.  It is already done.  Each and every smart card ID already is a credit card., a debit card, an access control and tracking device, etc.  All that's needed is to put in the back end, and voila, a part of the system becomes cashless and eminently trackable.  Just the additional fiscal income from making it harder to cheat on taxes would pay for the system 100 times over.  If it is cashless, all funds are always subject to the purview and taxation powers of the state.  Anyone who "cons" the government would leave a trail a mile wide, and the beauty is that they cannot hide - their loot would largely still be in the system.

But back to the topic at hand.  The focus here is WHAT could serve as an alternative to American T Bills.  The argument is that China should boost domestic consumption.   The question is how.  If you don't like outright consumption, how about using the same 5,000 RMB per person to build a medical care delivery system?  Print the same amount of money (which should show up as national debt).   Instead of just using it pay insurance, add an entreprenurial element, and give each person a spending account instead, and also allow them to form coops for making profits.  It all takes tweaking and there are risks involved of course, but the possibilities are very encouraging.  Since most of that money would be spent domestically (except perhaps the small percentage, say 3-5% that would be spent on imported drugs), the recycled effects in the economy would be huge.  It would also develop further medical expertise that can either b e exported, or new domestic industries (e.g. elective surgeries, convalescent and long term care, etc.) that can serve imported patients with good profits.

The cost?  The nation would have a bigger national debt.  But compared to Japan or America, the numbers are still glowing.  Also, the higher debt ratio would likely lower the RMB and take off the pressure to revaluate.  Several birds with one stone.

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Post time 2006-6-24 10:49:09 |Display all floors

Reply #13 tongluren's post are you going to "link up" 20 million enterprises in China!
how is the small businessman with his pull cart store going to install a credit card/debit card.

how you going to defend the "electric data system" from being corrupted by "foreign sabatours" or even "local chinese triads".....
It's voodoo.....way too advance for the present state of affairs in China....
Just wait 25 years when i predict China farmers will be working on 40 hectare farms (average) and 75% of our citizens lives in Cities with a wide range of services...

then we talk again..
probably i might be old and senile...and don't have energy to talk to you...

ha  ha ha

Green Dragon

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