Is Monetarism/Neoliberalism bad? Not at all!

Neoliberalism and its mainstream macroeconomic theory Monetarism are not bad theories like these old-fashioned Socialist and the other Left-wingers condemn at all! These theories teach very important socioeconomic lessons for all the individuals to live as long as the monetary economy where individuals use fiat-money for their intermediary of exchange in their daily life thrives to exist. 

Those who are against Neoliberalism tend to blame these theories as the severe survivalist Capitalist political theories leading the majority individuals to deprivation. However, it is the same nonsense as blaming Marxism and the other socialist theories for the disastrous mistakes of the United Soviet Socialist Republic (USSR). Both Marxism and Neoliberalism contain the non-negligible elements to study the political affairs and the human history. 

- The monetary policy channel instead of the fiscal policy

Focusing on Monetarism as he major base macroeconomic policy of Neoliberalism, the key element of this theory is analysing the nature of the fiat-money flowing into economy as the intermediary of exchange. In the long run, the money value is neutral to the other substances distributed in the world. By contrast, it regards that the change in the money supply volume affects the economic activities and productivity level in the short-medium run. 

Monetarism regards highly of the value of the fiat-money supplied by the central bank which should be supported by its credibility and its market demand. Therefore, it is sensitive to adjust the money supply level to the aggregate production level of this economy in order to avoid the value depreciation. 

It encourages the private sector based economy functioned by the spontaneous order of individual economic agents voluntarily deciding the aggregate production volume according to their needs and wants on spot. It discourages the excess reliance on the fiscal policy cutting tax and increasing the government expenditure while incurring national debts leaving their responsibility of repayment with the inevitably increasing future taxation and cutting the future government expenditure in the long run. Instead, it tackles with the temporary economic downturn by temporary pumping the extra money supply filling the temporary emerging negative output gap. 

- High-Powered Money as the antidote against the deflationary recession

In order to enable the fiat-money to stimulate economy, the velocity power of this money supply which is its value and credibility in both domestic and international market, is required. When individual economic agents appreciate its value and credibility, they find its extra supply as valuable and trustable to use as their intermediary of exchange in both domestic and international market. They may either spend for their exchange or save in their banks using the extra money from their saving account as the extra investment resource for increasing their profit. This is called High-Powered Money theory. 

According to Monetarism, the deflation inducing the recession, the negative output gap, is caused by an error of scaling the optimum market aggregate production level or a false information delivered to economic agents. Thus, the deflationary recession is caused by the stuck money circulation which means the money supply level is not balanced with the aggregate productivity level. In this scenario, the money supply as the High-Powered Money can be increased to directly inject it to economy to equalise it to match with the aggregate productivity level. 

- Killing inflation is more important!

On the other hand, Monetarism regards of Stagflation (the output stagnation + the price inflation) as the excess money supply unmatching with the aggregate productivity level.  Then, the decreasing output caused by Stagflation is considered as the long-term phenomenon which should be solved by cutting the cots including wages of the production even if it means to discourage their business activity level at least for a short run.

The reason to sacrifice the output to suppress the inflation is to maintain the money value as useful to be implemented as the High-Powered Money. Even to protect the employment by maintaining the wage distribution, the real value of their wage/income is consequently reduced when the price inflation, the money value depreciation, is perpetuated. Monetarism is actually a humanitarian political theory against depreciating their income/wage level to avoid consequently treating these employees as the quasi-slave labour. 

Monetarism antagonises the perpetuated inflation even for diverting the negative output gap is bad for economy overall. Even though the extra money supply is injected into the real good and service market to push the output level up, the value depreciation negatively affects the capital market. 

Most of the capital asset value is based on the base money so that the money value depreciation implies the capital asset value depreciation in the international financial market. Almost all the firms producing goods and services are invested by banks and shareholders through the capital market.

In addition, firms in the good and service market also face the import cost up under Stagflation as the excess money supply perpetuating Stagflation. Because all the regions of this world are interdependent on each other so that the relative value decline of the fiat-money used in one regional economy causes the purchasing power depreciation of this regional economy. 

- Monetarist, Consequentialist Ethical Philosophy

Overall, Monetarism supports the gradual and natural economic recovery encouraged by private individuals and firms under the stable market economy propped up by the balanced money supply adjusted to the aggregate productivity level. This ethical policy is what Neoliberalism shares with and aspires to achieve so that Monetarism is the core macroeconomic policy of Neoliberalism.

Monetarism and Neoliberalism are often regarded with a bitter cold attitude towards those suffering from economic downturns by these antagonists. However, it is really a prejudice to accuse them as such because these theories take account of the majority individual citizens such as their about preventing their real income depreciation caused by the monetary value depreciation.

Monetarism and Neoliberalism may be categorised into the Consequentialist ethical philosophy which attempts to maximise the overall net benefits by maximising the sum of the gross benefits while minimising the sum of the various cots as a total at the end. Monetarism criticises the big government policy directly caring their citizens by incurring a massive debt and the non-stoppable inflation depreciating their income and the market value of financial assets in the international market. Monetarism counts on the rationality of each individual's free will and the spontaneous order based on these free wills to recover their economy with the minimum assistance by the small government. 

It does not mean that both Monetarism and Neoliberalism neglect the public support with government assistances. They simply suggest the minimum required assistances. Furthermore, the High-Powered Money of Monetarism maintains the real value of the assistances provided by government and the procurement power of this government gathering the resources for their provision. This is why the European countries implementing Social Democratic socioeconomic policies adopt Monetarism for their core macroeconomic policy.

- Monetarism in Europe

The weight on each different macroeconomic theory which Neoliberalists adopt to follow depends on each Neoliberalist. Some of them mildly adopt Keynesian theory meanwhile the devote Neoliberalists base their thoughts and plans purely on Monetarism. As a matter of fact, the European Central Bank (ECB) and the central banks of Scandinavian countries, whose countries are famous for their Social Democratic socioeconomic policy, follow the monetarist macroeconomic policies especially for their tight prudent money supply policy. This proves that Monetarism is worth referring to not only the economic Right-wing but also the relatively more centralist counterparts. 

Social Democracy is actually the friendly version of Liberal Democracy (Capitalism) (※) and not technically Socialism. Therefore, it makes sense that these Social Democratic European countries are happy to install Monetarism as the principle macroeconomic theory of handling their market economy. Their socially minded intervention is not stimulated by the proactive positive macroeconomic intervention by a central government expenditure or the extravagant money supply from a liberal central bank which Keynesian economic theory often uses. 

    ※ Liberal Democracy and Liberalism by means of this comparison are treated as the synonym of Capitalism, the market economy, because Neoliberalism is mentioned to explain in this essay. Liberal Democracy is therefore the synonym of Neoliberalism here. Then, Social Democracy is the derivation of Neoliberalism rather than Socialism. 

The level of tax and expenditure rarely changes flexibly unlike those adopting Keynesian theory as their core principle macroeconomic policy. Their costs for the socially minded public intervention of these European countries are covered by the tax revenue from the progressive taxation levied on individuals and firms their steadily growing market economy. These European countries especially since 1997 (The European Monetary Union conducted by the ECB was introduced then) have been actually reluctant to artificially stimulate their economy.

It is because their macroeconomic tradition, especially of Germanic and Nordic, puts high priority on prudence over expansion. Their Social Democracy sustains the diverse income distribution allowing the slow but steady human capital development. Therefore, Monetarism matches with their prudent attitude towards economy to slowly but steadily raising their economy backed up by the human capital development requiring the steady continuous public investment in the long run.

- Conclusion: Monetarism and Neoliberalism are good!

In conclusion, having re-evaluated Monetarism and its ethics basing Neoliberalism, it is actually an ethically good functional socioeconomic political philosophy. Their characteristic is simply different and unique from the other political economic theories.  Their quality depends on how, where, and when it is implemented in real.

    To my admiring economists, Irving Fisher and Milton Friedman

Japan The End (Friendly investment advice)

 Many immigrant workers are now leaving Japan because of the current income decline on the top of the excessively hard-working environment. As a matter of fact, Thai wage is so higher than Japanese counterpart that it is not beneficial for these South-Eastern Asians to pay various high costs for their relocation to Japan. This phenomenon represents the end of Japan as an economic power house.

As having mentioned by means of the astrological analysis, Japan will be transformed to be something like the one in the Edo period during the coming two decades. This means that Japan will be furthermore socio-economically and culturally isolated from the rest of the world. The currently ongoing phenomenon caused by the economic power decline can be see as the prelude of the end of Japan!

As having mentioned several times, the Japanese government are reluctant to implement any countermeasure against Japan's socio-economic collapse at all. Well, this is also the responsibility of Japanese nationals electing the same incompetent government perpetuating the multiple decade long recession. These Japanese national citizens are also reluctant to rationally evaluate their own political actions.

It is obvious that Japan will shift to the further decline of its economic and cultural initiative in the world. Because of the declining fertility rate and the reluctance of both the government and the general public for investment to education, the human capital development will be considerably slowed down.This will lead to the further productivity plunging. 

 Moreover, the current Japanese situation also deteriorates its best advantage of seducing consumption and investment which is the service industry. Japan used to be a popular foreign tourist destination because of its once high service quality of its hospitality businesses. By contrast, the declining motivation of Japanese citizens for their daily life as well as business has started to be discouraged.

Only the tradition left in Japan is its highly bureaucratic culture. These Japanese citizens are still loyal to their bureaucratic order even with its notorious inflexibility. The quality of their consistency in office works, factory lines, and corruption prevention in both private and public sector administration will remain as its little left virtue. However, it guarantees that Japan will become a more boring and inflexible place to live for majority autonomic individuals due to the very tight margin of deviation from its rigid social norms and values.

The level of creativity is dropping down in Japan. As seen in the current trend of the subcultural products such as its animation and gaming industries, the brand-new products attracting audiences with a fresh impression is slumping. Instead, most of the well sold products are those of the remakes of the old series whose original ones were created last century. 

Then, it is ostensible to recognise that Japan is not a feasible place to invest your precious financial resources even it has recently become cheaper to buy the assets there due to the current Japanese Yen (JPY) depreciation. The aggregate productivity of Japan will plunge furthermore especially due to the human capital decline. 

The best option to purchase the Japanese assets will be investing to only those which are merged or annexed to the multinational firm. The foreign executives are much more competent to replace the irrational endogenous policies and mentalities of Japanese firms. In addition, majority Japanese are subservient to their authorities regardless of their ethnic origin so that they follow the reformed management policies implemented by these multinational shareholders. Combining the rational management by foreign executives and shareholders and the loyal labour-force is an attractive characteristic for investors.

Only the legitimate and productive purpose of living in Japan for foreigners is having a Japanese significant other i.e., a spouse, a loving partner, a concubine, etc. Japanese tend to have their day-dreaming nostalgic image in foreign worlds and often seek the foreign DNA of these individuals coming from abroad. Therefore, even under the socioeconomic deprivation, living in Japan for these foreigners with a Japanese significant other might enjoy their stay in Japan because their significant other and her/his family and relatives will protect you somehow even in a socioeconomic hardship. 

Overall, it is already Japan the end, and its beginning has already taken place. There will be no such once a major economic superpower nation state called Japan: The remaining there is the empty shell of its unproductive inflexible bureaucratic structure and the hopeless mobs simply as the remnants of this ethnicity barely nesting this archipelago. Because of the coming decades of the macroeconomic winter, the aggregate investment volume in the world is likely to fall so that there will not be enough investment flowing into Japan. Nobody will not notice Japan's existence, the remote edge of the world which only the few will show their interest in the existence of, any more.