Transcript of the above video: 

Folks buckle up, this is going to be a long one. To quite David Allan Coe, "it's going to be a long, hard ride". I thought of making this video after reading a recent article from the Bangkok Post, bangkokpost.com, the article is titled: Handout difficult without BoT's help. To preface this, this is written by someone I really very much respect. I have been reading his stuff for years over here. I believe he used to work for the IMF; he's an economist. His name is Chartchai Parasuk and again his thoughts are something I always sort of take into account when I think of anything, well I read him when he writes something regarding economics here in Thailand, and I very much take it to heart because I think that this is someone that very much understands sort of the plumbing if you will of economics and finance, and it's also a person that from my estimation - from reading his stuff - that actually really cares about Thailand and wants it to be better. 

This is going to be one of those exercises, in the American legal vernacular when you are talking about the Supreme Court, this is one of those opinions sometimes called sort of a Seriatum opinion maybe or they used to be Seriatum opinions of the Court but it's one of these opinions, this opinion piece for me at least, where I think at the end of the day, myself and the author of this article agree in our conclusions but we sort of disagree at certain points along the way in terms of the way we think. So we both sort of came to the same outcome I think, without necessarily agreeing on the logic that got us there. So again, to put it in sort of a US Supreme Court vernacular, it would be akin to a Supreme Court opinion by a Justice where they are sort of dissenting in part, concurring in part but then they may find with the rest of the Court regarding the holding; that's kind of the way I look at this. 

That said, quoting directly: "The purpose of this article is to educate the public about the real issue of the digital wallet scheme. The issue is not "HOW to get the 500 billion Baht?" but "Is there 500 billion Baht AVAILABLE to be borrowed?" Good point. My point would be, one thing I would also throw in there is "should we be doing this at all?" is a major question that doesn't really seem to be posed when I see a lot of the academic and journalistic discussions regarding this whole notion. Quoting further: "The legality of financing sources is the Government's problem, not the public's." Yeah, but it is the public's problem to pay it back, and that's what gets me so riled up about this whole thing is, okay fair enough, it's not the public's problem to go out and raise 500 billion Baht but it is going to be the public’s problem to raise it when they have got to pay it back, presumably with interest. Quoting further: "They just have to make sure that obtaining 500 billion Baht is done in a way that will not land them in jail." Well, I would hope that the standards for Public Policy would be more than just "is it going to land us in jail?" My thinking. Quoting further: "It seems like the Government has found the legally correct means now." I'm not sure about that, we'll get into that further here in a minute. Quoting further: "The answer to the availability issue is that without the Bank of Thailand's (BoT) liquidity support, it is almost impossible to find money unless the Government decides to pull some nasty tricks - as there is no dormant 500 billion Baht in the monetary system to borrow in 2024." Which then begs the question "if it doesn't exist within the system should we be doing it?" and further, again: "Without the Bank of Thailand's liquidity support". So going back to that, we need to stop calling it liquidity. If it doesn't exist in the system, it's not liquidity. It would be printing money is the way I look at it. Then at the same time this whole scheme is based on a notion of "we will print this digital stuff" which isn't really currency to begin with, let alone money. Save that and set that aside, quoting further: "With no liquidity injection by the BoT, one can be 90% sure there will be no cash-handout in the fourth quarter this year. I leave the possibility of 10% for a surprise massive inflow of capital or the Government pulling nasty tricks." Well, I would love to know what he thinks nasty tricks are. But again, it is about being prudent and I don't see where it is particularly prudent to just print up orders of magnitude of money and then throwing it into the system, and not only throwing it into the system, but throwing it in such a way that it creates this digital economic surveillance grid which I don't see anybody really wants. Quoting further: "The financing plan of the 500 billion Baht digital wallet scheme was announced last week, instead of issuing an Emergency Borrowing Act." Well to my mind, the reason they didn't utilize the Emergency Borrowing Act is there's no emergency; there is no emergency here; there has been no meteorite that has hit the Earth or anything else. I mean at the end of the day, this is something that's politically motivated. Quoting further: "The funding will come from three sources: (1) 2024 fiscal budget to the amount of 175 billion Baht, (2) 2025 fiscal budget to the amount of 152.7 billion Baht, and (3) an advance by the Bank of Agriculture and Agricultural Cooperatives (BAAC) to the amount of 172.3 billion Baht." The first question I have is yeah, I notice how the verbiage is out there right now where they don't ever really want to say 'debt' but at the end of the day, that's what we are talking about is the country is going to have to go into some level of debt to do this thing which means the public is eventually going to have to pay it back. And as we have discussed in other videos, we are going into debt to create some sort of digital money that doesn't really exist. It's not a real thing; it's not even money, 'money' is the wrong word, call it digital currency, and then we take out a loan to create something that doesn't exist but then we have to pay it back with real labour and real goods and services and real value. Quoting further: "The complicated financing plan of splitting the funding into three sources was drawn up to avoid breaching the Public Debt Management Act of 2025." So translation there, complicated, I have some notes here, complicated sophistry has been used to circumvent the spirit of well promulgated laws and then again as we discussed in other videos, the discussions that they are having about the way to make this not debt and all of this stuff, is akin to what I talked about with regard to the book, The Smartest Guys in the Room about Enron, where they were using so-called special purpose vehicles or special purpose entities to allow their corporation to be in massive debt but not call it debt because due to sort of financial smoke and mirrors, they were able to keep it off the balance sheet. That is sort of what I have seen the discussion be about how: "well it's debt but it's not debt, and if we don't make enough money - even though the economy is sluggish - then it will become debt later; we'll like kind of sneak it in." Quoting further: "Section 21 says the "Government shall not borrow more than 20% of the expense budget to finance deficit in each fiscal year." Well, that's a good idea. "Previously the Government attempted to bypass this legal borrowing limitation by issuing a separate Emergency Borrowing Act / Decree. The Office of National Anti-Corruption Commission advised against such a move as the economic situation does not qualify as an emergency." Yeah, because there is no emergency. I mean yes Thailand's economy is sluggish. She shut down the whole economy for years. Okay, we have got problems; we are going to work through them but going into massive amounts of debt, how does that help anything? Quoting further: "Therefore the Government abandoned plan A that was the Emergency Borrowing Act and went into Plan B - splitting fund sources." So instead of just declaring an emergency that doesn't exist and going into a bunch of debt, now they are going to use a bunch of smoke and mirrors to basically allocate public resources towards something that I can't see is particularly beneficial to the public, nor that a lot of people really want. If you actually talk to people about this handout, when it's really explained to them, "well you are not actually, it's not like somebody showing up with an envelope and giving you 10,000 Baht in cash. Oh no, no, it's something that's going to be injected into your phone and you can only use it in certain places and at certain times and for certain things", people start saying: "well why do I want that?" Quoting further: "I still have some legal doubts about the new funding plan such as managing the 2024 fiscal budget to save cash for the digital wallet (DW) scheme to be launched in the 2025 fiscal year and the authority of the BAAC (that's the Agricultural Bank) to make an advance. However, those legal risks are not my concern. My concern is "where is the money?" So I like how it seems like Economists especially, when it suits them they sort of say "I don't care about legal concerns" but meanwhile if you were to go into debt to a bank and you said "well I don't care about legal concerns", they will say "well we do and we are going to use the Courts to our fullest advantage and make you pay us back." Again, I am not pointing out the author of this per se. I think it's just a, how do I put it? It's sort of a, for lack of a better term, sort of a flaw of mindset insofar as again when it suits folks, it's kind of like, 'where is a cop when you need one?' Nobody likes to see the police unless a crime is taking place and then where are they? Where were they at blah, blah? Similar to this, similar to this. I care about the legal concerns because the laws were put in place for a reason so that this country doesn't go into a bunch of massive debt for nothing. Quoting further: "It really does not matter how the financing of the digital wallet scheme would legally come about." Really? Quoting further: "as long as there is money in the system to borrow." No! It absolutely does matter and the reason it matters is if we don't follow the law, Governments would just do whatever they want. And anytime they wanted to do something, they would just go into debt to do it. We are actually seeing this phenomenon in the United States. I have talked about Professor Dave Collum over in Cornell University; I've listened to him on a few podcasts. At one point he asked the question: "Would all of the COVID lockdown have happened in the United States if the Federal Reserve hadn't backed up the truck and just started basically just throwing out printed money in the form of cheques and things and PPP to basically ameliorate what was an absolutely terrible situation. If the FED hadn't paid for all that COVID lockdown, would there have been a lockdown?" And again, the point I bring up here is again this notion that 'well we don't really have to get into worrying about if it is legal or not', well yeah, we absolutely do. In fact, that's the primary thing we should worry about otherwise again Governments would just go into debt any time they feel like it in order to fund some pie in the sky thing or something that maybe isn't necessarily in the public interest. "The money could be borrowed under the Emergency Borrowing Act /Decree." Well again why, when there's no emergency? Quoting further: "Under this year's fiscal budget, under next year's fiscal budget, from the state bank(s), from Commercial Banks, or even from donations from rich Thais." Well have fun with that. "The bottom line is that the Government has the necessary money ready for distribution." Question. If the Government has the money, why are they borrowing it? Or why are they trying to borrow it? Isn't the notion of borrowing something, predicated on the notion that you don't have it?

Quoting further: "Let me give an example: If rich Thais decide to head to commercial Banks to withdraw 500 billion Baht to "donate" to this Digital Wallet scheme, commercial banks will say HOLD ON, as the entire Thai banking system currently holds cash in the amount of 223.3 billion Baht." Let me restate that. "The entire Thai banking system currently holds cash in the amount of 223.3 billion Baht." First, kind of a straw man argument here because I don't see any Thais, including myself, that are going to line up to "donate" money to this thing. Secondly, if there's 223.3 billion Baht in the entire banking system and this thing costs 500 billion Baht, that's two orders of magnitude of money over and above what already exists in the banking system. Explain to me how that is not massively inflationary? How that will not have tremendous ramifications across the board on the economy in this country? Then on top of it all, it's not real currency. It's just going to be this thing that is just injected into the system that again doesn't create new value, doesn't create new goods and services, just induces the population to start moving pre-existing goods and services around in a pre-existing system, thereby creating taxable events, thereby creating the opportunity for the Government to extract wealth off of the population on something that didn't add any value to the population to begin with.

Another point to make here is you can make an argument in certain circumstances that creating an inflationary event is okay under certain circumstances, but again it presumes population expansion and economic expansion at a very rapid rate to thereby offset the creation of the debt event in the first place, and by ‘offset’ I mean basically to create the wealth to pay it back. Thailand's demography is not working that way. If anything, the demographics are going in the opposite direction so to create 500 billion Baht in a system where the banking system only has half of that in existence, is incredibly inflationary without any prospect that I can see to actually pay it back. So again, it creates a surveillance grid from an economic standpoint for purchasing of things without having the prospect of actually paying back the money, if you can even call it money because at the end of the day, we are going into debt for something that doesn't actually give us anything.

Quoting further: "There are three possible ways for banks to raise the remaining 276.7 billion Baht of cash: (1) borrow from abroad in dollars and convert into Baht at the BoT." Interesting! Didn't we learn anything from 1997? That's exactly what has got us into the problems then, was foreign denominated debt that then had to be paid off in those foreign currencies. Probably not the best of ideas. I am not saying this person by the way is advocating that. They are just pointing out it is one option, but not a very good one. Quoting further. "(2) recall loans, which is not possible as borrowers have no way to find cash;" yeah so let's go out and just call note on the whole country, all the mortgages and everything, it will be like 'hey it's back.' 'well we don't have it!' and we don't have it as it pointed out because 500 billion Baht is two orders of magnitude above what is already in the entire banking system to begin with. Quoting further: "(3) borrow from the Central Bank." So, when they say borrow from the Central Bank, it sounds to me like ‘money printing’. Quoting further: "It is clear that without the liquidity support of the Central Bank, financing the extra 500 billion Baht will not be possible." Well it's not even financing it, it's just printing it. Again, you can use all these words like the FED uses in the United States, “quantitative easing” and the “twist” and the this, and the that, it’s money printing, okay? If you don't have the money in the system and you're creating it, what is that? It's money printing. 

Quoting further: "The prime directive of the Bank of Thailand (BoT) is to make sure that inflation rates are at acceptable levels through proper management of the money supply (broad money)." Okay? Well how is it proper management of the money supply to just create two times more money than already exists in the system, without concomitant creation of value? Without concomitant creation of goods and services? Quoting further: "The attached table in the article proves the BoT is good at its job," I actually never disagreed with that. For the most part I have actually been watching the BoT. It is one of the more prudent Central Banks that I can see. A bit more Keynesian than I would otherwise like but Central Bankers and Keynesianism pretty much go together like peas and carrots. So you know, take what you can get. Quoting further: "except for in 2022, probably because the economy needed to recover from the COVID economic crisis." You mean when you shut us all down? You mean that crisis? When the government shut us all down, when Central planners all told us they knew better than us and that basically a flu or a cold required us all to just not work and basically watch businesses die and people just had to sit at home. I'm not going to go into all the details of that but we lost a lot of people, I mean within the first week of that because people that were living hand to mouth just felt they couldn't survive and they took matters into their own hands and ended their own lives. That economic crisis? Quoting further: "and the Central Bank obviously released too much liquidity." Well. Again 'released too much liquidity'! They printed too much money; they printed too much money. Quoting further: "The result was a 6.08% inflation rate." Well, okay. Yeah.

Quoting further: "To keep inflation below 2% in 2024, according to my own estimation, the BoT will likely need to keep broad money supply growth at 2.4%, implying 499.9 billion Baht of the money supply will increase. This amount of new money supply is to be shared by the Public and Private sectors for funding requirements." Shared by the Public and Private sectors! Not by the public, Public and Private sectors. Quoting further: "The Government needs 693 billion Baht to cover its 2024 budget deficit. Therefore, there would already be a liquidity fight," this is key: "Therefore, there would already be a liquidity fight between the public and private sectors, even without the additional 500 billion Baht funding for the Digital Wallet scheme." So first off, is it really funding because again it's digital money that will be created, destroyed, whatever, if and when they need it; secondly) how does creating all of this extra "liquidity", printing this money, how does this help? At the end of the day, that's what I don't see in all of this. Is the explanation on how creating all of this would actually help anything; I don't get that. There isn't presently, from what I can tell, a liquidity crisis per se. Thailand has taken in a great deal of foreign reserves; Thailand creates a great deal of value; it exports a great deal of value. Again, it has its own internal economy, a consumer economy on many levels. Again, creating two orders of magnitude more money than already exists in the entire banking system for an emergency that doesn't exist, again what is this? It seems like a big sort of exercise in spinning one's wheels; it's like a feedback loop of nonsense. 

Quoting further: "So, is the Digital Wallet scheme hopeless? Not exactly. The BoT, Bank of Thailand, is powerful enough to release a large amount of extra liquidity/money supply." Well just because you can do something it doesn't mean you should do something. Quoting further: "The Bank of Thailand did just that in 2020 and 2021. To finance Emergency Borrowing Decrees of 1 trillion Baht and 0.5 trillion baht, (so 500 billion baht) the Central Bank injected 1.26 trillion Baht of liquidity in 2020 and injected another 852.9 billion Baht in 2021 respectively." Well what I would say to that is first off, they did that in response to the fact the entire economy was shut down; the entire economy was shut down in those years, effectively. Yes, it wasn't completely shut down because you can't really ever completely shut everything down. I mean there was somebody, somewhere who opened someone else's beer, coca cola or poured them a coffee but for the most part, the economy was shut down. Meanwhile, this predication that there was an emergency, well even then there really wasn't. The emergency was created by the Government's response and it's very analogous to what we are seeing right now where again it's this contrivance that there is an emergency to begin with. If anything, the emergency is we had too much Government. We need less, quite honestly. But the notion that there is an emergency here that needs to somehow be rectified by this creation of liquidity, I don't see where that exists frankly. 

Quoting further: "I should explain the BoT, (Bank of Thailand) was able to do the liquidity injection because conditions were conducive to do so." Yeah, everybody was shut down. Quoting further: “The BoT is bound by law under the Currency Act of 1958 and cannot create liquidity at will." Good thank God. Thailand created laws back in 1958 because the Thais in 1958 were smart enough and preciate enough to know that you don't want to just create money willy-nilly. Quoting further: "The little liquidity injection of 2020 was possible because of the US$27.4 billion of net foreign capital inflow and the liquidity injection of 2021 was possible through the "asset revaluation" technique." That sounds an awful lot like ‘quantitative easing’; that sounds an awful lot like technocratic nonsensical speaking in my mind. Quoting further: "Before crying that the BoT is being unfair to the current Government because it supported the previous Government's financing needs and (are likely to) reject this Government's financing needs," In this case they should because again I don't see where it's an exigent need of this Government. This Government or folks in it have been saying there is an emergency here but in reality there really isn't one. Quoting further: "Please note the inflation rates of 2020 and 2021. I am certain that if 2024/2025's inflation rates can be managed to be below 2%, the BoT could be agreeable to a liquidity injection for Digital Wallet program." You know, this is a conceit that seems to exist in the minds of Economists. It's this notion that you can sort of keep inflation rates, it is like a dial you can just turn and we can keep those inflation rates below 2%. Ask the Federal Reserve how much luck they had keeping the inflation rate below 2%. They have been talking about that for years. "Oh, we can just, we'll just keep it.." No, it's nonsense. The economy is a living thing; it's an emergent phenomenon. It cannot be predicted like that. We learned this from the Soviet Union, we learned this from the Soviet Union. You cannot plan the economy, you just can't. Quoting further: "When the Government talks about the Digital Wallet scheme, it only claims how much gross domestic product (GDP)," again a function of bank credit because that's the only thing that is being measured. The informal economy is not being measured necessarily when talking about GDP.  Quoting further: "Growth will be boosted, but never mentions the effects on inflation." Good point there, very good point there. Again, I am really on board with that one as well. "I really do not understand how the Government can be proud of the Digital Wallet program as according to the Government's own statement, the GDP boost would be 1.2% to 1.8%, while the cost of the scheme to taxpayers is 2.8% of GDP." Great point, absolutely great point, and this again like again, me and him don't necessarily see eye to eye on the underlying theories by which we come to our conclusion, but facts and math are facts and math, and if it takes 2.8% of spending to create at a maximum 1.8% of growth, we lost a point in there; we lost a point in there somewhere. Why did we lose a point? Because it's ineffective allocation of capital. Allow the underlying markets to dictate where capital goes to. Government intervention creates inefficiencies that result in losses to the overall economy. Quoting further: "The new financing plan is a good effort but," he's being nice, "but it will not work unless the BoT cooperates." yeah you're absolutely right because you have got to have somebody to print the money because as noted, it's two orders of magnitude more than already exists in the entire banking system already. Of course you need the BoT. Quoting further: "It should be noted that if the BoT ignores the Government's request to inject liquidity," - God I hope they do - "to lower the policy interest rate due to concerns over inflation, I see no logical reason why the Central Bank would yield to the liquidity requirement of the Digital Wallet scheme." My comment, “nor should they”. I think it would be very prudent on the BoT's part to not engage in this. Quoting further: "Some Wicked thought just flashed into my head. What if, worse comes to worse, the final Digital Wallet token recipients cannot redeem their tokens for cash, but get tax credits or even Government bonds in exchange? Interesting?" No, it's just more chicanery just like these digital tokens. At the end of the day, the Government would go into 500 billion in debt; that's what we're talking about here. Well who's paying that back? It's going to be the taxpayer; it's going to be the taxpayer. And what just baffles me in all of this is we go 500 billion in debt to not even create anything. We are not building roads, we're not building hospitals, we're not building airports or ports or the land bridge. If you told me that this was for the land bridge, I might be on board with it. That's an infrastructural project that has long-term benefit to the country. No, we are going to create 500 billion in debt to not give anybody real money and then tax them back on that debt, probably with interest, whatever the prevailing interest rate is at BoT at the moment. So not interesting at all from my standpoint, again something akin to magic beans.

That said, again this this writer writes a great article; it was very thought-provoking. Again, reasonable people can disagree on how they come to their conclusions but at the end of the day again he just smacks it out of the ballpark when he says: “hey according to government's own”, so I want to quote this again: "According to the government's own statement, the GDP boost would be 1.2% to 1.8% while the cost of the scheme to taxpayers," that's the key point, taxpayers, "is 2.8% of GDP." So what are we getting out of this? It sounds to me like a bucket of nothing.