“When I let go of my hand, I became a’thunderbolt’.”
Among the salarymen who earnestly earned money without buying a house or stock last year, there is a self-help mingling saying that they have unwittingly become a’thunderbolt’. In response to the new coronavirus infection (Corona 19), money released on the market flows into the asset market, giving them a relative deprivation.
Escape from the New Year’s beggar can be even more difficult. This is because the ruling Democratic Party, which is the ruling party, pushes for the universal payment of the 4th disaster support fund in the past, ahead of the re-election in April. It is pointed out that if disaster subsidies are distributed evenly to all the people, there is a possibility that people who are not in need of money can use subsidies to purchase assets.
◇If the amount of money on the market increases, the price of real estate also rises.
Looking at the economic statistics system of the Bank of Korea on the 11th, the broad currency (M2, seasonal adjustment group, and average), a representative indicator of the amount of currency in the market, reached 3178 trillion won in November last year, an increase of 9.9% from the same month last year (2893 trillion won). did. M2 encompasses not only cash that can be used anytime, but also market-type products that can be quickly converted into cash, such as deposits and installments for less than two years.
This is interpreted as the result of the fiscal authorities pouring enormous amounts of money into the market by preparing an additional budget (additional budget) in response to the Corona 19 incident, and the Monetary Authority, the BOK, implemented a quantitative easing policy.
The problem is that this overflowing liquidity in the market leads to higher housing prices.
The Korea Development Institute (KDI) published a report on the’Ripple Effect of Increased Currency Supply and the Corona 19 Economic Crisis’ published in December of last year, saying, “When the amount of money increases by 1.0%, housing prices increase by 0.9% over one year. It appears,” he analyzed. “The effect of an increase in the money supply can be seen as a rise in housing prices in the short term.”
Accordingly, if the fourth emergency disaster subsidy is released this year, it is expected to have ripple effects in the real estate market. In particular, the 4th disaster support fund is expected to be organized at a record-breaking scale of around 20 trillion won, surpassing the first (1.4 trillion won), the second (7.8 trillion won), and the third (9.3 trillion won).
The Democratic Party plans to cover the necessary financial resources by issuing large-scale government bonds, and allow the BOK to take over a significant portion of this. As the money paid by the BOK to purchase government bonds is circulating in the market, the amount of money is expected to increase significantly.
◇Universal support for disaster subsidies is fueled by rising asset prices
The controversy over’universal support’, which provides subsidies to all the people regardless of income and property, and’selection support’ for the victims, is also hot. The ruling party is in a position to provide universal and selective support at the same time, but the Ministry of Strategy and Finance is facing conflict against universal support.
Experts point out that if you give disaster assistance to people who don’t need livelihood funds, they can flow into the asset market and only grow bubbles.
Professor Kim So-young of the Department of Economics at Seoul National University said, “If you selectively give subsidies to the victims, we will use them to recover from Corona 19 damage or pay off debts, but if you pay money indiscriminately to all classes, there is a high concern that it will flow into the asset market. Said.
This is also revealed in the results of a study on the first disaster subsidies provided to the nation last year. In the report’Effects and Implications of the First Emergency Disaster Subsidy Policy’ released last year, KDI analyzed that after the first disaster subsidy was paid, sales increased by 26.2 to 36.1% compared to the total input budget in the sectors where subsidies were available.
On the contrary, KDI explained that 63.9~73.8% of the subsidies that did not produce a sales effect can be estimated to have been used for other purposes, such as savings or investment in real estate and stocks.
In this regard, KDI Research Fellow Kyu-Cheol Kyu said, “There is a possibility that a significant portion of the first disaster subsidy has flowed into the asset market. If this fourth disaster subsidy goes to all households, not to those affected by Corona 19, asset investment will increase further. I can.”
It was written with the content provided through News1.