5 ms·

> If anything now is the time to print a bunch of new money to counteract the existing deflationary forces caused by the coronavirus It's time to let everyone

by dpc_pw 7y ago

> If anything now is the time to print a bunch of new money to counteract the existing deflationary forces caused by the coronavirus It's time to let everyone reckless go bankrupt, and idiots who "could not see this coming" lose their money and jobs. The business etc. will go bankrupt, restructured and purchased by people who know how to preserve the capital. The reason why this keeps happening is because of moral hazard. We keep rescuing reckless behavior at all levels of society. Until there's no way to rescue anything, or the rescue package is going to kill the dollar due to its size.

vikramkr 7y ago
Nobody could have seen this one coming. People thought a recession is coming soon, but not like this, where the economy is basically shut down to prevent transmission of a pandemic. Hopefully people have insurance to protect against some of this, but a restaurant owner that didn't plan for their community being shut down by a pandemic within a couple weeks of the first cases in town hitting the news wasn't being reckless
- daxorid 7y ago
  Nobody saw the Japanese coming in 1941, either. And yet, millions of Americans sacrificed, liquidated their businesses or shifted them to a war materiel production footing, changed jobs, bought war bonds, etc. Tens of thousands of diners and clothiers closed their doors in 1942, and Americans were largely happy to do it for the greater good. This is precisely the opposite of what is occurring now - demands of bailouts, monetization, handouts, 50+ person St. Patrick's Day parties still going, bitching about having to learn how to cook, etc. A complete and total unwillingness to accept even a modicum of pain or sacrifice.
  - TheSpiceIsLife 7y ago
    Wasn't there a bunch of huge government intervention during WW2? Businesses shifted to materiel production because they were told the have to, no? So it seems fair that people are demanding leadership now too, no?
  - vikramkr 7y ago
    There was enormous government intervention - the military industrial complex basically revitalized the entire economy. And America didn't even want to join until we were attacked first, even with the threat the nazis posed. This was all happening in the middle of the new deal, one of the most significant, major government bailouts in all of american history, fundementally defining america as a welfare state. And what do you call the huge amount of sacrifice by employers taking lowered productivity by sending workers to be remote? Companies that have declared they'll continue paying workers even if business gets shut down? What do you call the enormous social effort to get people to understand social distancing and flattening the curve? Did the populace even know what those terms were a couple weeks ago? What about the thousands of students packing up and going home, evacuating campus while their graduation ceremonies that they've been looking forward to for 4 years are cancelled? And do you seriously think that in all of america during world war two, nobody was a bad person that didn't accept pain or sacrifice, or even actively make things worse? What about jsut a few years before int he spanish flu when government stupidity led to the streets of philadelphia being filled with corpses because people didn't want to call off a parade? What about all the nazi sympathizers and eugenecists in the US that supported hitler? If your bar for "society is just and moral" is that literally no idiots hold a saint patricks day parade out of 360 million people, we've never been at that bar. The only constant through history has been people with superiority complexes on the side moralizing about how people used to be so much more moral (just like themselves of course) in the good old days, and how much society has decayed today.
- siscia 7y ago
  Nono sorry but I can't agree. In my very limited understanding the price of stocks were way to high already. The virus is just the proverbial drop, it is not the cause.
  - TheSpiceIsLife 7y ago
    What do does the stock market have to do with restaurants becoming suddenly non-viable?
  - vikramkr 7y ago
    You're saying you don't agree, and then agreeing with one part of what I said without addressing the core of it. Yes people could anticipate that stocks will drop, but stocks are not the economy. a recession isn't about stock portfolios going down, it's about GDP decreasing. What does a restaurant having to close because of a public health countermeasure have to do with a hedge fund anticipating that stocks might go down?
- jsanford9292 7y ago
  You can argue that the coronavirus is an unforeseeable event, and I would agree. However, in economic terms, this virus will likely translate to a 2-3 quarter demand shock (softening of demand). Any well-managed business should have a plan in place for weathering a 2-3 quarter demand shock.
  - vikramkr 7y ago
    There's a difference between adapting to different forms of demand and what you would do in a traditional recession versus your customers not being allowed to visit you because of government intervention. There's nothing for a restaurant to do here to respond to this particular kind of shock. Sure, you could sell through doordash etc, but setting that up and building a remote customer base was not a risk mitigation strategy 3 months ago - it was an expansion opportunity. And demand shock isn't the extent of it. How many companies could reasonably have been expected to anticipate that their employees will have to work from home? Remote work isn't an option for everyone (good luck remoting into a wetlab), and some companies have built cultures that thrive on people coming into work to meet employees face to face, find opportunities for teamwork and innovation etc. This is a fundamental set of behavior changes, not just a simple demand shock.
thorwasdfasdf 7y ago
yes, but you need to remember that "reckless behavior" was extremely heavily incentivized by central banks across the world that lowered interest rates, way too long. 0% should NOT be the norm (it should be only used in the most dire emergencies). The Feds of the world ran the economy hot for way too long and punished savers (both companies and people) with extremely low intrest rates now we have the result.
- throw0101a 7y ago
  > ... central banks across the world that lowered interest rates, way too long. Why "way too long"? Inflation was not a problem so why exactly did rates need to rise to cool things down? The ECB did in fact raise rates at one point... and the EU recovery stalled. Krugman for one was very critical of raising them too soon, and he turned out to be correct.
  - strbean 7y ago
    I think measures like the CPI are a woefully incomplete view of inflation. I'm not sure what would be a good alternative metric, but it seems clear from the stock market average that stock prices have been growing much faster than the historical average for the past 5 years. Unless we have good reason to believe actual growth/productivity has accelerated significantly in that time span, this suggests that things are becoming increasingly overvalued, which only ends in reversion to the mean. Maybe another way of looking at this is that inflation is affecting stocks but not consumer goods for one reason or another.
    - ssivark 7y ago
      It’s kinda easy to see why inflation is limited to certain sectors — “trickle down” isn’t working! CPI rises only if the money reaches the hands of poor(er) consumers who spend all their money on essentials. But currently the money is being made available largely to large corporations (etc) who can borrow at low interest rates — and they’re choosing to spend on financial assets — which is where we note the “inflation”.
jsanford9292 7y ago
100% agree. It is painful in the short-term but if we rescue these companies, they will continue to be reckless and will need more rescuing in the future.
TheSpiceIsLife 7y ago
> It's time to let everyone reckless go bankrupt, and idiots who "could not see this coming" lose their money and jobs. That's definitely one perspective. How long can you sustain yourself after sudden and sustained loss of income? One issue with a bunch of broke and homeless people is that a fair portion of them tend to be young males, who tend to have a bit of a penchant for violence. How long do you think you can defend your hoard of cash and food against looters?
asdff 7y ago
It seems good in principle but in practice isn't so neat. With healthcare tied to employment in the US, people could literally die if they lose their jobs.

by dpc_pw 7y ago

vikramkr 7y ago

Nobody could have seen this one coming. People thought a recession is coming soon, but not like this, where the economy is basically shut down to prevent transmission of a pandemic. Hopefully people have insurance to protect against some of this, but a restaurant owner that didn't plan for their community being shut down by a pandemic within a couple weeks of the first cases in town hitting the news wasn't being reckless

daxorid 7y ago
Nobody saw the Japanese coming in 1941, either. And yet, millions of Americans sacrificed, liquidated their businesses or shifted them to a war materiel production footing, changed jobs, bought war bonds, etc. Tens of thousands of diners and clothiers closed their doors in 1942, and Americans were largely happy to do it for the greater good. This is precisely the opposite of what is occurring now - demands of bailouts, monetization, handouts, 50+ person St. Patrick's Day parties still going, bitching about having to learn how to cook, etc. A complete and total unwillingness to accept even a modicum of pain or sacrifice.
- TheSpiceIsLife 7y ago
  Wasn't there a bunch of huge government intervention during WW2? Businesses shifted to materiel production because they were told the have to, no? So it seems fair that people are demanding leadership now too, no?
- vikramkr 7y ago
  There was enormous government intervention - the military industrial complex basically revitalized the entire economy. And America didn't even want to join until we were attacked first, even with the threat the nazis posed. This was all happening in the middle of the new deal, one of the most significant, major government bailouts in all of american history, fundementally defining america as a welfare state. And what do you call the huge amount of sacrifice by employers taking lowered productivity by sending workers to be remote? Companies that have declared they'll continue paying workers even if business gets shut down? What do you call the enormous social effort to get people to understand social distancing and flattening the curve? Did the populace even know what those terms were a couple weeks ago? What about the thousands of students packing up and going home, evacuating campus while their graduation ceremonies that they've been looking forward to for 4 years are cancelled? And do you seriously think that in all of america during world war two, nobody was a bad person that didn't accept pain or sacrifice, or even actively make things worse? What about jsut a few years before int he spanish flu when government stupidity led to the streets of philadelphia being filled with corpses because people didn't want to call off a parade? What about all the nazi sympathizers and eugenecists in the US that supported hitler? If your bar for "society is just and moral" is that literally no idiots hold a saint patricks day parade out of 360 million people, we've never been at that bar. The only constant through history has been people with superiority complexes on the side moralizing about how people used to be so much more moral (just like themselves of course) in the good old days, and how much society has decayed today.
siscia 7y ago
Nono sorry but I can't agree. In my very limited understanding the price of stocks were way to high already. The virus is just the proverbial drop, it is not the cause.
- TheSpiceIsLife 7y ago
  What do does the stock market have to do with restaurants becoming suddenly non-viable?
- vikramkr 7y ago
  You're saying you don't agree, and then agreeing with one part of what I said without addressing the core of it. Yes people could anticipate that stocks will drop, but stocks are not the economy. a recession isn't about stock portfolios going down, it's about GDP decreasing. What does a restaurant having to close because of a public health countermeasure have to do with a hedge fund anticipating that stocks might go down?
jsanford9292 7y ago
You can argue that the coronavirus is an unforeseeable event, and I would agree. However, in economic terms, this virus will likely translate to a 2-3 quarter demand shock (softening of demand). Any well-managed business should have a plan in place for weathering a 2-3 quarter demand shock.
- vikramkr 7y ago
  There's a difference between adapting to different forms of demand and what you would do in a traditional recession versus your customers not being allowed to visit you because of government intervention. There's nothing for a restaurant to do here to respond to this particular kind of shock. Sure, you could sell through doordash etc, but setting that up and building a remote customer base was not a risk mitigation strategy 3 months ago - it was an expansion opportunity. And demand shock isn't the extent of it. How many companies could reasonably have been expected to anticipate that their employees will have to work from home? Remote work isn't an option for everyone (good luck remoting into a wetlab), and some companies have built cultures that thrive on people coming into work to meet employees face to face, find opportunities for teamwork and innovation etc. This is a fundamental set of behavior changes, not just a simple demand shock.

thorwasdfasdf 7y ago

yes, but you need to remember that "reckless behavior" was extremely heavily incentivized by central banks across the world that lowered interest rates, way too long. 0% should NOT be the norm (it should be only used in the most dire emergencies). The Feds of the world ran the economy hot for way too long and punished savers (both companies and people) with extremely low intrest rates now we have the result.

throw0101a 7y ago
> ... central banks across the world that lowered interest rates, way too long. Why "way too long"? Inflation was not a problem so why exactly did rates need to rise to cool things down? The ECB did in fact raise rates at one point... and the EU recovery stalled. Krugman for one was very critical of raising them too soon, and he turned out to be correct.
- strbean 7y ago
  I think measures like the CPI are a woefully incomplete view of inflation. I'm not sure what would be a good alternative metric, but it seems clear from the stock market average that stock prices have been growing much faster than the historical average for the past 5 years. Unless we have good reason to believe actual growth/productivity has accelerated significantly in that time span, this suggests that things are becoming increasingly overvalued, which only ends in reversion to the mean. Maybe another way of looking at this is that inflation is affecting stocks but not consumer goods for one reason or another.
  - ssivark 7y ago
    It’s kinda easy to see why inflation is limited to certain sectors — “trickle down” isn’t working! CPI rises only if the money reaches the hands of poor(er) consumers who spend all their money on essentials. But currently the money is being made available largely to large corporations (etc) who can borrow at low interest rates — and they’re choosing to spend on financial assets — which is where we note the “inflation”.

jsanford9292 7y ago

100% agree. It is painful in the short-term but if we rescue these companies, they will continue to be reckless and will need more rescuing in the future.

TheSpiceIsLife 7y ago

> It's time to let everyone reckless go bankrupt, and idiots who "could not see this coming" lose their money and jobs. That's definitely one perspective. How long can you sustain yourself after sudden and sustained loss of income? One issue with a bunch of broke and homeless people is that a fair portion of them tend to be young males, who tend to have a bit of a penchant for violence. How long do you think you can defend your hoard of cash and food against looters?

asdff 7y ago

It seems good in principle but in practice isn't so neat. With healthcare tied to employment in the US, people could literally die if they lose their jobs.