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I'm no expert. But I'm concerned about quantitative easing. Introduction of massive amounts of money erodes the value of peoples savings. Propping up some busin

by smarri 7y ago

I'm no expert. But I'm concerned about quantitative easing. Introduction of massive amounts of money erodes the value of peoples savings. Propping up some businesses might not be a good idea, some business should fail if they are no longer relevant or have not been managed well e.g. a business couldn't predict coronavirus necessarily, but they could absolutely predict an unforeseen event that impacts their cashflow for a quarter or more. Also, if we haven't seen the worst that's to come with the coronavirus, what's the plan? Throw even more money at the problem? While we are at it, why don't we just print money forever and pay everyone's salary - where do we draw the line?

mattmanser 7y ago
There's so many businesses that legitimately operate on tight margins, it's kinda the point of capitalism. While this will hit some legitimately badly run businesses, it will also hit lots of well run businesses that simply can't reduce their overheads that quickly. The businesses that fail might have a totally legitimate business model, as long as you didn't expect all your customers to abruptly disappear for a month or even months.
- smarri 7y ago
  "There's so many businesses that legitimately operate on tight margins, it's kinda the point of capitalism" I dont think that's true. Also, the business model isn't legitimate if it needs a bail out.
  - mattm 7y ago
    It is true. If you do have a high-margin business, eventually other people will notice and start to compete which will bring the margins down.
    - smarri 7y ago
      Thanks, yes I agree with your point on competition eroding margins. But I think it is nuanced, not all successful business have slim margins, many are awash with cash, Apple for example.
      - mattmanser 7y ago
        A luxury product with high margins that is entirely reliant on branding, and on top of that has a long shelf-life and retailers buy in bulk. Great example! /s
        smarri 7y ago
        As are Berkshire Hathaway, Ford, Cisco, Amazon, Alphabet, Microsoft. But that's not the point, the point I'm making is a solvent business should have cash reserves.
zxienin 7y ago
It's ok if implementation of such money printing exercise is more surgical than broad based. But I don't think this is the time to bring undue complexity of debating which business model deserves to be propped. This will misdirect lot of debate/energy. My view is that tail end concerns here are largely theoretical. we fall in the trap of such argumentation, when reality needs immediate response. > if we haven't seen the worst that's to come with the coronavirus If humanity can't come up with working measure/vaccine in next 1-1.5 yr time frame, global economy is the least of concern. > Throw even more money at the problem? While we are at it, why don't we just print money forever and pay everyone's salary - where do we draw the line? This is an unwarranted extrapolation of opening premise. Who argued forever?
- smarri 7y ago
  Thanks, this is worth debating. Is this QE surgical rather than broad based, I can't see how it's precise and not broad? We can avoid the debate of which businesses need propped up by not propping any up. Yes an immediate response is required, but some consideration should be given to down-stream impacts. Agreed on the vaccine, but the worst to come could happen in the next 1.5 years, and if we've deployed trillions into the economy already, what's our next move? The extrapolation is my argument, if central banks can print money and pay wages now, why stop?

by smarri 7y ago

mattmanser 7y ago

There's so many businesses that legitimately operate on tight margins, it's kinda the point of capitalism. While this will hit some legitimately badly run businesses, it will also hit lots of well run businesses that simply can't reduce their overheads that quickly. The businesses that fail might have a totally legitimate business model, as long as you didn't expect all your customers to abruptly disappear for a month or even months.

smarri 7y ago
"There's so many businesses that legitimately operate on tight margins, it's kinda the point of capitalism" I dont think that's true. Also, the business model isn't legitimate if it needs a bail out.
- mattm 7y ago
  It is true. If you do have a high-margin business, eventually other people will notice and start to compete which will bring the margins down.
  - smarri 7y ago
    Thanks, yes I agree with your point on competition eroding margins. But I think it is nuanced, not all successful business have slim margins, many are awash with cash, Apple for example.
    - mattmanser 7y ago
      A luxury product with high margins that is entirely reliant on branding, and on top of that has a long shelf-life and retailers buy in bulk. Great example! /s
      - smarri 7y ago
        As are Berkshire Hathaway, Ford, Cisco, Amazon, Alphabet, Microsoft. But that's not the point, the point I'm making is a solvent business should have cash reserves.

zxienin 7y ago

It's ok if implementation of such money printing exercise is more surgical than broad based. But I don't think this is the time to bring undue complexity of debating which business model deserves to be propped. This will misdirect lot of debate/energy. My view is that tail end concerns here are largely theoretical. we fall in the trap of such argumentation, when reality needs immediate response. > if we haven't seen the worst that's to come with the coronavirus If humanity can't come up with working measure/vaccine in next 1-1.5 yr time frame, global economy is the least of concern. > Throw even more money at the problem? While we are at it, why don't we just print money forever and pay everyone's salary - where do we draw the line? This is an unwarranted extrapolation of opening premise. Who argued forever?

smarri 7y ago
Thanks, this is worth debating. Is this QE surgical rather than broad based, I can't see how it's precise and not broad? We can avoid the debate of which businesses need propped up by not propping any up. Yes an immediate response is required, but some consideration should be given to down-stream impacts. Agreed on the vaccine, but the worst to come could happen in the next 1.5 years, and if we've deployed trillions into the economy already, what's our next move? The extrapolation is my argument, if central banks can print money and pay wages now, why stop?