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The economy is effectively frozen. But you have to distinguish the production process from the monetary, contractual and ownership relations that normally contr

The economy is effectively frozen. But you have to distinguish the production process from the monetary, contractual and ownership relations that normally control the production process. We can continue to produce necessary, essential good during this crisis and let the rest of the economy stay frozen 'till the end of this mess. The situation should be the equivalent of a war or a different natural disaster. Essentially, the processes of finance will need to just stop for a while and then be restarted in a reasonably orderly fashion. I'm not even sure what everyone howling for immediate and potentially restart of the American economy is even thinking, obviously they aren't thinking much. The economy previous are essentially on life-supports but life supports for the only the rich. Now we basically need literal and metaphorical life supports for everyone but once the situation is stabilized, the negotiations begin. Just think, a robust restart of the economy would be far easier once an entity to deal with the virus is constituted and can act effectively. The US economy has recovered from war and terrorist attacks quite well (better than a lot of times). The government directed the lions share of production during WWII and things turned out fine. Come on folks.

nostromo 7y ago
You can't turn off and on the economy like a switch. People need to pay rent and mortgages, or loans will not be repaid. If loans don't get repaid, banks fail. If banks fail, we have another financial crisis. The last one took a decade to recover from and there weren't even that many bad mortgages (as a percent of all mortgages). Businesses right now are eating a bunch of costs. That can't last for very long before they run out of money, fire everyone, and throw in the towel. They will not have savings to restart after the closure.
- wegs 7y ago
  Sure you can. You stop rent. You stop mortgage interest. You pause mortgage principal. You do that across the board for every rental, contract, and debt obligation in America. In 90 days, it expires, and everything starts back up again. https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3SjhsZ0ztpG5bMzA3WNbVNhU/edit https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3Sjhs...
  - wrkronmiller 7y ago
    And what about international obligations? What about mortgage-backed securities?
    - wegs 7y ago
      International obligations, where governed by US law, get placed on hold too. Ideally, other countries join in the regime. If not, you're just talking about a much smaller amount of debt (US debt held under foreign jurisdictions). Mortgage-backed securities generate no income for a couple of months.
      - im3w1l 7y ago
        If you stop paying other countries, the goods stop flowing. Or are you going to swing the military dick around to force people to give you stuff for free?
        op00to 7y ago
        Nope. The world floats on net terms. Companies extend terms frequently. Doing so is not as big of a deal as you are making this out to be.
    - joe_the_user 7y ago
      Pensions and institutions people need to survive get a bailout. Speculators lose their shirts.
      - marcus0x62 7y ago
        What’s the difference between a worthy investor and a speculator? Is it sort of like the difference between a church and a cult?
        Red_Leaves_Flyy 7y ago
        Net worth?
- joe_the_user 7y ago
  You can't turn off and on the economy like a switch. Actually, you can. Money transactions can be suspended and goods can be distributed directly. If banks fail, we have another financial crisis. The last one took a decade to recover from. Not even, what we're looking at is the dead Frankenstein construction created to avoid dealing excess speculation of last time. The economy has been artificially supported by QE since 2008 (sure, it stopped periodically but everyone knew it could start up again, stocks values were completely absurd. Half of what happened just now was that fantasy falling rather than the cost of Covids.
  - kyleee 7y ago
    "Actually, you can. Money transactions can be suspended and goods can be distributed directly." Do you mind expounding a bit on this claim? What does it mean to suspend all money transactions and who will distribute the goods?
  - im3w1l 7y ago
    If it goes on for any length of time there will be an explosion in organized crime as people seek out the black market. This is how you get a failed state.
    - landryraccoon 7y ago
      Normally yes, but criminals are just as vulnerable to viral infection as anyone else. The basic question needs to be answered - is this virus bad enough to shut down an economy? If the answer is yes, then renaming the economy from "state sanctioned" to "black market" does nothing - the black market is just as crushed by the pandemic as any other. What people are arguing for when they argue for a shutdown is that the economy is going to be wrecked no matter what if the pandemic is allowed to rage unchecked. That being the case, there is no tradeoff - shut down the economy to save lives and wreck the economy, or continue with business as usual AND wreck the economy AND have many more lives lost.
      - suryherhhd 7y ago
- lifeformed 7y ago
  Why do banks fail if loan payments are paused?
  - krustyburger 7y ago
    Depending on the degree to which they are leveraged, they are counting on loan payments to be able to meet the withdrawal demands of their deposit accounts.
    - limomium 7y ago
      Not sure about US, but in EU citizen accounts are insured up to EUR 100k. So it doesn't matter if banks fail.
      - imtringued 7y ago
        I feel you don't understand the magnitude of the problem. Yes, your money will be fine but will your insurance claim be processed before you have to pay rent? A bank is like a multiplayer game company. Once the company shuts down, the servers are gone as well. If you can't access your bank account then you lost access to the money until it will be restored by the government. This is why we have bank runs at all. People cash out so they have a buffer until their claim is processed, not because they won't get their money bank.
- unethical_ban 7y ago
  Maybe we should learn how to, because this may not be the last pandemic we face. Retailers and citizens can't pay rent. Landlords only need that money (per se) because they owe money to banks via mortgage, or the government via taxes. So government should order the banks to halt collections on real estate, and government should halt collections of property taxes. Banks might go under? Have the fed print them money. Governments can't afford it? Have the government print money. Inflation due to increased monetary supply? That's where my idea ends. Perhaps instead of the printed money being a gift, perhaps it is a zero percent long term loan. Landlords need the money to live? Give its employees the same cushioning we should be giving all citizens through the pandemic. edit - I am absolutely going to ask people who downvote to give a reason.
pdonis 7y ago
> The economy is effectively frozen. This is a huge overstatement. Certain sectors of the economy are frozen: basically, those sectors which serve demand that is discretionary and non-essential, the sorts of things people have stopped doing because they don't want to get infected. Grocery stores, drugstores, etc. aren't frozen--in fact their sales have probably skyrocketed over the past few weeks. All of the supply chains that feed those places aren't frozen either. Not to mention that there is now a huge new demand for various health care items, from masks to ventilators, that companies will be wanting to meet and will be hiring people for.
- joe_the_user 7y ago
  I should say, the finance and stock part of the economy is effectively. Even, the prices retailers charge are frozen (because this is an emergency and appropriately so). Essentially production continues and will ramp up. But the process of market adjustment, basically, is frozen and should remain frozen for a while.

nostromo 7y ago

You can't turn off and on the economy like a switch. People need to pay rent and mortgages, or loans will not be repaid. If loans don't get repaid, banks fail. If banks fail, we have another financial crisis. The last one took a decade to recover from and there weren't even that many bad mortgages (as a percent of all mortgages). Businesses right now are eating a bunch of costs. That can't last for very long before they run out of money, fire everyone, and throw in the towel. They will not have savings to restart after the closure.

wegs 7y ago
Sure you can. You stop rent. You stop mortgage interest. You pause mortgage principal. You do that across the board for every rental, contract, and debt obligation in America. In 90 days, it expires, and everything starts back up again. https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3SjhsZ0ztpG5bMzA3WNbVNhU/edit https://docs.google.com/document/d/1YbtJGn7ida2IYNgwCFk3Sjhs...
- wrkronmiller 7y ago
  And what about international obligations? What about mortgage-backed securities?
  - wegs 7y ago
    International obligations, where governed by US law, get placed on hold too. Ideally, other countries join in the regime. If not, you're just talking about a much smaller amount of debt (US debt held under foreign jurisdictions). Mortgage-backed securities generate no income for a couple of months.
    - im3w1l 7y ago
      If you stop paying other countries, the goods stop flowing. Or are you going to swing the military dick around to force people to give you stuff for free?
      - op00to 7y ago
        Nope. The world floats on net terms. Companies extend terms frequently. Doing so is not as big of a deal as you are making this out to be.
  - joe_the_user 7y ago
    Pensions and institutions people need to survive get a bailout. Speculators lose their shirts.
    - marcus0x62 7y ago
      What’s the difference between a worthy investor and a speculator? Is it sort of like the difference between a church and a cult?
      - Red_Leaves_Flyy 7y ago
        Net worth?
joe_the_user 7y ago
You can't turn off and on the economy like a switch. Actually, you can. Money transactions can be suspended and goods can be distributed directly. If banks fail, we have another financial crisis. The last one took a decade to recover from. Not even, what we're looking at is the dead Frankenstein construction created to avoid dealing excess speculation of last time. The economy has been artificially supported by QE since 2008 (sure, it stopped periodically but everyone knew it could start up again, stocks values were completely absurd. Half of what happened just now was that fantasy falling rather than the cost of Covids.
- kyleee 7y ago
  "Actually, you can. Money transactions can be suspended and goods can be distributed directly." Do you mind expounding a bit on this claim? What does it mean to suspend all money transactions and who will distribute the goods?
- im3w1l 7y ago
  If it goes on for any length of time there will be an explosion in organized crime as people seek out the black market. This is how you get a failed state.
  - landryraccoon 7y ago
    Normally yes, but criminals are just as vulnerable to viral infection as anyone else. The basic question needs to be answered - is this virus bad enough to shut down an economy? If the answer is yes, then renaming the economy from "state sanctioned" to "black market" does nothing - the black market is just as crushed by the pandemic as any other. What people are arguing for when they argue for a shutdown is that the economy is going to be wrecked no matter what if the pandemic is allowed to rage unchecked. That being the case, there is no tradeoff - shut down the economy to save lives and wreck the economy, or continue with business as usual AND wreck the economy AND have many more lives lost.
    - suryherhhd 7y ago
lifeformed 7y ago
Why do banks fail if loan payments are paused?
- krustyburger 7y ago
  Depending on the degree to which they are leveraged, they are counting on loan payments to be able to meet the withdrawal demands of their deposit accounts.
  - limomium 7y ago
    Not sure about US, but in EU citizen accounts are insured up to EUR 100k. So it doesn't matter if banks fail.
    - imtringued 7y ago
      I feel you don't understand the magnitude of the problem. Yes, your money will be fine but will your insurance claim be processed before you have to pay rent? A bank is like a multiplayer game company. Once the company shuts down, the servers are gone as well. If you can't access your bank account then you lost access to the money until it will be restored by the government. This is why we have bank runs at all. People cash out so they have a buffer until their claim is processed, not because they won't get their money bank.
unethical_ban 7y ago
Maybe we should learn how to, because this may not be the last pandemic we face. Retailers and citizens can't pay rent. Landlords only need that money (per se) because they owe money to banks via mortgage, or the government via taxes. So government should order the banks to halt collections on real estate, and government should halt collections of property taxes. Banks might go under? Have the fed print them money. Governments can't afford it? Have the government print money. Inflation due to increased monetary supply? That's where my idea ends. Perhaps instead of the printed money being a gift, perhaps it is a zero percent long term loan. Landlords need the money to live? Give its employees the same cushioning we should be giving all citizens through the pandemic. edit - I am absolutely going to ask people who downvote to give a reason.

pdonis 7y ago

> The economy is effectively frozen. This is a huge overstatement. Certain sectors of the economy are frozen: basically, those sectors which serve demand that is discretionary and non-essential, the sorts of things people have stopped doing because they don't want to get infected. Grocery stores, drugstores, etc. aren't frozen--in fact their sales have probably skyrocketed over the past few weeks. All of the supply chains that feed those places aren't frozen either. Not to mention that there is now a huge new demand for various health care items, from masks to ventilators, that companies will be wanting to meet and will be hiring people for.

joe_the_user 7y ago
I should say, the finance and stock part of the economy is effectively. Even, the prices retailers charge are frozen (because this is an emergency and appropriately so). Essentially production continues and will ramp up. But the process of market adjustment, basically, is frozen and should remain frozen for a while.