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I'm not an economist, but I actually am holding onto the cash (putting it in savings). Yes, I'll probably ultimately spend it on something else but not for dec

I'm not an economist, but I actually am holding onto the cash (putting it in savings). Yes, I'll probably ultimately spend it on something else but not for decades.

zozbot234 6y ago
Unless you're literally buying government bonds (that are yielding very low and sometimes negative returns) your savings will still translate to increased spending elsewhere.
- skybrian 6y ago
  Well, maybe. There isn't a hard requirement that a bank will invest the money; excess reserves are currently over 3 trillion. https://fred.stlouisfed.org/series/EXCSRESNS https://fred.stlouisfed.org/series/EXCSRESNS The Fed even pays a small amount of interest. IOER is currently 0.1% https://fred.stlouisfed.org/series/IOER https://fred.stlouisfed.org/series/IOER
- downerending 6y ago
  I googled for a bit and wasn't able to find a definition for "demand shortage" specifically, so I can only guess at what it means, versus the intuitive idea that "restaurants expected a certain level of demand, and those expectations have been dashed". Does anyone understand the exact point being made?
  - zozbot234 6y ago
    I think the established terminology is more like "demand shortfall". In a general (non-sector-specific) economic context, this almost always refers to a fall in demand for all goods or services that introduces severe frictions into the workings of the market mechanism itself, and that can thus be "solved" in a comparatively straightforward way by addressing these frictions. The "liquidity constraints" discussed in the abstract may be one such friction, but it's quite common for agents to be liquidity-constrained or unwilling to incur debt even irrespective of any negative supply-shock, so it's not quite clear to me what points the paper is trying to make.
    - downerending 6y ago
      Whelp, I guess that's why I call myself an amateur. Thank you for your attempt. :-)
- soVeryTired 6y ago
  How so?

I'm not an economist, but I actually am holding onto the cash (putting it in savings). Yes, I'll probably ultimately spend it on something else but not for decades.

zozbot234 6y ago

Unless you're literally buying government bonds (that are yielding very low and sometimes negative returns) your savings will still translate to increased spending elsewhere.

skybrian 6y ago
Well, maybe. There isn't a hard requirement that a bank will invest the money; excess reserves are currently over 3 trillion. https://fred.stlouisfed.org/series/EXCSRESNS https://fred.stlouisfed.org/series/EXCSRESNS The Fed even pays a small amount of interest. IOER is currently 0.1% https://fred.stlouisfed.org/series/IOER https://fred.stlouisfed.org/series/IOER
downerending 6y ago
I googled for a bit and wasn't able to find a definition for "demand shortage" specifically, so I can only guess at what it means, versus the intuitive idea that "restaurants expected a certain level of demand, and those expectations have been dashed". Does anyone understand the exact point being made?
- zozbot234 6y ago
  I think the established terminology is more like "demand shortfall". In a general (non-sector-specific) economic context, this almost always refers to a fall in demand for all goods or services that introduces severe frictions into the workings of the market mechanism itself, and that can thus be "solved" in a comparatively straightforward way by addressing these frictions. The "liquidity constraints" discussed in the abstract may be one such friction, but it's quite common for agents to be liquidity-constrained or unwilling to incur debt even irrespective of any negative supply-shock, so it's not quite clear to me what points the paper is trying to make.
  - downerending 6y ago
    Whelp, I guess that's why I call myself an amateur. Thank you for your attempt. :-)
soVeryTired 6y ago
How so?