The Pandemic Boom Goes Bust
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The Pandemic Boom Goes Bust
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Re: The Pandemic Boom Goes Bust
#2I think it’s naive to say that a couple stimulus checks and some unemployment is responsible for high consumer spending.
Re: The Pandemic Boom Goes Bust
#3I think it’s naive to say that a couple stimulus checks and some unemployment is responsible for high consumer spending.
>>> a couple stimulus checks
You might want to take at the numbers involved (this is just the US, other countries also had huge packages):
https://en.wikipedia.org/wiki/American_Rescue_Plan_Act_of_20...
Re: The Pandemic Boom Goes Bust
#4We've been here before... printing of significant amounts of money to solve big problems can work well to get through the problem, but the after effects can be painful.
>>[1]People in Paris were getting rich — and they were getting rich fast. In fact, it was so hard to describe how rich everyone was becoming that a new word was needed and the term “millionaire” was coined in 1719.
>>[1]The people of France could thank a Scotsman with a penchant for gambling, the printing of new paper money, and all the vast riches that surely would be found in the New World for their sudden wealth
>>[1]Realizing that the paper money was only going to continue being a problem, over a few months France again allowed transactions to be conducted in metal currency. Further, it limited the uses for paper money to buying government debt issuances, in this way, taking on debt from its citizens in order to prevent the financial system from collapsing completely. Through these actions, by the end of 1720, Law’s original money-printing bank shut its doors, with the Mississippi Company dwindling towards the same by the end of 1721.
Or fun stuff like the tulip mania, when supply and a little bit of euphoria made things silly:
>>[2]The Dutch Tulip Bulb Market Bubble was one of the most famous asset bubbles and crashes of all time. At the height of the bubble, tulips sold for approximately 10,000 guilders, equal to the value of a mansion on the Amsterdam Grand Canal.
>>[2]Additionally, because of the timing in tulip cultivation, there was always a few years of lag between demand pressures and supply. Under normal conditions, this wasn't an issue since future consumption was contracted for a year or more in advance. Because the 1630's rise in prices occurred so rapidly and after bulbs were already planted for the year, growers would not have had an opportunity to increase production in response to price.
[1] https://newsletter.butwhatfor.com/p/john-law-and-the-mississ... [2] https://www.investopedia.com/terms/d/dutch_tulip_bulb_market...
Re: The Pandemic Boom Goes Bust
#5I think it’s naive to say that a couple stimulus checks and some unemployment is responsible for high consumer spending.
Not only that, but people were stuck in their houses all day. It's not surprising at all that people ordered tons of crap on Amazon or decided their house needed some renovation/appliances/etc.
Re: The Pandemic Boom Goes Bust
#6We've been here before... printing of significant amounts of money to solve big problems can work well to get through the problem, but the after effects can be painful. >>[1]People in Paris were getting rich — and they were getting rich fast. In fact, it was so hard to describe how rich everyone was becoming that a new word was needed and the term “millionaire” was coined in 1719. >>[1]The people of France could than…
The first-hand account of Law's scheme in Saint-Simon's memoirs is highly recommended (if you like that sort of thing).
Re: The Pandemic Boom Goes Bust
#7I am as far from an inflation hawk as you can get. I basically think that any government can both print money and avoid inflation bar external shocks with a modicum of common sense, e.g. don't pay people not working to piss off the French and Belgians: https://www.theholocaustexplained.org/the-nazi-rise-to-power...
Yet we did just that. People not working being paid for existing at a time when the real economy went into cardiac arrest by every measure of actual productivity. Instead of giving people money to chase goods stuck in ports the government should have spent that money on building up infrastructure and have people out doors away from covid.
Were I a betting man I'd say that the reason for doing this was to discredit left leaning economic policy for another 40 years, like happened after the stagflation of the 70s.
Re: The Pandemic Boom Goes Bust
#8I think it’s naive to say that a couple stimulus checks and some unemployment is responsible for high consumer spending.
Not only that, but people were stuck in their houses all day. It's not surprising at all that people ordered tons of crap on Amazon or decided their house needed some renovation/appliances/etc.
> It's not surprising at all that people ordered tons of crap on Amazon or decided their house needed some renovation/appliances/etc.
As any graph comparing CPI-Goods versus CPI-Services will show:
* https://ritholtz.com/2021/11/structural-or-transitory/
Further, Goods YoY inflation has been flat/negative since 2013, so most supply chains probably weren't really being stressed much (and maybe even atrophying slowly) when the sudden surge in demand hit.
Re: The Pandemic Boom Goes Bust
#9Another welcome sign of the slow grind back to normality that will be 2022 :)
Just wish I could just go into my time machine for 2025 onwards
Re: The Pandemic Boom Goes Bust
#10Apple just had a very good earnings report a couple days ago, and showed iPhone demand hasn’t slowed down at all.