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The Pandemic Boom Goes Bust

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Re: The Pandemic Boom Goes Bust

#101

Post by giaour »

thisisnotatest1 wrote: post #69
giaour wrote: post #63

Earlier quoted context omitted.

Your assertion assumes that demand would not have contracted in April 2020 absent government intervention, which seems suspect. Unless you believe no one would have adopted any pandemic precautions absent activity restrictions, thereby averting any demand drop in, say, the entertainment and hospitality sectors.

Demand reflects consumption opportunities People kept receiving salaries, and unemployment benefits. So financial position and income of families was always strong There's no precautionary savings cycle.. People engaged in financial risk taking by buying houses like never before

> People kept receiving salaries, and unemployment benefits. So financial position and income of families was always strong

I'm confused; weren't you arguing above that unemployment concerns shouldn't have motivated government spending because the drop in demand was artificial? You can't bolster that position by saying that the demand stayed strong because of unemployment benefits and salaries that went out despite people staying home; those spending categories (PPP loans and enhanced unemployment benefits) were a government subsidy to keep demand from cratering.

Re: The Pandemic Boom Goes Bust

#102

Post by pjc50 »

thisisnotatest1 wrote: post #57
pjc50 wrote: post #20

This is missing a very important graph, unemployment. Here's an example: https://www.bbc.co.uk/news/business-52938993 And its not-quite-mirror, labor force participation: https://www.bls.gov/charts/employment-situation/civilian-lab... The purpose of stimulus was to prevent those from looking even worse and causing more permanent damage to the economy. In that regard it's been a huge success; somewhere above, Keynes i…

That's a very simplistic (and ideological) view. World's leading country in inflation, Venezuela, has terrible wages. Inflation makes people overworked, by forcing them so sell under fair price. Wages are sticky, prices are not. That salaries are picking up doesn't mean real salaries have improved. They have not.

No, it's just the Philips curve: https://www.khanacademy.org/economics-finance-domain/macroec... ; understanding and using that is how Western central banks have tamed inflation and reduced the impact of the business cycle.

Venezuela (and almost all the classic hyperinflation cases) are forex crises. You can't print foreign currency, which you need to buy goods on the international market; and the collapse by mismanagement of Venuela's oil industry and any other export industries means that the currency is just going to keep devaluing as the trade fails to balance.

> That salaries are picking up doesn't mean real salaries have improved.

It is however a necessary condition for real salaries to improve that nominal salaries improve. Which needs a tight labour market.

Re: The Pandemic Boom Goes Bust

#103

Post by pjc50 »

argsv wrote: post #91
cs702 wrote: post #86

Earlier quoted context omitted.

> The purpose of stimulus was to prevent those from looking even worse and causing more permanent damage to the economy. In that regard it's been a huge success; somewhere above, Keynes is smiling. In exchange for that we've got only 5%ish inflation, driven partly by a newly-tight labour market in which people can actually negotiate incomes upward, and partly by a big spike in natural gas prices? I would absolutely t…

I would take inflation that can be managed over the alternative that could have happened had the government not intervened. However and if I understood things correctly, it appears that banks, financial entities and ultra rich individuals got money absolutely for free; no strings attached. The rest of the population got stimulus checks , asset prices appreciation followed by inflation which will eventually eat away a…

> banks, financial entities and ultra rich individuals got money absolutely for free

[citation needed]: please distinguish between gifts and loans, bearing in mind that a loan written off other than in bankruptcy can be counted as a gift.

There is a big problem that most of the consumer spending goes through Jeff Bezos who gets to keep a percentage of it, but that's not the same as directly giving him money, and happens regardless of the stimulus or not.

Re: The Pandemic Boom Goes Bust

#104

Post by pjc50 »

onlyrealcuzzo wrote: post #67
lvl100 wrote: post #47

Earlier quoted context omitted.

I agree they had to spend the money to prevent a depression. I don’t think anyone is here contesting the amount of money unleashed. However, I am really disappointed with where that money went. It went into “non-productive” assets and activities.

My problem is - there are sooooo many things that need done in this country. I am not sure why everyone thinks it is cruel and unusual punishment to ask people to do some of those things that need done (burying power lines in cities, as one example) in exchange for money. Why is it so barbaric to give people a job? Theoretically, there are plenty of low-skilled workers that could've been trained to do needed skilled…

Lack of state capacity, really: there is no way that level of labor mobilization could have happened, and people would have screamed about it every step of the way. The US absolutely hates anything that looks like government expansion, unless it has camo on it.

I suppose it could have been the 1037th Non-Combat Plumber Division and everyone would have been fine with that.

Re: The Pandemic Boom Goes Bust

#105

Post by mupuff1234 »

altdataseller wrote: post #92
mupuff1234 wrote: post #52

Earlier quoted context omitted.

The fed is still pumping in money till march, we'll probably have to wait till the earnings of Q2/Q3 to see if there's a slow down.

What are you talking about? Stimulus checks have stopped.

That's only one of the way the economy is being stimulated.

https://www.businessinsider.com/personal-finance/fed-taperin...

Re: The Pandemic Boom Goes Bust

#106

Post by pjc50 »

eru wrote: post #83
thisisnotatest1 wrote: post #76

Earlier quoted context omitted.

Monetary and fiscal are largely equivalent specially when the central bank has the tendency to print money to buy government debt, so public solvency is never an issue

You can easily reverse monetary stimulus: just sell those assets that the central bank bought. You can't really reverse fiscal stimulus. Once you paid people to dig holes and cover them again, you can't really get that money back. Yes, public solvency is not an issue for governments that borrow in their own currency. But that's a separate concern.

> Once you paid people to dig holes and cover them again, you can't really get that money back.

That doesn't matter though? If someone's unemployed, their labor is wasted, and you can't get it back. The money spent is not destroyed, it re-enters the economy when the workers you gave it to immediately spend it, and comes back to the government when they pay income or sales tax.

You can reverse fiscal stimulus by putting up taxes.

Re: The Pandemic Boom Goes Bust

#107

Post by wowokay »

SamoyedFurFluff wrote: post #54
lvl100 wrote: post #47

Earlier quoted context omitted.

I agree they had to spend the money to prevent a depression. I don’t think anyone is here contesting the amount of money unleashed. However, I am really disappointed with where that money went. It went into “non-productive” assets and activities.

I’m confused what you mean by non-productive in this sense. In my country, the vast majority of aid money was in the form of massive “loans” to companies that were later forgiven presumably to avoid them going under/bankrupt.

Non productive would be referring to stimulus checks and child tax credit money in the US, you will hear stories about families making 10-15k and using it for Disney trips, all that did was incentivize not working and paying of people that made the decision to have to many kids. It’s also caused the bottom of he job market to see increased pay while the middle and upper markets get pay decreases in the form on inflation. All in all not worth it IMO.

Re: The Pandemic Boom Goes Bust

#108

Post by [deleted] »

wowokay wrote: post #107
SamoyedFurFluff wrote: post #54

Earlier quoted context omitted.

I’m confused what you mean by non-productive in this sense. In my country, the vast majority of aid money was in the form of massive “loans” to companies that were later forgiven presumably to avoid them going under/bankrupt.

Non productive would be referring to stimulus checks and child tax credit money in the US, you will hear stories about families making 10-15k and using it for Disney trips, all that did was incentivize not working and paying of people that made the decision to have to many kids. It’s also caused the bottom of he job market to see increased pay while the middle and upper markets get pay decreases in the form on inflat…

[deleted]

Re: The Pandemic Boom Goes Bust

#109

Post by SamoyedFurFluff »

wowokay wrote: post #107
SamoyedFurFluff wrote: post #54

Earlier quoted context omitted.

I’m confused what you mean by non-productive in this sense. In my country, the vast majority of aid money was in the form of massive “loans” to companies that were later forgiven presumably to avoid them going under/bankrupt.

Non productive would be referring to stimulus checks and child tax credit money in the US, you will hear stories about families making 10-15k and using it for Disney trips, all that did was incentivize not working and paying of people that made the decision to have to many kids. It’s also caused the bottom of he job market to see increased pay while the middle and upper markets get pay decreases in the form on inflat…

My understanding was that the stimulus checks and child tax credit were not remotely a majority of the money spent; that most of it went to corporations.
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