The Economic Consequences of Opening the Economy Too Soon

[bilby]

Of course, the government could step in and find a way to support all those people. At present, however, the US government simply does not have the resources to do so. They can increase the deficit, borrow against the future, or print more money, but each of those is also likely to increase inflation. And if it increases too much, then we're at widespread poverty, food insecurity, and anxiety for everyone.

Do you have any evidence for the claim that the US Government does not have the resource to do this without drastically increasing inflation?

Like, an example of a similar situation where such inflation has occurred given similar circumstances.

Be specific.

I think you're setting up an unattainable goal there. I don't believe there are similar circumstances to look at anywhere, so it's kind of moot.

They've already dumped a few trillion dollars into the economy and seen it evaporate in days. If we just keep adding debt to an already large pile of US debt, by handing out money that doesn't currently exist... my understanding is that inflation is a pretty normal effect. Maybe ask Laughing Dog for more details?

Of course, if you'd rather believe they have the financial resources necessary to do so easily at hand, go for it.

Is inflation currently a major concern? Are economists forecasting high inflation in the near future?

The worry right now is deflation.

So exactly what do you think is constraining the maximum expenditure of the US government? As you say, they have dropped trillions already without even slowing the collapse of inflation. The cost of feeding a few hundred million people for a couple of years is easily witin their means.

The problem is that those holding the purse strings would rather give those trillions to existing billionaires, and to the corporations those billionaires run, instead of giving ordinary people the means to survive until it is safe for them to resume their employment.

 

[repoman]

It doesn't matter what I (or anyone) wants. The only question is what is necessary to avoid massive numbers of deaths.

For consideration: deaths caused by what?

It seems as if you're focusing on the deaths directly caused by COVID-19, and not really giving much consideration to the potential deaths caused by secondary effects of an economic shutdown. I posted a couple of WoTs in a different thread, that probably belong here, so I'm going to copy them over.

There's no reason for an economic shutdown (that continues to allow food production, processing, and transportation, and other essential services) to kill anyone. It's perfectly possible to feed all the people, at the expense of the government, indefinitely. Even if they don't work.

Governments don't require taxes in order to spend money; Taxes are merely a way to prevent runaway inflation. As a depression is massively deflationary, taxes to offset the cost of keeping people alive despite their unemployment can be deferred until after the crisis.

The only reason for unemployment to cause death is callous disregard for their situation. So the USA may well be in deep trouble, but the developed world should be just fine.

For obesity it seems like metabolic syndrome is the best fit. Choking on excessive fast carbs then spewing out insulin gumming up insulin receptors. Not having glucagon work effectively. Mental acuity turns to shit as well.

I was in Target yesterday and the shelves were lined with tones of junk food. But I saw a lot of customers getting much healthier food than I expected.

Also, Covid-19 uses the ACE2 receptor (that lowers blood pressure) to gain entry. Than can't be good.

 

[Loren Pechtel]

Yes, but lifting all the shelter-in-place orders isn't going to help anything either. If you don't think the government has the money to pay hundreds of thousands of people's minimum wage salaries for a couple of months, how the hell is it supposed to afford paying those same people's medical expenses for years? Our system is incredibly inefficient, but can be made more efficient with a bit of forethought. What the political Right is suggesting is not a real solution, it's just adding mass death to the already inevitable problem of the resulting economic downturn, heightening the problem without providing any real counter-measures.

If you crash the healthcare system you're not going to have that many seriously impaired by Covid-19. The bad cases will simply die, not to mention a lot of people with other health issues. Healthcare spending goes down, victory! God wouldn't let good people die of it, those who die of it don't matter.

 

[Loren Pechtel]

So vaccine hope needs to be taken off the table as a reason to wait. Then reassess.

There are a few other reasons to wait and some reasons to not wait to get back to work.

But to have what may be vaporware as a reason to wait it would really suck.

We need to get the infected count down, then go with masks, distancing and banning large gatherings until we have a vaccine.

 

[Politesse]

If you don't think the government has the money to pay hundreds of thousands of people's minimum wage salaries for a couple of months, how the hell is it supposed to afford paying those same people's medical expenses for years?

I don't think it can do that either.

Also, it's not just minimum wage here. For example, a close friend of mine just got laid off from her $55K/yr project manager job because the company she works for can't do business during the pandemic. Another friend of mine is using up his own savings trying to keep his plumbing business afloat and pay his employees, and that' going to run out this month. Then he'll be bankrupt and his business will fail and all of his employees will be laid off. None of them make minimum wage... but commercial plumbing installation isn't occurring right now.

So you don't want the victims to die for lack of money, but you don't want to pay their expenses, and you don't want to take the most reliable actions to prevent their getting ill in the first place. What, in fact, is your proposed disaster response plan?

 

[repoman]

So vaccine hope needs to be taken off the table as a reason to wait. Then reassess.

There are a few other reasons to wait and some reasons to not wait to get back to work.

But to have what may be vaporware as a reason to wait it would really suck.

We need to get the infected count down, then go with masks, distancing and banning large gatherings until we have a vaccine.

By that time will it have burned itself out like 2003 SARS?

 

[Elixir]

If you don't think the government has the money to pay hundreds of thousands of people's minimum wage salaries for a couple of months, how the hell is it supposed to afford paying those same people's medical expenses for years?

I don't think it can do that either.

Also, it's not just minimum wage here. For example, a close friend of mine just got laid off from her $55K/yr project manager job because the company she works for can't do business during the pandemic. Another friend of mine is using up his own savings trying to keep his plumbing business afloat and pay his employees, and that' going to run out this month. Then he'll be bankrupt and his business will fail and all of his employees will be laid off. None of them make minimum wage... but commercial plumbing installation isn't occurring right now.

So you don't want the victims to die for lack of money, but you don't want to pay their expenses, and you don't want to take the most reliable actions to prevent their getting ill in the first place. What, in fact, is your proposed disaster response plan?

Here's MY plan:
Take the 4 trillion and instead of stuffing the pockets of Trump's donors, send each and every citizen $12,000. A family of four would get $48k. This would hold almost everyone over for the necessary duration if there was a national stay-home directive. And all that money would stimulate the shit out of the economy and would end up in the hands of the holy capitalists within a few months anyway.
Of course with the current leadership vacuum at the top of the federal government, "the duration" is likely to turn out to be years unless the PINO is replaced.

 

[Emily Lake]

If you don't think the government has the money to pay hundreds of thousands of people's minimum wage salaries for a couple of months, how the hell is it supposed to afford paying those same people's medical expenses for years?

I don't think it can do that either.

Also, it's not just minimum wage here. For example, a close friend of mine just got laid off from her $55K/yr project manager job because the company she works for can't do business during the pandemic. Another friend of mine is using up his own savings trying to keep his plumbing business afloat and pay his employees, and that' going to run out this month. Then he'll be bankrupt and his business will fail and all of his employees will be laid off. None of them make minimum wage... but commercial plumbing installation isn't occurring right now.

So you don't want the victims to die for lack of money, but you don't want to pay their expenses, and you don't want to take the most reliable actions to prevent their getting ill in the first place. What, in fact, is your proposed disaster response plan?

You've got a lot of arguments from so in there that don't actually reflect my views.

I don't have a proposed solution. And I'm incredibly relieved that I'm not the one who has to make that decision. Because there is no good solution. All of the options come with risks and hardships and they all suck. I just don't have a lot of patience with either of the firewalled sides right now. The people who insist that staying in lockdown for many months so that people don't get sick don't seem to have any sympathy for the people whose livelihoods and security are being jeopardized by the economic fallout of the lockdown. The people who insist that the lockdown has gone on long enough and we need to open everything back up immediately don't seem to have any sympathy for the people who would end up getting sick and dying (or the people who love them). Both of those hard-line positions seem to lack sympathy and consideration for others, in my opinion.

So yeah, I'm arguing both sides and neither. Mostly, I'm trying to make sure that people on either side have a good understanding of the impact of their positions on other people. I want everyone to understand the magnitude of this situation, and the trade-offs that are under consideration.

 

[DBT]

It's only a question of how deep the economic hole becomes.....

 

[Politesse]

The people who insist that staying in lockdown for many months so that people don't get sick don't seem to have any sympathy for the people whose livelihoods and security are being jeopardized by the economic fallout of the lockdown.

Who are you describing? I definitely think we should be taking care of those whose livelihoods are threatened by the shutdown, and not just with a $1000 check. But I also think we should attempt to slow the spread of the COVID-19 infection. Ideally, both at once, and the claim that this is "too expensive" to do is absurd; it is the least expensive of many expensive options. And I'm pretty sure most on "the left" would agree with me. What moderate to left politician of any influence whatsoever is advocating not helping struggling businesses and families? Its the good ol' Party of Death that thinks it's okay to let people die for the crime of being poor.

 

[Elixir]

The people who insist that staying in lockdown for many months so that people don't get sick don't seem to have any sympathy for the people whose livelihoods and security are being jeopardized by the economic fallout of the lockdown.

Who are you describing? I definitely think we should be taking care of those whose livelihoods are threatened by the shutdown, and not just with a $1000 check. But I also think we should attempt to slow the spread of the COVID-19 infection. Ideally, both at once, and the claim that this is "too expensive" to do is absurd; it is the least expensive of many expensive options. And I'm pretty sure most on "the left" would agree with me. What moderate to left politician of any influence whatsoever is advocating not helping struggling businesses and families? Its the good ol' Party of Death that thinks it's okay to let people die for the crime of being poor.

If we had a leader, that leader might have responded to the threat immediately and we would be past it by now. That opportunity is lost now. Tens of thousands of preventable deaths have already ensued. But we could still collectively man up, give the fucking money to the people and make them stay home long enough to end this thing - whether by waiting it out with testing and contact tracing, by treatment development, by the advent of a vaccine or by the miracle that Trump promised at the outset.
Or... we give the money to corporations and whine about not being able to go to work to feed our families, so we go to work and 30-40% of us get sick, 2-5% of us die and we can't feed our families.
This isn't some kind of nuanced question.
GIVE THE FUCKING MONEY TO THE PEOPLE AND TELL THEM TO STAY HOME

 

[bilby]

The people who insist that staying in lockdown for many months so that people don't get sick don't seem to have any sympathy for the people whose livelihoods and security are being jeopardized by the economic fallout of the lockdown.

Who are you describing? I definitely think we should be taking care of those whose livelihoods are threatened by the shutdown, and not just with a $1000 check. But I also think we should attempt to slow the spread of the COVID-19 infection. Ideally, both at once, and the claim that this is "too expensive" to do is absurd; it is the least expensive of many expensive options. And I'm pretty sure most on "the left" would agree with me. What moderate to left politician of any influence whatsoever is advocating not helping struggling businesses and families? Its the good ol' Party of Death that thinks it's okay to let people die for the crime of being poor.

If we had a leader, that leader might have responded to the threat immediately and we would be past it by now. That opportunity is lost now. Tens of thousands of preventable deaths have already ensued. But we could still collectively man up, give the fucking money to the people and make them stay home long enough to end this thing - whether by waiting it out with testing and contact tracing, by treatment development, by the advent of a vaccine or by the miracle that Trump promised at the outset.
Or... we give the money to corporations and whine about not being able to go to work to feed our families, so we go to work and 30-40% of us get sick, 2-5% of us die and we can't feed our families.
This isn't some kind of nuanced question.
GIVE THE FUCKING MONEY TO THE PEOPLE AND TELL THEM TO STAY HOME

But that's fiscally irresponsible. Vast government spending in response to an emergency would lead to disaster. Just look at how the strong and vigorous economy of the 1930s was destroyed by the vast government spending of the '40s, leading to the terrible depression and hardships of the 1950s and '60s.

Clearly vast government spending in response to an emergency is unacceptable.

 

[Trausti]

The upper right circle makes you highly irrational. What exactly do you think government is gaining by preventing people from working and consuming and thereby eliminating the governments own revenue? And the government has been given no new or expanded authority. The laws are unchanged.They are merely exercising emergency authorities they always had.

Anyone who believes that these temporary lockdowns are some slippery slope to permanent conditions or authoritarianism is dangerously stupid and doesn't even know what fascism is or how it functions.

De Blasio’s social distancing tip line flooded with penis photos, Hitler memes

Mayor Bill de Blasio’s critics let him know how they really felt about him ordering New Yorkers to snitch on each other for violating social-distancing rules — by flooding his new tip line with crank complaints including “dick pics” and people flipping the bird, The Post has learned.

An NYPD source said that “dick pic” photos of real penises have also been texted to 311, and a caller phoned in a tip that de Blasio was seen performing oral sex on someone “in an alleyway behind a 7-11” early Sunday.

“He looked at me…and coofed in my direction,” the caller said, according to a photo of the 311 operator’s computer screen provided to The Post.

“Coof” is a newly coined term for coughing while infected with the coronavirus, according to the Urban Dictionary website.

You must feel devastated, ronburgundy.

 

[braces_for_impact]

Your cute diagram above may apply to you, hell it applies to me, but it sure as fuck doesn't apply to the numb-nuts protesting. I'll be watching for the uptick and further economic devastation...you know Like WI and KY are starting to feel.

By the by, being worried about government overreach and cessation of freedom is valid, but I haven't seen any - and considering I certainly don't trust Trumpelthinkskin, I find a LOT of people, say certain FOX news anchors and others, don't either. It's a bad faith argument, like most of the arguments they make. So to excuse these vacuous tools for what they are is understandable no?

 

[blastula]

Nitpicky, I know, but this is NOT a "souped up flu". Flu is specifically influenza virus, which has a host of very different effects. This is a coronavirus. Coronaviruses don't mutate and evolve at nearly the same pace that influenza does... but it's also more robust and lasts longer outside the human body.

Both are enveloped viruses and so neither lasts long outside the body.

Depends on how you define long I guess. Research is not conclusive at this point, but there's a fair bit of suggestion that COVID-19 has a surprisingly long "shelf life".

Also, my recollection is that most influenza survives like an hour outside the human body, whereas most coronaviruses last many hours outside the human body. My recollection may be wrong But I'm under the impression that coronas last like 6 times as long as influenzas. I mean, neither is weeks or months, but that's still a pretty big difference when you're talking about contact transmission.

Nah, they are about the same.

 

[ronburgundy]

De Blasio’s social distancing tip line flooded with penis photos, Hitler memes

Mayor Bill de Blasio’s critics let him know how they really felt about him ordering New Yorkers to snitch on each other for violating social-distancing rules — by flooding his new tip line with crank complaints including “dick pics” and people flipping the bird, The Post has learned.

An NYPD source said that “dick pic” photos of real penises have also been texted to 311, and a caller phoned in a tip that de Blasio was seen performing oral sex on someone “in an alleyway behind a 7-11” early Sunday.

“He looked at me…and coofed in my direction,” the caller said, according to a photo of the 311 operator’s computer screen provided to The Post.

“Coof” is a newly coined term for coughing while infected with the coronavirus, according to the Urban Dictionary website.

You must feel devastated, ronburgundy.

Why would I feel devastated that people who share your irrational dogma have the mentality of 12 year olds? That was already obvious from everything you post and in the words and actions of every single person protesting being asked to act like decent human beings and not kill others.

When someone assaults or robs you, everyone around adheres to your political philosophy and says "Nope, I'm not calling the cops, b/c that wold make me a fascist snitch."

 

[Alcoholic Actuary]

I really don't think opening back up will have too great of an impact on the overall economy - or preventing small businesses from going bankrupt. These businesses were built on sustaining expenses based on a projected revenue stream pre-pandemic. The only way to open up and pay all employees and afford to stay in business is to somehow generate the same income. That could take years, and in the meantime everyone is placed at greater risk.

Another (terrifying - for me at least) remedy besides UBI could be allowing business owners to file Business Interruption claims on their commercial policies. Most forms have a strict virus exclusion or will tie any business interruption claim to actual physical damage to the property, but state OIRs could issue a bulletin stating that it no longer applies.

aa

 

[southernhybrid]

Yeah, sure. Let's all get back to normal.


https://www.washingtonpost.com/business/2020/04/22/theres-growing-possibility-w-shaped-economic-recovery-its-scary/

There’s growing consensus among economists and epidemiologists that the recovery period from the deadly coronavirus is going to be long — and bumpy.
Hopes of a quick bounce back for the economy — dubbed a V-shaped recovery — have faded. Even as parts of the nation reopen, many Americans will be afraid to venture out, and it looks increasingly likely that restaurants, stadiums and yoga classes are going to be operating at partial capacity, at best, for a while.
Anthony S. Fauci, director of the National Institute of Allergy and Infectious Diseases, put it this way when asked about when baseball stadiums will be filled again: “I cannot see a return this year to what we consider normal.”
What isn’t getting as much attention is the possibility of a W-shaped recovery, the scary scenario when the economy starts looking better and then there’s a second downturn later this year or next. The “W” could be triggered by reopening the economy too quickly and seeing a second spike in deaths from covid-19, the disease caused by the coronavirus. Businesses would have to shutter again, and people would be even more afraid to venture out until a vaccine is found.

Nobody likes to see people suffer financially, but opening things up too soon will likely cause more financial suffering, not to mention the likelihood of a resurgence of the pandemic, more deaths and more stress on the healthcare system.

There is simply no easy way out of this. tragedy.

“Pretending the world will return to normal in three months or six months is just wrong,” said Diane Swonk, chief economist at Grant Thornton. “The economy went into an ice age overnight. We’re in a deep freeze. As the economy thaws, we’ll see the damage done as well. Flooding will occur.”

So, when will we stop pretending that everything is going back to normal soon? When will people realize that this isn't like the seasonal flu? The pandemic of 1918 had three peaks before it began to die down. We have no idea how long it will take to conquer this virus. We have no idea how many months or years it will take for the economy to start to expand. For now, the best we can do is continue with the social distancing and accept that this may be the new normal. We were warned about the coming of a world wide pandemic but the world didn't prepare for it.

 

[TSwizzle]

So, when will we stop pretending that everything is going back to normal soon?

Who is this "we" that you speak of ?

When will people realize that this isn't like the seasonal flu?

I guess when there is actual evidence.

 

[ZiprHead]

When will people realize that this isn't like the seasonal flu?

I guess when there is actual evidence.

Willful ignorance.