Global stock markets have had their worst week - Politics Forum.org | PoFo

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#15072269
The stock market finally felt the full force of the new coronavirus this week,After shrugging off warning signs for weeks as Covid-19 shut down travel and broke international supply chains, investors slammed the panic button after reports of viral outbreaks in Italy, South Korea, and Iran. That triggered “a two-day loss of 6.3 percent” for the S&P 500, “the largest for the benchmark since 2015,” while “the Dow posted back-to-back losses of at least 800 points for the first time ever.” A handful of stocks were up: Clorox, Camp bell’s Soup, and Zoom video conferencing, for instance—signs that investors anticipate more consumers stocking up on necessities and working from home.
source : http://www.vikilix.com/2020/03/04/globa ... orst-week/
#15077639
Things can and probably will get a lot worse. A drop in production will push up prices and suppress earnings but that much is manageable. The problem is that everyone is in debt and the central banks will continue to ratchet up their money printing. A tsunami of bankruptcies and hyper-inflation is on the cards.
#15077643
SolarCross wrote:
Things can and probably will get a lot worse. A drop in production will push up prices and suppress earnings but that much is manageable. The problem is that everyone is in debt and the central banks will continue to ratchet up their money printing. A tsunami of bankruptcies and hyper-inflation is on the cards.



Bankruptcies fer sure.

Not so sure about inflation. Some would actually be good, an indicator of economic activity. But that's also the problem, when are we going to see an uptick in activity? Beats me.
#15077644
late wrote:Bankruptcies fer sure.

Not so sure about inflation. Some would actually be good, an indicator of economic activity. But that's also the problem, when are we going to see an uptick in activity? Beats me.

Money counterfeiting is not "economic activity". Assuming a stable money supply then falling prices would indicate production increases.
#15077646
SolarCross wrote:
Money counterfeiting is not "economic activity". Assuming a stable money supply then falling prices would indicate production increases.



"On the other hand, the need for social distancing has led to the cancellation of large events, ravaged the travel industry, and closed businesses, restaurants, and shopping centers, leading to a large negative demand shock.

The combination of both shocks will rapidly increase the unemployment rate and trigger a large economic recession. However, the decline of both demand and supply means that we should not expect to see the falling prices and deflation that occurred during the Great Recession and Great Depression.

Ultimately, the imbalance will create a lopsided recovery with slow output growth with accelerating prices and inflation; in other words, stagflation."

This is an odd situation, and has me scratching my head, but this analysis seems pretty good.

https://www.cnbc.com/2020/03/19/what-comes-after-coronavirus-for-economy-worry-about-stagflation.html
#15077658
Rancid wrote:
Policy.

If you want to answer on a personal level, feel free to do so too.

I'm not looking to argue anything specific, just curious to hear your view.



This is a time when you need comprehensive Progressive policy, or pay the price.
#15077660
Rancid wrote:Policy.

If you want to answer on a personal level, feel free to do so too.

I'm not looking to argue anything specific, just curious to hear your view.

On a policy level, there is probably nothing that can be done to halt the trainwreck that has been building for decades so what they will do is pump accelerator by dumping more fake money into the market. This time they might even dump it so that regular joes get to spend it directly instead of just buying up stocks etc. The consequence will be hyper-inflation, but that has been brewing for decades so coronavirus is just merely a shock that precipitates what must happen anyway.

If I were Trump I would nationalise the FED and confiscate all their shares in the stock market. I would sell those shares to the public for gold and then use the gold to float a new currency. The newly nationalised FED then would get a new constitution which prohibited any counterfeiting on pain of death.
#15077662
late wrote:This is a time when you need comprehensive Progressive policy, or pay the price.


Details would be appreciated.


SolarCross wrote:If I were Trump I would nationalise the FED and confiscate all their shares in the stock market. I would sell those shares to the public for gold and then use the gold to float a new currency. The newly nationalised FED then would get a new constitution which prohibited any counterfeiting on pain of death.


Ok. How would that help? Say, the restaurant worker, or plumber, or electrician?
#15077667
SolarCross wrote:They will get to keep the value in the dollars they earn. Inflation is a theft perpetrated against them on every dollar they earn.


Yea. I agree that inflation is basically another form of taxation. A tax that impacts the poor more than the rich.

I do wonder though, one of the things of having elastic fiat currency is it does make it easier to lend and leverage, which means more work could be created, which could compensate the lost in value via inflation.

I guess my question is, if the monetary system was still based on a fiat system like we have now, but much more conservative, would that work out ok?

I guess my point is, I wonder if the optimal balance is
#15077671
Rancid wrote:
Details would be appreciated.



The idea is simple, limit the stress on the economy. The way you do that is put money in people's hands that need it. And spend on health care where it will do good. That includes getting help to the poor and homeless to limit them as disease vectors.
#15077674
Rancid wrote:Yea. I agree that inflation is basically another form of taxation. A tax that impacts the poor more than the rich.

I do wonder though, one of the things of having elastic fiat currency is it does make it easier to lend and leverage, which means more work could be created, which could compensate the lost in value via inflation.

I guess my question is, if the monetary system was still based on a fiat system like we have now, but much more conservative, would that work out ok?

I guess my point is, I wonder if the optimal balance is

If it were elastic why does it never recover after being stretched out?

You need a stable money supply for true elasticity. When supply surges prices contract, when consumption surges prices expand. That's real elasticity.

The fake money tends to get dumped into worthless activities and so creates perverse incentives. The work generated will tend not to be good work which actually produces something worthwhile. A more honest money supply will mean less scope for boondoggles and white elephants. Activity in itself is worthless, work is worthless what matters is the value of what is produced.

I think it might be possible to have a fiat system that maintains a stable supply but a fiat system must have an administrator to control the supply and that person or institution is a risk factor. Bitcoin is a fiat system that solves this, so it can be done I guess.
#15077676
late wrote:The idea is simple, limit the stress on the economy. The way you do that is put money in people's hands that need it. And spend on health care where it will do good. That includes getting help to the poor and homeless to limit them as disease vectors.


That's not specific enough for me. What should the Fed do? How should the government get money into people's hands? Into what specifically in healthcare should money get funneled into?

SolarCross wrote:If it were elastic why does it never recover after being stretched out?

You need a stable money supply for true elasticity. When supply surges prices contract, when consumption surges prices expand. That's real elasticity.

The fake money tends to get dumped into worthless activities and so creates perverse incentives. The work generated will tend not to be good work which actually produces something worthwhile. A more honest money supply will mean less scope for boondoggles and white elephants. Activity in itself is worthless, work is worthless what matters is the value of what is produced.

I think it might be possible to have a fiat system that maintains a stable supply but a fiat system must have an administrator to control the supply and that person or institution is a risk factor. Bitcoin is a fiat system that solves this, so it can be done I guess.


I guess it depends on what we mean by, "elastic", "recover", and "stretched out".

Are you a fan of crypto currencies?
#15077679
Rancid wrote:T
I guess it depends on what we mean by, "elastic", "recover", and "stretched out".

Are you a fan of crypto currencies?

Not a fan but I dabbled in them so I know something about it.

A national crypto might be a way to do a fiat currency that was not so open to cheating. After the dollar dies that is probably what will succeed it. If not gold / silver.
#15077686
Rancid wrote:
That's not specific enough for me. What should the Fed do? How should the government get money into people's hands? Into what specifically in healthcare should money get funneled into?



You are going to have to do some homework. In terms of getting money to people, start with a $1K check to everybody. Then start work on programs that patch the holes.

There is a lot to do, for example, how to structure money to cities and states to help the homeless. That alone is a lot more involved than what you can cover in a forum post. It's also gonna set off a lot of whining among our snowflakes. If you want people to stay at home, Step One is getting a home for the homeless. That makes economic sense, it's actually cheaper to do that. But it drives the snowflakes nuts (granted it takes next to nothing to get them cranked up).

A lot of hospitals have financial woes, and the last thing we want right now is hospitals closing.

Crap, the list seems endless, you get the idea.

https://www.commondreams.org/news/2020/03/11/denouncing-trumps-wealthy-favoring-plan-progressive-groups-demand-lawmakers-draft
#15077690
Rancid wrote:What do you thin should be done to deal with this virus from an economic perspective?

I think identifying products that are a national security requirement and ensuring they are made in the US. Naturally, I would start with pharmaceutical ingredients, drugs and medical equipment.

Rancid wrote:The fake money tends to get dumped into worthless activities and so creates perverse incentives.

That's the problem. That's why I say the solution is terminating the outsourcing of anything deemed a matter of national security. Health care is something a country the size of the United States should not be relying on from a military adversary. It simply makes no sense.

I generally don't wish death on anyone, but I think it would be great if maybe one of our billionaires got coronavirus and died from it. What makes this a panic is that it is as deadly as the Spanish Flu, but it is as contagious as the common cold--that is, really easy to get it. From there, it's a roll of the dice. Some are totally asymptomatic. Others end up dead. People don't freak out about AIDS anymore, because it's pretty much transmitted by lifestyle. Same with epidemics like opioid addiction. People that don't abuse opioids don't freak out about it. People who don't have promiscuous sex with homosexuals don't worry about AIDS.

Everyone has to worry about coronavirus, because of its contagiousness. However, we've encountered multiple infections like this coming from China, because they allow wet markets. Food in the US is pretty well monitored by the FDA. People here don't see cockroaches and envisage a meal. They get out Black Flag or Raid cans and kill them. China is a different animal altogether. With a history of starvation under Mao, etc., even bugs are a meal there, not to mention bats (flying rats for all intents and purposes), etc.

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