[My (non-expert) understanding of the game.] While waiting for a vaccine, we must, 1. Keep infections low enough so as to not overwhelm health care capacity; while, 2. Preventing the economy from collapsing, which is, uh, often a violent process.pic.twitter.com/V2j0xck413
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Replying to @generativist
The “economy collapsing” part is interesting. If the problem is loss of demand due to people being stuck inside, then you don’t need as big an economy by definition (lower demand = smaller required economy). The problem there is the potential ripple effects in terms of income...
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Replying to @Nimayi2 @generativist
...and financial asset values. So you have to do monetary stimulus to keep the money supply larger than what is needed to support demand to keep financial assets propped up. And you do fiscal stimulus to backstop lost income. So now you have a money supply way larger than needed
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Replying to @Nimayi2 @generativist
So I guess financialization makes the economy sclerotic, unable to flex itself dynamically to shifts in demand. That’s gotta create inflation right? Idk...just thinking out loud here. It’s all very confusing.
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Replying to @Nimayi2
Yea. I'm guessing you know more about it than me but sclerotic is exactly they word I keep using. Slackless systems that lack buffer capacity can't... ...well, buffer.
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Replying to @generativist
My guess to the immediate culprit of the eroding buffer is financialization. Liabilities make you inflexible.
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Yea. That's seems like a good guess for where the contagion is... ...again.
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