printing money

[colin]

Unless you need that money to buy food and pay rent.

John

Such essentials have been covered for a long time by unemployement and housing bennefit, in that respect the norm has been to suspend capitalism for those affected at a survival level but giving people more money to buy food that is not on the shelves can only exacerbate coming price rises .

You think 93 quid a week covers that?

John

Perhaps you enjoy a somewhat luxurious diet if you can't feed yourself for less than half of that but I certainly do.
l

[redsturgeon]

Such essentials have been covered for a long time by unemployement and housing bennefit, in that respect the norm has been to suspend capitalism for those affected at a survival level but giving people more money to buy food that is not on the shelves can only exacerbate coming price rises .

You think 93 quid a week covers that?

John

Perhaps you enjoy a somewhat luxurious diet if you can't feed yourself for less than half of that but I certainly do.
l

You pay no rent, electricity, gas, water or council tax?

John

[colin]

Not sure giving people money to maintain their cash wealth (whatever that means) will raise the demand, or price of oil. The oil at $30 is due to Saudi Arabia and Russia increasing Oil (what's that word again?) "supply".

To repeat, it's not about raising demand (that cannot happen during isolation/lockdown), it's about preventing insolvency and preventing a further large rise in indebtedness. A short term measure whilst the crisis lasts.

An estimated 10 million bbls per day fall in oil consumption is a demand shock.

BoE

True that the demand for oil has collapsed but up to now that has been because the supply of goods requiring transport has dried up as factories are closed.

[colin]

You think 93 quid a week covers that?

John

Perhaps you enjoy a somewhat luxurious diet if you can't feed yourself for less than half of that but I certainly do.
l

You pay no rent, electricity, gas, water or council tax?

John

I assumed your figure of £93 was income bennefit which for me is more than enough for food and heating and water per person, other benefits are available to cover remaining essentials such as rent and I am sure there will be some arrangements around council tax.I used to rent out a property to someone who was on benefits almost continuosly for 10 years, occassionaly a months rent might be late due to delayed benefits but I allways received
it at some point , that's why I am puzzled by landlords who won't rent to those on benefits.
Hopefully this won't last more than a few months and most people will have some savings to utilise.

[odysseus2000]

Not sure giving people money to maintain their cash wealth (whatever that means) will raise the demand, or price of oil. The oil at $30 is due to Saudi Arabia and Russia increasing Oil (what's that word again?) "supply".

A lot of the price of oil has been its perceived status as a safe asset. The argument being that to run a modern economy one had to use oil, hence oil would always be a store of wealth.

Now we have move away from oil using engines to electric vehicles and suddenly oil is not longer the must have commodity that it was. To try and make the demand for oil hold up, the producers have ramped up supply to lower the consumers price. I doubt this will work as politicians will ramp up co2 taxes to mitigate the oil price crash.

Regards,

But have we really moved away from oil. Sure, we would all like to do so but technology and logistics are simply not able to bridge the gap at the moment. Deflation is really the source of the problem in the economy largely through cheap money and technological advancements which has undermined the productivity of the mass job market. I have lost count of the number of 'job creation schemes' out there care of central government policy. Machines are and always will be preferable to a labour workforce and that gap is only going to widen over time under freemarket forces. But there is the catch because freemarket forces in the markets notably risk capital are defunct which is why we face the very problem we are witnessing right now. Friedman economics endorses this principle and is most closely aligned to the evolutionary and innovative principles of natural selection. Unfortunately, Keynesian economics is favoured by the centralists and social planners for obvious reasons which is hardly surprising when you consider that Keynes was known for his rather ambiguous judgements on textbook economic discipline to the extent that when consulted by the acting PM of his time he predictably offered two answers as to which leaver to pull. Ask Friedman the same question and he unquestionably would have replied that the markets would decide for themselves. The real problem is that governments should stay well away from matters of enterprise and stick to politics and administration but therein lies the oldest chestnut of all.

We have moved away from oil being seen as a store of value in the future and as markets always look ahead the premium for investing in oil and in the drillers and refiners etc is now going away.

None of us know how much oil demand there will be in the future, but we have gone from the peak oil thesis with oil reaching very high prices, to the peak demand thesis with oil no longer seen as something that is essential to run our civilisation.

That is a huge change in how investors and speculators see oil. The days when oil investment, holding through any temporary declines etc, was a sure fire winner have gone.

Regards,

[redsturgeon]

Hopefully this won't last more than a few months and most people will have some savings to utilise.

Unfortunately most people on low income have no savings at all.

Tough times ahead.

John

[colin]

Hopefully this won't last more than a few months and most people will have some savings to utilise.

Unfortunately most people on low income have no savings at all.

Tough times ahead.

John

They have access to the savings of the state provided by tax and bond investors.
Have a play with this if you are really interested.
https://moneysavingexpert.entitledto.co.uk/home/start

[richfool]

Bank of England governor Andrew Bailey on Wednesday, 18 March, suggested that the central bank was considering printing money and giving it directly to UK households, noting that “everything is on the table.”

https://uk.finance.yahoo.com/news/coron ... 06965.html

Unless you are a sturdy disposition, don't look at the value of the £.

[colin]

Free money won't help us buy food which is un available at any price.

[Bubblesofearth]

Free money won't help us buy food which is un available at any price.

Where is food unavailable? I've just been to Tesco and the only empty shelves are for pasta. I can live without pasta.

[dspp]

Free money won't help us buy food which is un available at any price.

Where is food unavailable? I've just been to Tesco and the only empty shelves are for pasta. I can live without pasta.

My local Tesco is a different scene. There are - repeatedly - many empty shelves. My baker is rationing everyone, and their shelves are empty as well.

regards, dspp

[odysseus2000]

Free money won't help us buy food which is un available at any price.

Where is food unavailable? I've just been to Tesco and the only empty shelves are for pasta. I can live without pasta.

My local Tesco is a different scene. There are - repeatedly - many empty shelves. My baker is rationing everyone, and their shelves are empty as well.

regards, dspp

My local Morrisons had bread last visit, but no toilet or kitchen rolls and no washing up liquid and was promoting lemons but had none for sale.

Regards,

[PeterGray]

Interestingly I was sent to our local farm shop to stock up on flour and yeast yesterday (my last trip allowed out before house arrest) and while nearly all the shelves were full (including bread!) the flour shelves had been stripped.

[csd2020]

> This is a supply shock, not a demand shock!
> The economy is struggling not because people don't want to consume, but because they are not being able to work, workplaces are being closed etc.

You are mistaken. It is both a supply shock and a demand shock. Factories & shops are not running because people are off sick or isolating. But also, people are not shopping / going to the cinema / engaging in tourism / eating out, because a) it's actually a bit dangerous now compared to a few months ago b) they are worried about losing their jobs c) they are actually losing their jobs - 18% of Americans have lost their jobs or some hours at their job because of coronavirus already.

A contraction in both supply and demand, and both due to non-economic factors that can't be fixed by money printing or lower rates.

You could hand me 1000x free vouchers for world cruises, haircuts, restaurant meals, flights, massage/spa, gym membership etc, I won't use even one of them.

You can hand a factory owner a billion pounds, but if all the trained staff are in hospital, or refusing to bring sickness & death to their elderly live-ins, what can he do with it?

[csd2020]

Interestingly I was sent to our local farm shop to stock up on flour and yeast yesterday (my last trip allowed out before house arrest) and while nearly all the shelves were full (including bread!) the flour shelves had been stripped.

It is possible people are worrying that someone may have coughed on the bread after it leaves the oven but believe this is less likely with bagged flour. Alternatively they may be planning to have something in reserve in case of a 2-4 week quarantine/isolation, and many people don't realise bread freezes well for toasting (or perhaps they prefer fresh bread).

Re: other shelves, it is difficult to find a fresh fruit/veg isle that no one could have coughed on. As the number of cases increases, people will become increasingly risk-averse towards small risks (and also those small risks will grow to become bigger risks). And the shelf life of fresh fruit/veg is not as good as tinned. If people have limited funds they may opt for the latter for the double purpose of quarantine supplies.

It's possible to wash fruit/veg with soap, or boil it for a while, but I'm not sure how you could ensure bread was sterile. Even toasting it might not work. Coronaviruses have been found to survive 65-70C for up to 30 minutes.

[servodude]

Bank of England governor Andrew Bailey on Wednesday, 18 March, suggested that the central bank was considering printing money and giving it directly to UK households, noting that “everything is on the table.”

https://uk.finance.yahoo.com/news/coron ... 06965.html

Unless you are a sturdy disposition, don't look at the value of the £.

From that link:

Bailey, who began his term as governor on Monday

- puts me in mind of the Mitchell and Webb sketch about Karl Dönitz (https://www.youtube.com/watch?v=FHnyQXyuTGY)

perhaps they can print money and instead of making bills, wrap it round cardboard for distribution; so it can be used directly?

- sd

[Bubblesofearth]

A contraction in both supply and demand, and both due to non-economic factors that can't be fixed by money printing or lower rates.

It's not about stimulating demand during the crisis, it's about trying to prevent insolvency so that businesses survive the crisis.

[colin]

What would happen if rather than money printing all debt payments were suspended ? Like a mortgage holiday but for all debt?

[dealtn]

A contraction in both supply and demand, and both due to non-economic factors that can't be fixed by money printing or lower rates.

It's not about stimulating demand during the crisis, it's about trying to prevent insolvency so that businesses survive the crisis.

Printing money won't achieve that.

Targetted supply side measures and access to liquidity and debt financing will, in the short term. Longer term, depending on how demand recovers as consumers are able to go back to spending (and working), combinations of micro- and macro- policy tools will be used.

The fastest acting effectiveness of any policy is in restoring confidence, rather than what it will do economically. In this instance pledges by governments to "pay wages" or "employ" staff laid off might appeal to the government (and the media and markets).

[colin]

Interestingly I was sent to our local farm shop to stock up on flour and yeast yesterday (my last trip allowed out before house arrest) and while nearly all the shelves were full (including bread!) the flour shelves had been stripped.

It is possible people are worrying that someone may have coughed on the bread after it leaves the oven but believe this is less likely with bagged flour. Alternatively they may be planning to have something in reserve in case of a 2-4 week quarantine/isolation, and many people don't realise bread freezes well for toasting (or perhaps they prefer fresh bread).

Re: other shelves, it is difficult to find a fresh fruit/veg isle that no one could have coughed on. As the number of cases increases, people will become increasingly risk-averse towards small risks (and also those small risks will grow to become bigger risks). And the shelf life of fresh fruit/veg is not as good as tinned. If people have limited funds they may opt for the latter for the double purpose of quarantine supplies.

It's possible to wash fruit/veg with soap, or boil it for a while, but I'm not sure how you could ensure bread was sterile. Even toasting it might not work. Coronaviruses have been found to survive 65-70C for up to 30 minutes.

It's more likely that many people have been stocking up on dry goods to last months , many people have bread makers, a worker in a local Sainsburys who was really shocked by the panic buying told me how a woman had just grabbed a full tray of 48 tins of chick peas as she was trying to stack shelves, no one needs so many tins for a week or two. By the time I got there no tinned or dry pulses available for miles around.There are lots of small farms around here and to be honest I would not be in the least bit surprised if rural households were stocking up so they did not need to go back into town till this all blows over.
I have heard that in the US sales of amo have shot up and people who don't know one end of a gun to the other are suddenly buying them.
PS if you really want to disinfect fresh food it can be rinsed in water with a dissolved chlorine tablet, no idea if that works against coronovirus though.