[AGL] Fwd: Pandemic economics, perhaps of general interest

[Frances Morey]

The economics of it are dismal all right.
Best,
Frances

---------- Forwarded message ---------
From: Roger Baker <bakeroger at gmail.com>
Date: Thu, May 14, 2020 at 11:03 PM
Subject: Pandemic economics, perhaps of general interest
To:


The whole global system of finance capital is so loaded down with
un-repayable fiat currency debt that it has become like a bubble, like a
fragile network of global supply chains. The system is now so burdened by
interest due on the debt that a strong external shock like the pandemic can
initiate an interactive global economic collapse. The central banks like
the Fed try to keep their economies pumped up with easy credit to maintain
a population of consumers happy to keep spending themselves into debt,
together with the consumerist spending inducement of mild inflation. The
average American now dies in debt.

The effect of the pandemic is now to cause the lower income portion of the
population to shelter in place and stop spending except on essential
survival needs. This spending pattern is highly deflationary or conducive
to stagflation. An economy which has a lot of discretionary spending like
travel and recreation and which hires a lot of service labor tends to
contract in two ways, as both the customers and the service workers tend to
stop spending.

Once a deflationary spiral of saving more income gets going, it tends to
become self-perpetuating, because the velocity of money slows down. When
the currency circulates more slowly, the net effect is to make it seem like
there is less total money in circulation, which encourages saving in
response to harder times.

The average business becomes less profitable, and this has a domino effect
throughout trade. Local economies that use less energy and involve less
global trade gain an advantage. Local food production becomes more
essential and history runs backwards and becomes more regional in some
respects. Resource limits assert themselves, like a global economy that is
too weak to repay the real cost of global oil production. The corporate
consumerist media loses influence. Luxury becomes frowned upon as
conspicuous consumption. Local collective efforts and neo-tribal solutions
to common problems tend to gain favor. Thrift and  genuinely durable goods
tend to return as virtues that consumerism has repressed.

We are seeing history speed up to match the rate of global pandemic
contagion. The smoldering unsustainable background crisis of exploitative,
expansive global indebtedness is incompatible with what may easily be the
new normal. We are seeing a sudden reduction of global and domestic travel
and normal recreational spending in the USA. This is matched with the
parallel shutdown of industrial production in China.

What was unbalanced before can't and won't be restored to the previous
exponential growth state, even if the pandemic were to suddenly and
magically disappear. The abrupt impact of this super-contagious pandemic is
a severe economic shock that suddenly demands a totally new pattern of
social behavior, as may be appreciated from this most recent monthly FHWA
chart of U.S. driving.

<http://goog_1906911671>
https://www.fhwa.dot.gov/policyinformation/travel_monitoring/20martvt/figure3.cfm

As usual, actuary Gail Tverberg does a very good job of further explaining
how the pandemic is likely to impact the global economy, see the analysis
below.

-- Roger

                   ********************

https://ourfiniteworld.com/2020/05/13/understanding-our-pandemic-economy-predicament/

Understanding Our Pandemic – Economy Predicament
<https://ourfiniteworld.com/2020/05/13/understanding-our-pandemic-economy-predicament/>
Posted on May 13, 2020
<https://ourfiniteworld.com/2020/05/13/understanding-our-pandemic-economy-predicament/>
by Gail Tverberg <https://ourfiniteworld.com/author/gailtheactuary/>

The world’s number one problem today is that the world’s population is too
large for its resource base. Some people have called this situation
*overshoot*
<https://www.amazon.com/Overshoot-Ecological-Basis-Revolutionary-Change-ebook/dp/B00VVH4UGG>.
The world economy is ripe for a major change, such as the current pandemic,
to bring the situation into balance. The change doesn’t necessarily come
from the coronavirus itself. Instead, it is likely to come from a whole
chain reaction that has been started by the coronavirus and the response of
governments around the world to the coronavirus.

Let me explain more about what is happening..............
-------------- next part --------------
An HTML attachment was scrubbed...
URL: <https://pairlist1.pair.net/pipermail/austin-ghetto-list/attachments/20200515/6c9b3908/attachment.html>