Wall Street, Main Street, and NGDP

In 2008, the Fed tried to save Wall Street without boosting aggregate demand. They were accused of trying to rescue Wall Street while not helping Main Street. The effect was a collapse of AD, which hurt even Wall Street.

Today, the Fed seems to be trying to help both Wall Street and Main Street, without boosting AD, at least not adequately.

I say, “seems to” because I’m not actually sure that’s their intention. But at the moment it looks like that will be the result.

In 2008, they thought that if they rescued Wall Street then aggregate demand would take care of itself. That did not turn out to be true. It might be true this time around (the situation is quite different), but we can’t be sure it’s true. The markets are certainly skeptical, predicting weak AD for years to come.

In 2008, the Fed had programs targeted at specific sectors, and tried to sterilize the effect on the broader money supply. Today, they don’t seem to be actively sterilizing the impact, but they aren’t going after the low hanging fruit that would be expected to boost NGDP growth expectations.

In my view, the Fed should set a level target for prices or (better yet) NGDP, and then do as many purchases of safe assets as needed to get growth expectations back on target for 2021 and 2022. That means I don’t favor the alphabet soup of programs targeted at specific sectors of the credit market. The Fed’s job is to print money, not encourage lending.

Of course one side effect of printing lots of money right now would be to encourage more lending. And credit is an essential part of our economy. But loans are much less likely to default when NGDP is expected to grow at a rate of 4% or more. Let banks and individuals make loans, let the Fed create money.

That doesn’t mean the Fed’s current actions are harming the economy; indeed the actions are helping, at least relative to the Fed not engaging in some of these initiatives. Rather the Fed is missing an opportunity to have a much more expansionary policy, which is also much less intrusive, less distortionary, less likely to create moral hazard.

What would I do? Set a level target and buy as many safe assets as necessary to hit the target. Ten trillion, twenty trillion, whatever. Promise to buy unsafe assets if necessary, but don’t actually buy them, as it likely won’t be necessary.

Odds and Ends:

1. The Wuhan lockdown just ended.  Nice story in the NYT, which puts a human face on Wuhan.  Things are getting better, but still a long way from normal.

2.  Interesting paper on the TB vaccination angle.  I don’t find it entirely convincing, but there’s probably at least a small beneficial effect.  And even “small” can be really important in a disaster this large.

3. I don’t entirely agree with this left wing rant:

The slow COVID-19 response from U.S. leadership seems to have been tailor made for people with salaries, with the ability to drive cars, with large houses (and their room for exercise equipment and grocery hoarding), and with private yards for their kids to play in. . . .

If we cared about hourly-wage families who get around without cars and who live in small homes — people who rely more heavily on the shared things like parks, playgrounds, and transit that have reduced access now — we’d have had strict shut-downs immediately, so as not to drag this out longer. . . .

How very convenient for wealthy, salaried people embedded in car-centric places, who can ride out the storm while feeling proud of their individualism.

But I’m also not sure it’s entirely wrong.

4.  Tyler Cowen notes that Peter Navarro warned of the potential impact of the coronavirus way back in late January.  I agree with Tyler that Navarro deserves credit for that warning.  But I also think it’s important to understand the precise nature of the subsequent failure.  This risk was widely understood at the time (or soon after), by almost everyone who was well informed.  I knew it might happen.  There were were numerous media articles quoting leading experts saying 50% of the world would become infected, or 60%, or 40% to 70%.  What I did not expect is that the predicted impact would actually occur.

The big failure here was not an inability to understand the risk, rather the failure to act appropriately.  If there’s a 10% chance of a disaster that will cost $10 trillion dollars, you take that risk very seriously even though you believe there’s a 90% risk probability it will not occur.  We did not do that.  I did not do that.

5.  On a more optimistic note, signs that the Trump administration might be beginning to understand that globalization makes it easier to address this crisis:

The Trump administration has reached a deal with 3M, the US manufacturer, to import 166.5m N95 respirator masks into America from abroad, easing tensions between the White House and the Minnesota-based company.

The agreement was announced by Donald Trump, US president, at his daily news briefing on the administration’s response to the coronavirus pandemic on Monday afternoon. Crucially it will allow 3M to continue selling its US-made N95 masks to Canada and Latin America, deals that had been threatened by a crackdown by the Trump administration on exports of protective medical equipment.

6.  On a more pessimistic note, you can’t very well have inspector generals if you plan to turn your country into a banana republic, can you?

President Donald Trump has removed the head of a team of U.S. auditors that will oversee the $2 trillion in federal coronavirus relief spending, his latest move against inspectors general who are supposed to serve as independent watchdogs. . . .

Michael Horowitz, head of a council of federal inspectors general, chose Fine for the new role of pandemic-spending watchdog last week.

“Mr. Fine is no longer on the Pandemic Response Accountability Committee,” Dwrena Allen, a spokeswoman for the Defense Department inspector general’s office, said in a statement Tuesday.

Trump has increasingly taken action against inspectors general he considers insufficiently loyal. He tweeted criticism of another inspector general on Tuesday. Last week, he fired Michael Atkinson, the intelligence community inspector general, who informed Congress — over White House objections — of the whistle-blower’s complaint that ultimately led to Trump’s impeachment.

No need to insure the $2 trillion is spent in a non-corrupt fashion; it’s just pocket change these days.

7.  This caught my eye:

Although the Riverside County Sheriff’s Department has been given the authority to ticket or arrest potential violators of the county’s latest health order to help slow the spread of coronavirus, Sheriff Chad Bianco said it was the last thing he wanted to do.

Don’t wear masks!  You must wear masks!  How about “It’s up to you”?



57 Responses to “Wall Street, Main Street, and NGDP”

  1. Gravatar of JDF JDF
    7. April 2020 at 14:15

    #4 is simply an Orwellian rewriting of history. Fauci, in addition to privately pushing back against Navarro, was publicly dismissing the risk to the US of Covid as “minimal” and “miniscule.” (Note his pushback on the travel ban also makes clear he didn’t understand the concept of “flattening the curve” back in January either). The CDC also dismissed the risk to Americans as low. The CDC website actually still says the risk to Americans of covid is low TODAY. They didn’t acknowledge community spread until late February.

    Others in the public health world said similar things. William Schaffner, who now complains about our “wasted month” of February was saying in February that covid was a “blip on the horizon,” and the risk was “trivial.” Zeke Emannuel, who is now talking about an 18 month lockdown, called the reaction “hysterical.” The head of vaccine research at the Mayo Clinic said that the top 3 public health concerns should be 1) influenza, 2) influenza, and 3) influenza. The heads of public health in New York State and City, as well as Illinois, said the risk was low, and discouraged making changes even after covid was diagnosed in their states. IL’s specifically said not to cancel large gatherings, and NYC’s specifically said to take mass transit (including to the Chinese New Year celebrations). Shira Doron of Tufts said Americans were “infinity” times more likely to die from flu than covid.

    Yeah, I read the article where Lipsitch said 40-70% could get it. He was an outlier. Mainstream public health and media, including the WHO, were lecturing us about not being woke enough. The WHO said “stigma” was a bigger problem than the disease. Those who didn’t say stigma was the real enemy said that “fear” or “panic” was.

  2. Gravatar of Gene Frenkle Gene Frenkle
    7. April 2020 at 15:08

    JDF, we know by the actions of senators Burr and Loeffler that the Executive Branch had intelligence of how serious a threat this virus was…unfortunately the public was kept in the dark by the president and the senators until Governor DeWine took the lead in cancelling large gatherings in his state in early March. We know Trump is obsessed with his re-election (like most presidents) so we know the incentives he had for listening to his advisers who were downplaying the threat.

  3. Gravatar of JDF JDF
    7. April 2020 at 15:35


    Where does Fauci fit into that conspiracy theory? Why was he saying that the risk was “minimal,” and “miniscule,” and that flu was the bigger threat? Where does the rest of the public health community fit in? Were prominent Biden advisers like Zeke Emanuel (who leads Biden’s covid “task force”) trying to downplay the threat to help Trump get elected? Was Cass Sunstein trying to downplay the threat to help Trump get elected when he said that the only people that were worried were either stupid or racist? Were State level public heath officials in on the conspiracy too? Was Cuomo? Were all the Governors of both parties who had elections? Were all the Democrat candidates who were running to replace Trump holding big rallies and trying to turn out voters because they were trying to downplay the risk to get Trump elected? Did the 538 panel of health “experts” that wildly missed the mark on the number of infections in the US by the end of March just two weeks earlier skew their predictions in order to downplay the virus to help Trump get elected?

    Or is it possible that the “experts” missed badly on this?

  4. Gravatar of Benjamin Cole Benjamin Cole
    7. April 2020 at 15:50

    It is difficult to tell whether the federal government is engaging in “helicopter drops on Main Street” presently, as advocated by Stanley Fischer and David Beckworth.

    It strikes me as a reasonable proposition that the Federal Reserve would get a lot more bang for its buck by helicopter drops on Main Street, rather than more conventional quantitative easing, that is “helicopter drops on (global) Wall Street.”

    Keep in mind that the Swiss National Bank purchased $100,000 in bonds on globalized capital markets per every Swiss resident, in a recent attempt to stabilize the Swiss franc exchange rate. This appeared to stabilize Swiss franc exchange rates but had no discernible effect upon Swiss GDP or prices.

    The Swiss effort is the equivalent of the US Federal Reserve buying about $30 trillion in bonds on globalized capital markets.

    Were the present situation not so dire, this would be an interesting policy, that is the Federal Reserve buying $30 trillion in bonds. The acquired booty would result in a transfer of about $1 trillion a year (the interest on the acquired bonds) from the Federal Reserve to the US Treasury and could be used to offset taxes.

    Sadly, the situation is dire. I would even go so far as to say the Federal Reserve should consider loosening its precious price targets.

  5. Gravatar of Benjamin Cole Benjamin Cole
    7. April 2020 at 15:56

    Add on: not in particulars but in scale: had the federal government and the Federal Reserve acted swiftly and in present-day scale to the 2008 Global Financial Crisis, could that long recession thereafter been avoided?

    Should the sentiment among macroeconomic policy makers be, “Better to go in too big and too early, than too late and too little”?

    I think so.

  6. Gravatar of Christian List Christian List
    7. April 2020 at 16:01

    You don’t link to the paper that I linked few days ago but to some weird yahoo article about Trump and hydroxychloroquine. Is this intentional?


    We did not do that. I did not do that.

    Yes, it’s weird how nobody saw it coming. Or better yet, as you say it: we even saw it coming, but still didn’t react. It just didn’t click.

    Probably our brains aren’t designed to see 100-year disasters like this coming. Perhaps there is no huge evolutionary advantage in seeing such disasters coming? Well there must be an advantage, it’s a game changer, but maybe the events are far too rare to be evolutionarily “encoded”?

    I read somewhere that the people at the beginning of the First World War thought that they would go to war for 5-6 weeks and then come home victorious. Yep, didn’t happen.

  7. Gravatar of Benjamin Cole Benjamin Cole
    7. April 2020 at 16:12


    This op-ed says the COVID-19 will only retreat when 50% or more of the world’s population is infected or inoculated. Check out the credentials and location of the author.

    It appears that attempting to suppress the virus through lockdowns will fail. You still have a novel cold virus and a naive population. Unfortunately, lockdowns do not have an exit strategy and are only a dead end.

  8. Gravatar of Benjamin Cole Benjamin Cole
    7. April 2020 at 16:22

    “We aren’t sure how many people who become infected with COVID-19 die, but on March 31 the Oxford Centre for Evidence Based Medicine (CEBM) reduced their best-guess estimate from 0.51% down to 0.1–0.26%.”


    0.1% to 0.26%?

    Danger Will Robinson Danger!

    PS We just wrecked our economy and financial system…

    PPS should one ever let experts and specialists in charge of general policies? From Vietnam to COVID-19 to the Federal Reserve, we see specialist extremism in action….

  9. Gravatar of Benjamin Cole Benjamin Cole
    7. April 2020 at 16:42

    Most large nations make arrangements to ensure domestic energy supplies, sources for military goods, and domestic food supplies.

    The 1973-74 and 1979 oil cut-offs were an example of what can happen when a nation is too vulnerable to offshore sources of energy.

    It is too early to tell, but perhaps the US will move to domestic sourcing for a range of medical supplies.

  10. Gravatar of ssumner ssumner
    7. April 2020 at 16:59

    JDF, You said:

    “The CDC also dismissed the risk to Americans as low.”

    Apples and oranges. They weren’t saying the virus could never get here, they were saying the risk was tiny at that time. Which was correct. We all saw what happened in China and Italy, and no one denied it could happen here.

    And Navarro wasn’t saying the risk to Americans was high at that moment, just that it might be in the future. (Still better than 90% of Trump’s advisors.)

    Christian, Sorry, I fixed the link.

  11. Gravatar of Christian List Christian List
    7. April 2020 at 17:07


    complaining all the time won’t help. Why don’t you come up with some realistic alternatives for a change, that are actually better?

    You’ve seen cities like NCY, right? The hospitals there, right? All the dead so they can’t even keep up with the burying, right? You saw that, or are you that blind? And that was the result under lockdown and minimal infestation. And your suggestion is no lockdowns and maximal infestation???

    There might be some alternatives. I read a good report on this from Bergamo. In Germany this is already partially being implemented. But these are mostly additions and/or measures that come AFTER a lockdown.

    It’s also not a government conspiracy, in cities like NYC people stay at home by themselves, every normal thinking person does that when such a crisis breaks out. We’ve said this many times before: in most countries, it was private individuals and companies that started the measures, long before the governments did. So why don’t you stick your constant, monotone, robotic repetitive anti-solutions in a place where the sun doesn’t shine?

    It is too early to tell, but perhaps the US will move to domestic sourcing for a range of medical supplies.

    Because of this little thingy??? What now??? Are you kidding me? It’s just a little flu, we’ll just carry on as before, don’t be a moron.

  12. Gravatar of JDF JDF
    7. April 2020 at 17:18


    As I mentioned in my post, the CDC says the risk of infection to Americans is low TODAY. April 7. And you didn’t respond to the rest of it. Look, I get that the narrative triumphs over all these days, but the facts are that the public health authorities missed on this, badly.

    Also, on risk, nobody knew what the risk really was back then (still probably don’t really, because the virus is new. We don’t know about antibodies, re-infection, etc.). It was irresponsible to say otherwise. Fauci, the CDC, etc did anyway. Navarro acted appropriately, and had the appropriate approach to deal with uncertainty in the face of systemic risk: apply the Precautionary Principle. It was dismissed by Fauci et al for the same reason the media and public health establishment dismissed concerns about the virus as ignorant paranoia: it was associated with people that they thought were right wing racists who couldn’t do math, like Tom Cotton, Peter Navarro, Tucker Carlson, Mencius Moldbug, Ann Coulter, and Paul Gosar.

  13. Gravatar of JDF JDF
    7. April 2020 at 17:21

    Also, let me correct your assertion that watching Italy and China, nobody thought it couldn’t happen here. Weeks after Trump floated the idea of locking down US cities, Fauci was still claiming it was “inconceivable” that that could happen in the US.

  14. Gravatar of BC BC
    7. April 2020 at 18:05

    “Don’t wear masks! You must wear masks!”

    That which is not explicitly forbidden should be mandatory, amirite? But, the mask fiasco is even worse than that. First, officials told the public that masks aren’t effective for the general public, including the medical-grade masks like N95. That wasn’t true; they just wanted to reserve those masks for healthcare workers. Reserving masks for healthcare workers is defensible policy, but officials’ wrongdoing was in lying to the public about those masks’ effectiveness. Now, officials want the public to wear masks, but not the effective kind. They advise wearing cloth masks that are ineffective for protecting the wearer and whose effectiveness for protecting everyone else is questionable (but they *might* be effective or that purpose). At best, they hint that the main reason for the public to wear masks is to protect everyone else, but they still studiously suppress any information that will help the public learn what types of masks protect the wearer.

    This is why many of the general public do not always “defer to the experts”. Experts, especially public ones, are not like your personal lawyer, giving you unvarnished advice to help you act in your own interest. In fact, they frequently try to “manage” the public, saying what they think will be most likely to get the public to go along with the experts’ preferred outcomes.

  15. Gravatar of Thaomas Thaomas
    7. April 2020 at 18:06

    “Set a level target and buy as many safe assets as necessary to hit the target.”

    And what would that price level target be? [I assume there is no way to set a verifiable-in-real-time NGDP target.] Should it not be enough greater than 2% to compensate for the fall in real GDP resulting from social distancing measures?

  16. Gravatar of Benjamin Cole Benjamin Cole
    7. April 2020 at 18:31

    Christian List–

    Yes, my better policy is a do-nothing policy. Sadly, ventilators appear useless. The good news is that the true real death rate from a COVID-19 infection may be about 1 in a 1000, per Oxford Centre for Evidence Based Medicine (see above).

    I will say it again—from Vietnam to the Federal Reserve response to the 2008 Great Recession, and to COVID-19: never allow specialists to control a policy with general ramifications.

    From the specialist perspective of a public health professional, lockdowns make sense. From a broader perspective, the results are an economic catastrophe, and costs far exceed the benefits.

    Beyond all that, the fantastically expensive lockdowns really won’t work. We still have a novel virus and a naive population.

    And a virus, by the way that evidently infects felines and canines.

    The COVID-19 virus appears to be highly infectious among humans and across other animal populations, a rarity. Almost as if it were, say, a designer virus.

  17. Gravatar of anon/portly anon/portly
    7. April 2020 at 20:14

    “Tyler Cowen notes that Peter Navarro warned of the potential impact of the coronavirus way back in late January. I agree with Tyler that Navarro deserves credit for that warning.”

    Hmmm. I think Tyler is to be commended for making this argument, for sure. I’m not sure whether Tyler really believes it or not, but I’m sure he believes a less polarized world would be a better place, and therefore that giving a polarizing figure like Navarro credit, whenever possible, can be a good thing. I’m glad Tyler consistently makes this kind of effort; who else is willing to?

    But in reality, *should* Navarro really get credit? To answer that question, we need to visit (say) 99 alternative universes, in which the pandemic started in 99 different places, chosen at random, and see in how many of them Peter Navarro issues his warning.

    As it is now, we have a sample size of n = 1, and the null hypothesis that Peter “Death By China” Navarro only issued his warning (slash noticed it at all slash gave a rat’s ass slash etc) because it started *in China* can’t be rejected.

  18. Gravatar of mbka mbka
    7. April 2020 at 21:01

    Christian List,

    re: Ben, “… your constant, monotone, robotic repetitive anti-solutions … ?”

    I couldn’t have expressed it better.

    Benjamin Cole:

    Besides what Christian said, about opening your eyes and looking at the overflowing hospitals: why to you think almost any country’s government on this planet institutes virtually the same policies now? Are they all following the Illuminati too?

  19. Gravatar of BC BC
    7. April 2020 at 21:45

    Re: the left wing rant, one could just as easily conclude that the shutdowns themselves, not the late start of them, are what favor the “people with salaries” over the “hourly-wage families”. One could also say that although dense urban housing, parks, playgrounds, and transit may at first seem like good things for the environment, we see now that they are actually virus hotspots, which also disproportionately put hourly-wage families at risk. We should plan communities around large private lots, spacious homes, and private transportation and scrupulously avoid public amenities that can turn into disease traps.

    In Arnold Kling’s three languages of politics, left wingers’ preferred narratives fall along the so-called oppressor-oppressed axis. They prefer to view every issue as an example of an oppressor, or at least a privileged party (people with salaries), benefiting at the expense of the an oppressed, or unprivileged, party (hourly-wage families). The problem with this axis is that it can apply to any setting and argue both for and against any policy. It’s like describing everything in terms of being God’s will — unfalsifiable.

  20. Gravatar of Benjamin Cole Benjamin Cole
    7. April 2020 at 22:01


    Governments are reacting to panic. The same thing happened after 9/11.

    In fact, scientists from the UK to Hong Kong to Sweden have concluded that only herd immunity or widespread inoculation will result in the virus burning out. See the link I provided above, to the New York Times.

    Public policy makers have reacted to voting populations, fear-mongered by media, and that is one of the costs of democracy. You know the old joke, democracy is a lousy form of government until you try the second-best form of government.

    Throw money at hospitals if you wish, build tent hospitals, voluntarily sequester the elderly. If you believe in balanced budgets, then slash military spending in half and devote to the hospitals. The money the US spends on its military is largely wasted anyway.

    But we cannot destroy the economy in order to save it, and the sad truth is we can save but few lives in the face of a highly infectious virus, which by the way evidently will infect cat and dog populations also.

    If you see a neighborhood cat scaling a wall into the yard…. call the police.

  21. Gravatar of Raver Raver
    7. April 2020 at 23:43

    Hey Scott, longtime reader, sometimes commenter. I sometimes ask dumb questions because you tend to give them intelligent answers.

    Sorry, but I have a very general economics question. It’s really a relationship question so maybe this isn’t the blog for it, but still I think you may be able to help.

    The trouble is i have this socialist girlfriend. She’s not exactly socialist, luckily, but she’s a huge Bernie fan and believes neoliberalism and supply-side economics is the Devil’s work, figuratively but ethically.

    She’s smart and reasonable, not a PC-thug, but if I can’t state my case succinctly enough she thinks I have no case and stops listening and just wants to dance or kiss or some other girl thing.

    I want her to believe I’m a moral person who cares about the poor despite describing myself as a supply-side neoliberal type. (Unfortunately the argument that global poverty had been massively decreased in the past 20 years do to global trade doesn’t work well with her, because she’s from a large family from the midwest and has brothers who were factory workers whose economic fortunes have declined. She admits to caring much more about US workers than global workers.)

    Anyway my argument to her is that neoliberalism helps more poor p

  22. Gravatar of Raver Raver
    8. April 2020 at 00:01

    I got cut off in my post, but to cut my question short: How best to argue liberal economics is best for the domestic poor in a frame even a Bernie Sanders fan can understand?

    I know well that there are no pithy answers to this, nevertheless I wish I could come up with some.


    Bleeding Heart Neoliberal Who Wants My Socialist Girlfriend to Understand I Care About Poor People

  23. Gravatar of Raver Raver
    8. April 2020 at 00:07

    While I’m on a commenting role and we are in quarantine, what’s your favorite Kurosawa movie? Favorite Bergman? I recommend Criterion if you don’t have it. Also recommend all of Yorgos Lanthimos’s films if you haven’t seen them all.

  24. Gravatar of Ray Lopez Ray Lopez
    8. April 2020 at 00:40

    @Raver – put your money where your mouth is, and donate to the poor. That will impress her.

    @ssumner – why are you against the Fed buying less safe assets, like the central bank of Japan does, like stock futures and ETFs? Strange, as you’ve said this several times without explaining why. Please tell us loyal readers what the danger of this might be. Thanks.

  25. Gravatar of Christian List Christian List
    8. April 2020 at 02:02

    Yes, my better policy is a do-nothing policy.


    I can imagine this in a country with a hot climate that is also relatively poor, say Brazil or many countries in Africa near the equator. But not in rich, colder countries. The people there don’t go along with that, and you don’t even know which way is better economically. It was you who quoted the study which said that it costs 2 trillion dollars to pursue your strategy in the US alone.

    Throw money at hospitals if you wish

    Throwing money at anything is your solution for everything, but there was simply not enough time. You won’t get many more doctors, nurses, medical equipment, and buildings in such a short time by throwing money around.

    Tent hospitalis might be a good idea, it’s also in the paper from Bergamo, but this will take time. The US is not China.

    In fact, scientists from the UK to Hong Kong to Sweden have concluded that only herd immunity or widespread inoculation will result in the virus burning out.

    And yet most of them supported a shutdown. You repeat this information over and over again as if it were a contradiction. It’s not. The lockdowns were an emergency measure. Your approach is like saying: Let’s not evacuate the soldiers in Dunkirk, because the only thing that will end WW2 is killing Hitler and his entourage.

    never allow specialists to control a policy with general ramifications.

    And I say it again, it was not specialists at all, but private individuals and private companies who first started the interventions. In Sweden, the people have now also demanded that the government adjust its measures, which it has done, that is how it works in a democracy.

    And the media writes about Brazil that Bolsonaro has been partly disempowered. As I said, I even understand his course in a country like Brazil, it is quite possible that a shutdown there will harm the people a bit more than Covid-19 will (we don’t know for sure), but even in Brazil the majority of people doesn’t seem to support his course anymore. So let the majority decide what is to be done.

  26. Gravatar of Benjamin Cole Benjamin Cole
    8. April 2020 at 02:34

    Christian List:

    Moreover, I do not speak in a robotic monotone. In person, I have a deep mellifluous voice.

    I am robbed of my charms by this wretched medium.

    Good luck.

  27. Gravatar of Christian List Christian List
    8. April 2020 at 03:33


    Your message is robotic monotone, it has nothing to do with your voice. The monotonous repetition of always the same snippets and soundbites (helicopter money, herd immunity, death rates) like a broken toaster or like a bad AI (or a fake news bot) who acts if repeating the ever same soundbites (often nearly word by word) is a surrogate for a reasonable strategy. Sometimes I really think you are a bot. You’d better be a bot, otherwise one would have to think of certain limitations of mostly elderly people, who sometimes also tell exactly the same story over and over again without realizing what they are doing.

  28. Gravatar of Brian Donohue Brian Donohue
    8. April 2020 at 05:04

    Very good post, except for the left wing rant, which is stupid. It is obvious to me that neither you nor the author has much experience with lower middle class and blue collar people.

    Approximately zero of these people were interested in an early shutdown.

  29. Gravatar of Benjamin Cole Benjamin Cole
    8. April 2020 at 05:06


    Chritian List: see above. One of your fellow Teutons, speaking in that Germanic accent that inevitably makes Americans think of the Third Reich, but expressing a very valid point of view.

  30. Gravatar of Christian List Christian List
    8. April 2020 at 05:26


    See, this is what I mean by robotic monotony. This is at least the third time this video has been linked here. Not everything he says is wrong, but he’s making absurd assumptions:

    He’s talking about 500 deaths a day in the US with no lockdown and maximal infestation. Yesterday there were 2000 deaths in the USA with maximum lockdown and minimal infestation. Can’t you see how obviously wrong this man is? What is wrong with you for not seeing this?

    You are like one of those anti-vaxxers: completely immune to facts contrary to your worldview.

    Or like the CCP subsidiary WHO in the case of Taiwan: Oh, did you say something, sorry we can’t hear you.

  31. Gravatar of msgkings msgkings
    8. April 2020 at 07:40

    Christian List is crushing Benjamin List here. Perfect encapsulation.

  32. Gravatar of Jay Jay
    8. April 2020 at 08:29

    Ben –

    If the Oxford study were right, how do we explain the death rate so far in NY state?

    Approximately 0.03% of all New Yorker’s have died so far. Nearly 1 in 3000.

    And, given that the death peak lags the case peak, we are already “locked in” to a death tally of total population of roughly 0.06%, even assuming no additional new cases.

    Indeed, if we were to assume that case starts steady decline; falling 50% every two weeks from this point forward, then total cases will be more than double the current case count (asymmetry of the curve), and New York would be on a path towards death rate of 0.12% to 0.15%. And this is excluding, from the numerator, all of those “at home” deaths we are reading about.

    Given the New York experience, for the Oxford study to be right, you’d need to assume the following:
    – Nearly 60% of the state’s population has ALREADY contracted the virus.
    – None of the “at home” deaths were caused by covid.

    But this is tough to argue, given that:
    – 2/3 of test results to date have come back negative (logically implies a 1/3 upper bound on penetration, as people with no symptoms presumably are NO MORE LIKELY to have covid than someone WITH sufficient symptoms to request a test)
    – Testing thus far indicates penetration of 0.73% of total population (implying testing off by a factor of 50-100… 60% / 0.73%)

    I realize this isn’t Ebola or the Plague, but this race to the bottom on estimate death rate does not fit.

    The data from New York implies a far, far higher death rate than 0.1%, and it’s not clear to me why that population would be a dramatic outlier.

    0.5% to 0.9% is more likely, based on the myriad of other studies I have seen. My informed peers are coalescing around 2/3 of 1%.


  33. Gravatar of Elizabeth Harris Elizabeth Harris
    8. April 2020 at 08:33

    https://wwwnc.cdc.gov/eid/article/26/7/20-0282_article R0 5.7 highly contagious, herd immunity (if possible) >80%

  34. Gravatar of Carl Carl
    8. April 2020 at 08:46

    @Benjamin Cole
    I hope that the lesson learned from this infectious disease outbreak isn’t that we should just let infectious diseases run their course. Not when Taiwan and others have shown us that the practices developed centuries ago still work. As for whether we would have been better off to let it burn, I think it’s reasonable to look at how the “burners” did against the “panic-mongers” during the Spanish Flu. Here’s an excerpt from a study by two MIT and one Fed economist:

    cities that intervened earlier and more aggressively
    experience a relative increase in real economic activity after the pandemic. Altogether, our findings suggest that pandemics can have substantial economic costs, and NPIs (non-pharmaceutical interventions) can have economic merits, beyond lowering mortality.


  35. Gravatar of ssumner ssumner
    8. April 2020 at 10:48

    JDF, You said:

    “As I mentioned in my post, the CDC says the risk of infection to Americans is low TODAY.”

    What precisely do they mean by “low”. The CDC reports the daily total of new cases, don’t they? Do they mean that on any given day less that one person in 10,000 will contact the disease?

    I don’t find your comments to be useful. All the experts I read take this very seriously, and have all along. Maybe you look at different experts.

    As far as people on the “right”, most of them were claiming it was a hoax to make Trump look bad.

    You said:

    “Weeks after Trump floated the idea of locking down US cities, Fauci was still claiming it was “inconceivable” that that could happen in the US.”

    Have any US cities been locked down? How do you define “lock down? Like Wuhan? I’m going to assume all your quotes are taken out of context, unless you present evidence that this is not the case.

    Thaomas, You said:

    “And what would that price level target be?”

    That’s up to the Fed. The point is to hit the target, wherever it is set.

    anon/portly, Yeah, I thought that was so obvious that it didn’t even need stating. But then there are some readers who don’t see what’s plain as day to you and me. So I’m glad you pointed it out.

    BC, You said:

    “We should plan communities around large private lots, spacious homes, and private transportation and scrupulously avoid public amenities that can turn into disease traps”

    Sometimes I can’t tell if commenters are being sincere or sarcastic.

    Raver, This caught my eye:

    “She admits to caring much more about US workers than global workers.”

    Ask her why America’s rich should care about America’s poor if she favors relatively affluent US workers over relatively poor global workers. What’s her value system?

    I don’t know of any magic bullet to convince people, there are lots of arguments than can be used. If she likes the Nordic model, for instance (the model Bernie touts). then tell her the Nordic countries are free traders.

    I don’t know enough about Bergman to give you a good answer. Persona is supposed to be his best, but I haven’t seen it. Smiles of a Summer Night is delightful light entertainment, if you want something not to heavy. Wild Strawberries is excellent, as are many other of his films. I like other Japanese directors more than Kurosawa, but the Seven Samurai is an all time great war film. Yojimba inspired the spaghetti westerns. High and Low is an entertaining film noir, if you want a modern setting.

    Here’s a pretty good list, albeit too light on East Asia:


    Brian, You said:

    “It is obvious to me that neither you nor the author has much experience with lower middle class and blue collar people.”

    I never claimed they favored a shutdown. And don’t assume you know anything about my personal life. You don’t.

    msgkings, You said:

    “Christian List is crushing Benjamin List here.”

    Yes, but is that difficult to do?

  36. Gravatar of msgkings msgkings
    8. April 2020 at 11:32


    No it isn’t, although apparently it’s difficult for me to get Ben Cole’s name right.

  37. Gravatar of JDF JDF
    8. April 2020 at 11:38


    ” m going to assume all your quotes are taken out of context, unless you present evidence that this is not the case.” That’s naked projection. Not all of us approach things that way. Perhaps starting with “assuming” isn’t the optimal strategy for ascertaining the facts.

    In any event, I’ve provided most of these quotes before, so feel free to ignore them again, and stick with the narrative.

    Fauci dismisses the threat of covid as “miniscule,” and says the flu is the real threat:

    Fauci doesn’t want people to worry about coronavirus, the danger of which is “just minuscule.” But he does want them to take precautions against the “influenza outbreak, which is having its second wave.”

    “We have more kids dying of flu this year at this time than in the last decade or more,” he said. “At the same time people are worrying about going to a Chinese restaurant. The threat is (we have) a pretty bad influenza season, particularly dangerous for our children.”


    Fauci saying the risk is “minimal” because there are few cases, and they’ve all been tracked and traced.

    Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said the risk of coronavirus in the US is “really very minimal because there really are only 15 cases now, in addition to those who were shipped here.”

    In an interview with CNN’s Wolf Blitzer on Monday, he went on to say the cases “were identified, they were isolated and the contacts were traced.”


    Last week, you posted an article citing William Schaffner from Vandy. He dismissed coronavirus as “a blip on the horizon” and “trivial.”

    “When we think about the relative danger of this new coronavirus and influenza, there’s just no comparison,” said Dr. William Schaffner, a professor of preventive medicine and health policy at Vanderbilt University Medical Center. “Coronavirus will be a blip on the horizon in comparison. The risk is trivial.”


    Here’s more folk weighing in:


    Brandon Brown, an epidemiologist from the University of California says;

    “Here in the U.S., this is what is killing us?” “Why should we be afraid of something that has not killed people here in this country?”

    . . .

    “This is something I guess we’re used to so we don’t really pay attention to it much.” “I think we need to shift our attention back to the flu.”

    CDC has not recommended people to use masks in the USA. But people tend to wear it as a self-precaution against the coronavirus, and other respiratory illness.

    US health officials share that people become immune from the flu virus and even vaccinated people are still at risk of getting affected. Dr. Shira Doron works at Tufts Medical Center infectious disease. She says:

    “Get your flu shot—take measures to prevent getting sick with the many things in this country we have to get sick from.” “The likelihood of an American being killed by the flu compared to being killed by the coronavirus is probably approaching infinity.”

    I can provide more public health academics if you want. You have one article from Lipsitch, and then the Guardian piece that quoted the guy from Hong Kong. The vast majority were on the other side.

    The state level public health people were even worse. In late February and March, Illinois’ public health people were still telling folks specifically not to cancel mass gatherings:


    DON’T avoid public places or gatherings: With the low odds of contracting the virus, there is no need to disrupt your regular schedule. “The risk is vanishingly small of contracting the virus,” Ezike says. “We want people to be aware, but we don’t want people to be unnecessarily anxious.”


    In March, New York’s public health people were still telling New Yorkers to make no changes, to keep going to crowded places, and to keep taking mass transit to get there:

    Commissioner Oxiris Barbot, Department of Health and Mental Hygiene: I’d like to add to that – what the Governor mentioned. Because of the fact that this New Yorker took early action, and we know that there’s currently no indication that it’s easy to transmit by casual contact, there’s no need to do any special anything in the community. We want New Yorkers to go about their daily lives, ride the subway, take the bus, go see your neighbors. The important thing, as both the Mayor and the Governor have said, we want New Yorkers to lean even more into frequent hand washing and covering their mouths and their noses. And if you can’t get to a water source, make alcohol-based hand sanitizer your new best friend.

  38. Gravatar of Ray Lopez Ray Lopez
    8. April 2020 at 13:46

    @ssumner – why are you against the Fed buying less safe assets, like the central bank of Japan does, like stock futures and ETFs? Please tell us loyal readers what the danger of this might be.

  39. Gravatar of Ray Lopez Ray Lopez
    8. April 2020 at 13:57

    @Elizabeth Harris – thanks for this article. Notes below. Seems Ben Cole will not get the Nobel Prize in Medicine for advocating herd immunity if C-19 has R0 = 5.7 as per Ms. Harris’ cite. – RL

    Covid-19 virus has not R0= 2.2-2.7 (which about 55% herd immunity will overcome) but possibly R0= 5.7!

    *Critical threshold (%) for herd immunity = 1 – 1/R0 [ref 1] Hence, if R0 = 2.2, then 1-1/2.2 = 55%. But if R0 = 5.7, as claimed by the paper, herd immunity = 1-1/R- = 1-1/5.7 = 82%, much higher.

    [1] – https://thoughtscapism.com/2015/04/20/the-simple-math-of-herd-immunity/

  40. Gravatar of Thaomas Thaomas
    8. April 2020 at 16:24

    “And what would that price level target be?”

    That’s up to the Fed. The point is to hit the target, wherever it is set.

    Well they could set it at today’s TIPS rate, 0.87% pa (minus 0.5% to account for the difference between CPI and PCE) compounded for two years for a CPE target 0.7% above today’s. Would that be OK? That would be pretty far from NGDP targeting ….

    Why no ideas on what the Fed should be “up to”?

  41. Gravatar of Christian List Christian List
    8. April 2020 at 17:00

    I bet the CCP has done research on quite some corona viruses in Wuhan.

    They searched, found and captured natural viruses from all over China. Then they brought the viruses to Wuhan. And then one critical virus escaped. This theory would explain very well why this viral infection broke out in the very city where China has concentrated its virus research. As I said, what are the odds for this?

    I give this theory at least a 30:70 chance by now.

    This would also explain why they tried a cover-up. It would als explain why samples were destroyed. They needed to get rid of the evidence first. Maybe they got even rid of Patient zero.

    It would also explain why certain markets aren’t really closed by the authorities. They simply have nothing to do with the virus. Bat does not seem to be a regional food speciality of Wuhan either way. Not many people there eat it, if any.

    A writer from National Review has some more information, this happend at least two times before with SARS:

    “In 2004, the World Health Organization determined that an outbreak of the SARS virus had been caused by two separate leaks at the Chinese Institute of Virology in Beijing.”


    Thank you very much. A little quibble: I’m the List and he’s the Cole.

  42. Gravatar of Myb6 Myb6
    8. April 2020 at 19:29

    Christian, I’m more like 60/40 on accidental lab leak.

    If you want some sour entertainment go check out all the “conspiracy debunked” articles from vox etc. So celebratory that virus features suggest it’s natural (I’m no MD but the arguments are plausible on the face), ignoring the possibility of a natural virus escaping the lab.

  43. Gravatar of Benjamin Cole Benjamin Cole
    9. April 2020 at 00:22

    All— yes, the general consensus is that COVID-19 is very infectious, passes easily between people and evidently between people and animals. Perhaps animals will become reservoir population for the virus..

    This suggests lockdowns will be futile. As long as you have a novel virus and a naive population, new infections will crop up and new hotspots.

    It will be a long 18 months, until the vaccinations come.

    And then, COVID-22? This is your battle plan for novel cold viruses?

    A vaccination is at least 18 months away, or so everybody says.

  44. Gravatar of JP Koning JP Koning
    9. April 2020 at 03:14

    “Set a level target and buy as many safe assets as necessary to hit the target.”

    …or lower interest rates as deep into negative territory as necessary to hit the target? (All the while using some of Miles Kimball’s tricks to avoid the cash withdrawal problem).

  45. Gravatar of Thaomas Thaomas
    9. April 2020 at 03:29

    @ Benjamin Cole

    The problem with helicopter drops is that Congress and the Administration decided instead of using off the shelf helicopters, they commissioned Prof. Rube Goldberg to invent a new special purpose flying machine.

  46. Gravatar of Benjamin Cole Benjamin Cole
    9. April 2020 at 05:18


    How nice to get a response that is not an insult! On the internet, we should always insult those people with different points of view. It is so elevating.

    Among macroeconomists there seems to multiple interpretations of whether the US government and the Fed are engaging in helicopter drops or not. For one, the Fed has not indicated whether additions to its balance sheet are permanent or not. But probably the public (the minute fraction of people thinking about this topic) expects the Fed’s balance sheet will be swollen for a long time, and maybe to the next recession, whenever that is. After all, the Fed never worked off of its Great Recession balance sheet. Does any federal official, including Powell, have credibility anyway?

    Is IOER still on?

    Michael Woodford says Fed QE and concurrent federal deficits are a helicopter drop. Then David Beckworth distinguishes between helicopter drops on Wall St. vs. Main St.

    I guess the MMT crowd is ascendant in reality, if not in popularity. Hard to tell.

    Others disagree.

    BTW, this in:

    “UK Treasury to use Bank of England for financing”

    So..if the Bank of England buys UK gilts, that is okay, but if they just send the money over and dispense with the gilt fig-leaf, that is a big deal?

    You know, we are talking about little blips on microchips, when we talk about money. Those blips give a claim on economic output.

    Best regards to all. Huge fresh jobless claims out today. Another six million unemployed. I guess we are a few batters into the first inning of this.

  47. Gravatar of Garrett Garrett
    9. April 2020 at 05:21

    Looks like the Fed might buy HY ETFs

  48. Gravatar of Student Student
    9. April 2020 at 06:52

    This is a bit of a long excerpt for people to read in a comment section but I was reading from this manuscript the other day and couldn’t help myself here.


    Among unjust governments, therefore, democracy is the most tolerable, but the worst is tyranny. This same conclusion is also apparent if one considers the evils which come from tyrants.

    Since a tyrant, despising the common good, seeks his private interest, it follows that he will oppress his subjects in different ways according as he is dominated by different passions to acquire certain goods. The one who is enthralled by the passion of cupidity {greed for money or possessions} seizes the goods of his subjects; whence Solomon says [Prov 29:4]: “A just king sets up the land; a covetous man shall destroy it.” If he is dominated by the passion of anger, he sheds blood for nothing; whence it is said by Ezekiel: “Her princes in the midst of her are like wolves ravening the prey to shed blood.” Therefore this kind of government is to be avoided as the Wise man admonishes [Sirach 9:13]: “Keep far from the man who has the power to kill,” because he kills not for justice’ sake but by his power, for the lust of his will. Thus there can be no safety. Everything is uncertain when there is a departure from justice. Nobody will be able firmly to state: This thing is such and such, when it depends upon the will of another, not to say upon his caprice. Nor does the tyrant merely oppress his subjects in corporal things but he also hinders their spiritual good. Those who seek more to use, than to be of use to, their subjects prevent all progress, suspecting all excellence in their subjects to be prejudicial to their own evil domination. For tyrants hold the good in greater suspicion than the wicked, and to them the valour of others is always fraught with danger.

    So the above-mentioned tyrants strive to prevent those of their subjects who have become virtuous from acquiring valour and high spirit in order that they may not want to cast off their iniquitous domination. They also see to it that there be no friendly relations among these so that they may not enjoy the benefits resulting from being on good terms with one another, for as long as one has no confidence in the other, no plot will be set up against the tyrant’s domination. Wherefore they sow discords among the people, foster any that have arisen, and forbid anything which furthers society and co-operation among men, such as marriage, company at table and anything of like character, through which familiarity and confidence are engendered among men. They moreover strive to prevent their subjects from becoming powerful and rich since, suspecting these to be as wicked as themselves, they fear their power and wealth; for the subjects might become harmful to them even as they are accustomed to use power and wealth to harm others. Whence in the Book of Job it is said of the tyrant [15:21]: “The sound of dread is always in his ears and when there is peace (that is, when there is no one to harm him), he always suspects treason.”

    It thus results that when rulers, who ought to induce their subjects to virtue,” are wickedly jealous of the virtue of their subjects and hinder it as much as they can, few virtuous men are found under the rule of tyrants. For, according to Aristotle’s sentence [ Eth. III, 11: 1116a 20], brave men are found where brave men are honoured. And as Tullius says [ Tuscul. Disp. I, 2, 4]: “Those who are despised by everybody are disheartened and flourish but little.” It is also natural that men, brought up in fear, should become mean of spirit and discouraged in the face of any strenuous and manly task. This is shown by experience in provinces that have long been under tyrants. Hence the Apostle says to the Colossians: “Fathers, provoke not your children to indignation, lest they be discouraged.”

    So, considering these evil effects of tyranny King Solomon says [Prov 28:12]: “When the wicked reign, men are ruined” because, forsooth, through the wickedness of tyrants, subjects fall away from the perfection of virtue. And again he says [Prov 29:2]: “When the wicked rule the people shall mourn, as though led into slavery.” And again [Prov 28:28]: “When the wicked rise up men shall hide themselves”, that they may escape the cruelty of the tyrant. It is no wonder, for a man governing without reason, according to the lust of his soul, in no way differs from the beast. Whence Solomon says [Prov 28:15]: ”As a roaring lion and a hungry bear, so is a wicked prince over the poor people.” Therefore men hide from tyrants as from cruel beasts and it seems that to be subject to a tyrant is the same thing as to lie prostrate beneath a raging beast.


    Excerpt from Thomas Aquila’s, De regno ad regem Cypri, Chapter 4, That the Dominion of a Tyrant is the Worst.

  49. Gravatar of Student Student
    9. April 2020 at 07:04

    @Ben Cole,

    When are you going to go herd yourself and purposefully infect yourself. Put your money where your mouth is… Quit being a chicken hawk.

  50. Gravatar of Elizabeth Harris Elizabeth Harris
    9. April 2020 at 08:35

    Worrisome https://threadreaderapp.com/thread/1247719681483509761.html

    Among recovered former #COVID19 cases, “nearly a third had unexpectedly low levels of antibodies. In some cases, antibodies could not be detected at all.”

    Consensus on the virus infecting people at warp speed if left to run its course.

    https://youtu.be/KAn6brpH3-M Germany R0 5
    https://www.medrxiv.org/content/10.1101/2020.02.07.20021154v1 Las Alamos Labs US R0 4.7-6.6

  51. Gravatar of Michael Rulle Michael Rulle
    9. April 2020 at 12:33

    Re: Ray”s Comment on Scott and Equity Futures—my impression is Scott’s for a “whatever it takes approach” within his framework—which would include Equity Futures “if that’s what it takes”

    Re:Scott’s Comment on “Left Wing Rant”

    Oddly, I agree with his perception—Not sure I disagree with the rant either and, if anything, I lean toward it with some additions. I disagree with is it’s name–I call it a “populist rant”. It is true that Govt employees,pols,TV heads, teachers, the “wealthy still employed” have little if anything to lose from a lockdown. This sometimes gets conflated with “red state” versus “blue state”. Its epmployed versus unemployed.

  52. Gravatar of ssumner ssumner
    9. April 2020 at 13:33

    JDF, You are confused about what you are reading. One group of experts says that 50% of humans will eventually get the virus. Fauci says that at the moment there is a tiny risk, and don’t be reluctant to go to Chinese restaurants. There is no contradiction. I felt safe eating out in mid-February too.

    It’s true that due to the testing fiasco created by the US government, the virus moved faster than anticipated in late February and early March in the US. So there were false statements by some experts based on bad data right before the numbers blew up. But again, the experts were quite clear that eventually this virus would spread widely around the world.

    Ray, Buying unsafe assets is better than buying nothing, but buying safe assets is even better. Less risk to the taxpayers.

    Thaomas, Presumably they’d choose 2%.

    Christian, There have been numerous previous epidemics caused by animal to human transfers in China; this is not the first time. Go with the simplest explanation.

    JP, That might also work, but I fear it would be too politically controversial.

    Garrett, Yes, and I’d rather they stick to safer assets.

  53. Gravatar of Christian List Christian List
    9. April 2020 at 14:20

    caused by animal to human transfers in China; this is not the first time. Go with the simplest explanation.


    no one doubts that. That’s actually our explanation, too. The question is where the virus jumped over, when keeping a bat for food or when keeping bats in a laboratory? We even know the place. It was most likely in Wuhan. So why in Wuhan? Wuhan is a densely populated city, is this a huge habitat for wild bats? Is bat a local food specialty in Wuhan? How often are bats really eaten in Wuhan, how often is it sold at the markets there? Is Wuhan a center for bat virus research? These are the questions to ask. Why Wuhan?

    These questions could all be answered, but is the CCP really interested in this, without bias, what do you think?

    You were right again, I finally agree with you, the CCP part of China is almost the worst place in the world where this virus could have appeared, because we do not have enough impartiality and transparency.

    We now need unbiased Chinese studies that determine who Patient zero was, or at least we need to get as close to Patient zero as possible. Where are these studies? We need the impartial help from the CCP for that, do you think we are getting this?

    Do you really think this search is happening right now in an impartial way? Who is conducting this search? Mr. Sorry-I-can’t-hear-you-Aylward???

    The CCP part of China is a total surveillance state, but unfortunately they cannot determine who patient zero is and unfortunately they cannot count the dead in Wuhan correctly.

    I agree, I thought the same thing. Certain media often present the study results incorrectly. They pretend that the studies prove that it can’t come from a lab. But this is not the case. It’s false advertising by the media or even by the study itself. This doesn’t inspire confidence. To put it bluntly: the only thing the studies really prove is that the CCP didn’t put a big fat bumper sticker on the virus saying: sorry we caused it. Whether I need a study for that, I would rather question.

    @Elizabeth Harris
    It might be even worse:

    “The coronavirus may be reactivating in people who have been cured of the illness, according to Korea’s Centers for Disease Control and Prevention.

    About 51 patients classed as having been cured in South Korea have tested positive again, the CDC said in a briefing on Monday. Rather than being infected again, the virus may have been reactivated in these people, given they tested positive again shortly after being released from quarantine, said Jeong Eun-kyeong, director-general of the Korean CDC.”


    Imagine Benjamin Cole deliberately infecting himself with corona, barely surviving, only to discover that this new virus behaves in a similar way as herpes, zoster or EBV: It burrows deep into your body as soon as you are infected and is then reactivated whenever you have a moment of weakness. It’s not that likely, but I’m no longer ruling anything out.

  54. Gravatar of Ray Lopez Ray Lopez
    9. April 2020 at 14:42

    @ssumner – seems to me you are not as radical as some people think you are, I detect a conservative streak in you (and not just now but for years actually). Sumner (on why it’s bad for the Fed to buy riskier assets like stocks rather than safer assets like highly rated bonds): “Ray, Buying unsafe assets is better than buying nothing, but buying safe assets is even better. Less risk to the taxpayers.” – OK, please now answer here, or in a separate blog post, whether it’s OK for the Fed to just keep the newly bought assets on their balance sheet permanently? What is the danger of this, inflation? And what’s wrong with a bit of inflation? Surely keeping say $2T to $5T on the Fed balance sheet (as per the latest Fed announcement) will not lead to US hyperinflation? So what’s the problem, if any? Ben Cole if you’re reading this, feel free to answer as well. You never have answered my query on your views towards hyperinflation, is it bad or not? Run away if you must, I will take your failure to answer as conceding defeat.

    PS–E. Harris scoring good points in her posts, against herd immunity.

  55. Gravatar of Christian List Christian List
    9. April 2020 at 14:55

    whether it’s OK for the Fed to just keep the newly bought assets on their balance sheet permanently

    I would say it’s all right if inflation is kept in check. Imagine how much fewer assets the Fed would have to buy if it finally became credible in terms of inflation.

    On another note: Seriously Ray, what kind of weird Saul to Paul, Bruce to Caitlyn transformation happened to you?

    Do we have to renounce atheism now? Easter is coming and miracles do happen?

    Scott, is a magician, if he can convince you, he can convince almost anyone.

  56. Gravatar of ssumner ssumner
    10. April 2020 at 16:52

    Ray, I’d rather “concede defeat” than waste time on those questions.

  57. Gravatar of Benjamin Cole Benjamin Cole
    11. April 2020 at 15:55

    Dr. Ray Lopez:

    I too have puzzled weather large additions to a central bank balance sheet make any difference, but might possibly relieve debt loads on taxpayers.

    For example, the Bank of Switzerland acquired a balance sheet equal to $100,000 for every Swiss resident in a war on an appreciating Swiss franc. This had no effect on inflation rates inside Switzerland or even real Swiss GDP.

    And, of course, the Bank of Japan has acquired a balance sheet equal to the GDP of Japan. They are sinking into deflation again.

    From these examples, and the experience in the US in 2008, I conclude that conventional quantitative-easing may have some useful purpose but will do little to affect inflation or real GDP. Conventional QE may stabilize financial markets and prevent Great Depression-type panics.

    I think Stanley Fischer and David Beckworth are on the right track in advocating helicopter drops on Main Street, in order to stimulate domestic demand inside the US.

    And yes, I think hyperinflation is bad. Like the Ronald Reagan crowd, I’m not particularly worried about any inflation rate under 5%.

    But Dr. Ray Lopez, above all else I believe that inside the Nonecumenical Temple of Macroeconomic Theology, no one is ever wrong!

    Perhaps, you are right. Money is neutral. The Great Depression happened because it happened. The Spaniards brought all that gold and silver back from the New World and it was worthless!

Leave a Reply