Yes, it’s tight money

It’s always useful to revisit Frederic Mishin’s three lesson on monetary policy, from the number one money textbook:

1.  It is dangerous always to associate the easing or the tightening of monetary policy with a fall or a rise in short-term nominal interest rates.

2.  Other asset prices besides those on short-term debt instruments contain important information about the stance of monetary policy because they are important elements in various monetary policy transmission mechanisms.

3.  Monetary policy can be highly effective in reviving a weak economy even if short term rates are already near zero.

Other asset prices?

We have plunging bond yields. Plunging TIPS spreads. Plunging Hypermind NGDP prediction prices. Plunging stock prices. Plunging commodity prices. Widening risk spreads. What more do you want?

How about a soaring dollar?

Yes, we need to avoid reasoning from a price change. Sometimes the dollar appreciates because another currency is weak. But now the dollar is appreciating against almost all currencies. Sometimes the dollar appreciates because the US economy is strong (as during the tech boom of 1998-2000.) Does the economy seem strong today?

We are seeing a replay of almost every single market reaction from late 2008.

PS. We have lots of pundits telling us that this crisis shows that libertarianism doesn’t work and that we need big government. (Do they know that Italy has one of the biggest governments in the world?)

In fact, our government has spent months twiddling its thumbs when it wasn’t using regulations to actively prevent the private sector from responding. And now I see this:

Thank God for globalization.

That’s not to say there aren’t a few areas where smart governments can contribute. Pity we don’t have one.



53 Responses to “Yes, it’s tight money”

  1. Gravatar of clueless clueless
    24. March 2020 at 16:07

    Doesn’t this explain the movements of the US dollar?

  2. Gravatar of Benjamin Cole Benjamin Cole
    24. March 2020 at 16:34

    “Federal Reserve Chairman Jerome Powell’s whatever-it-takes moment arrived Monday…

    Monday’s announcement was “really encouraging because the Fed didn’t wait for Congress to pass this bill,” said Tiffany Wilding, economist at Pacific Investment Management Co. “I don’t think the markets could have waited.”

    The central bank punctuated its moves, announced 90 minutes before markets in the U.S. opened Monday, with an unusually explicit warning about the perils ahead.”—WSJ

    Okay,then the market dropped 3% on a Monday—that is in the trading day after the Fed announcement, which was made pre-bell Monday.

    On Tuesday, the market did rally handsomely, with the bulk of the financial media attributing the gain to a pending fiscal stimulus bill.

    “The Dow soars on hopes for government aid bill: March 24, 2020”—CNN

    The timeline is what it is, indisputable. The market sank on Monday after the announcement of the Fed’s stimulus policy, but then rose on Tuesday when it appeared that fiscal stimulus was pending shortly.

    What does this mean?

  3. Gravatar of Ray Lopez Ray Lopez
    24. March 2020 at 16:36

    Sumner talks about stock price swings after specifically saying in the comments the last post that he doesn’t want the Fed to target stock prices. OK. So it’s OK to target bonds, bond yield, and so on, but not stock prices, quoting Mishin, since “Other asset prices besides those on short-term debt instruments contain important information about the stance of monetary policy because they are important elements in various monetary policy transmission mechanisms”. So information is more important than the transmission mechanism, vis-a-vis stocks? JP’s central bank does not agree but that’s OK, Sumner marches to his own drummer.

    Sumner muses about how the US dollar has strengthened now, when two weeks ago he was telling us why the Euro was stronger–what happened? “Never reason from a price change”. Guess he forgot his own advice.

    And this gem, almost as good as Dr. Sumner’s advice that heat and humidity don’t matter for the Covid-19 virus (which contradicts no fewer than four teams of independent PhD scientists who came to the opposite conclusion): “Thank God for globalization” (!?) But it was globalization that introduced Covid-19 rapidly to the world! If the world had more time in a pre-global world, arguably they could quarantine better.

    The more I read this blog the dumber I get. Like chatting with List.

  4. Gravatar of Ray Lopez Ray Lopez
    24. March 2020 at 16:41

    @Ben Cole – what your post means is obvious: fiscal policy is more important than monetary policy to most people. But, Cole, when the stock market closes lower tomorrow, as it probably will, it will mean the Keynesian multiplier is largely zero. Get smart: money is largely neutral and the Keynesian multiplier is largely zero. AD/AS are determined largely by animal spirits. That’s why Stockholm gave Robert Shiller the Nobel. Can’t dumb it down for you anymore than that Cole. Any dumber and we’re in C. List territory.

  5. Gravatar of Benjamin Cole Benjamin Cole
    24. March 2020 at 16:58

    Ray Lopez—In macroeconomics no one is ever wrong, so you may be right.

    My suspicion is on Tuesday the market thought fiscal stimulus is coming and it will be financed by money printing, that is money financed fiscal programs. The market is concluding the Federal Reserve will never reduce its balance sheet.

    I have to concur, I do not think the Federal Reserve will reduce its balance sheet in the future. The market likes helicopter drops.

    I would have preferred tax holidays to more spending, but what is is.

    Will we have to high inflation in the future?

    I listen to Ray Lopez’ diagnosis, with ears the size of saucer plates

  6. Gravatar of Benjamin Cole Benjamin Cole
    24. March 2020 at 17:13

    Ray (or anyone else): Read the above. They make a very strong case that the fatality rate associated with Covid 19 is vastly overstated.

    At this point the truth no longer matters. The people who advocated for a fantastically expensive response to Covid 19 cannot admit error, any more than the people who got the US into Vietnam could admit error. It will take a couple of generations.

    As I said in those grim days of the Vietnam War, “Let’s declare victory and leave now.”

  7. Gravatar of TravisV TravisV
    24. March 2020 at 17:40

    Prof. Sumner,

    Have you checked out TIPS spreads the past couple days?


  8. Gravatar of Alex Schell Alex Schell
    24. March 2020 at 17:56

    Ben: a lot can happen in the market in 90 minutes. There was a 6% increase in S&P500 futures in a few minutes starting at 8am Eastern. And you can see similar bumps (smaller of course) in foreign stock indexes being traded at the time in foreign markets, e.g. the FTSE100.

  9. Gravatar of Jeff Jeff
    24. March 2020 at 19:08

    The Democratic governor or Nevada has banned the use of chloroquine and it’s variants. This is one of the drugs that the Chinese, Koreans, and French have found useful against Covid-19. But Trump said he was hopeful that it could be a game-changer against the virus, so in keeping with the theory that anything Trump likes must be bad, Gov. Sisolak has banned it. We rarely see such a display of unmitigated stupidity. Enjoy it while it lasts. No doubt he’ll rescind the order tomorrow when the doctors in Nevada start raising hell.

  10. Gravatar of Jeff Jeff
    24. March 2020 at 19:11

    And of course, you’re absolutely right about this being tight money. Central bankers the world over are bureaucrats first, and economists second. Thus the criminal stupidity.

  11. Gravatar of Lorenzo from Oz Lorenzo from Oz
    24. March 2020 at 20:35

    As far as I can tell, governments in all the Western democracies seem to be doing about equally badly. It is clear that Western health departments sit on top of huge budgets and patently had no idea about how to deal with a pandemic.

    The US fatality rate seems to be on the lower range, but that could be due to any number of factors.

    I can testify that Australian governments and health departments are not demonstrating anything resembling smooth efficiency. At least in the US, private companies can test for the virus. In Australia, it is still only being done by a few government hospitals because, reasons …

  12. Gravatar of Matthias Görgens Matthias Görgens
    24. March 2020 at 23:22

    It’s good Elon Musk is giving the goods away. He wouldn’t have been allowed to charge market rates. Not allowed in both a legal sense and the ethical judgement of most people.

  13. Gravatar of Ray Lopez Ray Lopez
    25. March 2020 at 01:28

    @Ben Cole- you might find this useful, it confirms your priors; run your numbers again with the 350k dead and repost your costs-per-Covid19-death please.

    According to the “Super Forecasters” site that MarginalRevolution linked to, the USA might “only”, say the consensus, have a 70% chance of less than 23M Americans infected by Covid-19 and a 80% chance of less than 350k deaths in the USA. See:

    @Matthias Görgens – savvy insight, indeed, Musk is trading tax write offs for publicity.

  14. Gravatar of Benjamin Cole Benjamin Cole
    25. March 2020 at 01:30

    Nikkei 225 up 7.1% Tuesday, and then 8.0% Wednesday.

    “After fluctuating tightly on the positive side for the majority of the afternoon, the Nikkei surged over 1,400 points in the late afternoon, in response to news reports that the administration of U.S. President Donald Trump has reached a deal with Senate Democrats and Republicans on the stimulus package, brokers said”.

    My guess is the market is being airlifted by expected helicopter drops….that is, federal outlays financed by Fed money-printing…and does anyone think the additions to the Fed balance sheet will soon be reduced?

  15. Gravatar of Christian List Christian List
    25. March 2020 at 01:40

    I don’t understand the stock markets. After Italy and Spain, reports from NYC are now nightmarish. Don’t these people read reports?

  16. Gravatar of Todd Kreider Todd Kreider
    25. March 2020 at 02:13

    The death rate from coronavirus is 1.2% in NYC and 10% in Italy. Also, the good news in Italy is that the increase in the number of cases there is close to being on the flat part of the curve. The trend looks similar for Western Europe, and they have always been behind Italy.

  17. Gravatar of Benjamin Cole Benjamin Cole
    25. March 2020 at 02:58

    An interesting article.

  18. Gravatar of Student Student
    25. March 2020 at 03:17

    We need good government. A small good government > a big bad government. What we need is virtue.

  19. Gravatar of Saturos Saturos
    25. March 2020 at 03:42

    Quick question for Scott: You’ve said before that “the most pragmatic option is to try to target total compensation (or NGDP), adjusted for changes in the labor force…”. So what does that say about an imminent situation where, e.g., 30% of the labour force drops out for 6 – 12 months? Should the Fed be trying to hold NGDP on a stable level path, or somewhat lower than that?

  20. Gravatar of Benjamin Cole Benjamin Cole
    25. March 2020 at 04:01


    Man, you ask a tough question.

    Every answer to the COVID-19 disaster comes out the same: It doesn’t work if no one works.

    Committing economic suicide is not a policy option.

  21. Gravatar of Benjamin Cole Benjamin Cole
    25. March 2020 at 04:47

    Ray Lopez— cost-benefit analyses are not PC.


    “The Italian National Health Institute pegged the median age of death from COVID-19 in Italy at 80.5. This is consistent with early data from the United States.”


    Unfortunate individuals with multiple comorbidities.

    President Trump, who has an awful way of talking and a curious way of being right on certain issues, has the right instincts on this terrible issue in front of us. The least-bad option is to keep working.

    It is not a good option, it is not even a mediocre option.

    It is only the least-bad option.

  22. Gravatar of Becky Hargrove Becky Hargrove
    25. March 2020 at 05:12

    One way to look at economic stabilization, should high unemployment prove the case, is to target what are absolute non discretionary requirements. That is, the kinds of ongoing expenses all citizens still have to maintain every month whether they have a job or not.

  23. Gravatar of Thaomas Thaomas
    25. March 2020 at 05:27

    Instead of God, you should be thanking Democratic Presidents for globalization. 🙂

  24. Gravatar of Michael Rulle Michael Rulle
    25. March 2020 at 05:44

    Re: dollar appreciation

    I have tended to use a term coined by Arnold Kling to describe certain price moves, “the tallest pigmy in the jungle”. The dollar more times than not seems to rise during crisis(now, late summer early fall 2008, few months post 2001—etc—-but not all the time).

    I used to interpret it as a flight to quality, rather than tight money. As you say, never reason from a price change (only). But, given Powell’s actions, we should expect the dollar spike up to level off. I have taken your price change way of thinking to heart.

    But I must disagree that it is not true that the dollar usually rises when our economy is strong. It sometimes rises and sometimes falls—-in big swings. Although 2014 is a classic example of your point, 2017 is not.

    This time it does seem like tight money——but could tight money be caused by flight to quality? Seems possible. This is a question based on an observation.

    Also, per your never reason from a price change——I still sometimes get that sick feeling in my stomach on circularity of the MM. Dollar up in 2014 due to growth. Dollar down 2017 despite growth. Dollar up in times of weakness—-now and 2008. No answer expected——in reality the details matter greatly.

    Re: Govt slow action

    Hard to disagree. One of the most used terms in these daily briefings has been “waiving rules”. So the administration has had to override by executive order rules that hinder. If they hinder now, why don’t they always hinder? I agree with you that pro-govt crowd seems to have missed the point.

    Re: Back to “normal”

    Also—no matter what, we have to try to get back to normal—-but this cannot be mandated—-it won’t work. And the real reason we have stopped the economy is the public has been persuaded. Without some kind of hard to refute evidence (for example, pretend, as two professors from Stanford have said, that the real death rate is like the flu—and this as been confirmed by randomized testing) the people will not return to normal. This is a hard nut—-and what I see is Trump and Fauci trying their very best not to kill each other——they need to agree—-agree on what I don’t know—-but if they truly agree—The people will move on with confidence—-whatever that is. They are trying—-along with Dr Birx—-to agree—-where that goes who knows.

  25. Gravatar of cove77 cove77
    25. March 2020 at 05:51

    Trump has the “right instincts”….

    a visionary for our times

  26. Gravatar of Michael Rulle Michael Rulle
    25. March 2020 at 06:14

    Re: theater of the absurd

    The Atlanta Fed has asked me to participate in a survey about Monetary Policy. They claim I expressed interest——don’ t recall. Maybe it’s a new clever way to steal money from me——I am debating whether to respond!

  27. Gravatar of Student Student
    25. March 2020 at 06:21


    Well what we are doing is working. The last 2 days the growth factor in the USA has been 1.0959 (March 23) and 1.0821 (March 24). If we get this to 1.0 that’s a sign we are winning. At 1.0 we can expect total cases will be double the number that day.

    A few weeks of shit down are worth millions of lives both morally and on a cost benefit basis. We are almost there.

  28. Gravatar of Michael Rulle Michael Rulle
    25. March 2020 at 06:36

    Re: past theater of the absurd

    The NY Fed wanted me to interview for a position overseeing the AIG credit derivatives portfolio. I met with the two guys for several hours who were then in charge. I had no real interest in the position although I had great curiosity. At the time, I had been writing a lot about the crisis——and never heard of MM and knew zero about it. But I felt I had a decent handle on AIG portfolio. I keep trying to link what I thought then with what I have learned from you——and my reasoning would have been broader, but conclusions would not have changed. It reminds me now of today—-bad info—-bad reasoning—-real problem. AIG was characterized as being a lynchpin for the financial world. Not true at all. But, the markets were pricing their derivatives at unbelievably low levels. I did not think the market price was the best guess of the future. The implied mortgage defaults imbedded in the marks were completely implausible—-but the marks required huge margin postings which could not be met.

    I was virtually certain that 95%+ of their portfolio could not possibly default.

    I said to the two Fed guys——-“I don’t believe AIG has had any defaults”. This was with regard to their senior positions ——the overwhelming part of their portfolio. Because I did not. They seemed mildly surprised—but said “that’s true” maybe 1 or two—-.

    So I think back to the “Fed was too tight”. And that seems absolutely correct.

  29. Gravatar of Ray Lopez Ray Lopez
    25. March 2020 at 06:40

    @Student – you should call Ben Cole on his disinformation. He cites to a Guardian article saying the WHO says R0 for Covid-19 is not much different than the common flu, which is clearly wrong. Ben Cole is trying to kill lives! Babies too (one just died of Covid-19). Just to win points on the internet. Sad.

    Internet: Wuhan virus R0, estimated to be 2.2 to 2.7. …but the R0 value is likely to be between 4.7 and 6.6 (common flu is around 1.1)… WHO is *underestimating* R0 for Covid-19 says one site.

  30. Gravatar of Benjamin Cole Benjamin Cole
    25. March 2020 at 07:36

    Student: okay, let’s say you are right and we should shut down the economy for a couple weeks or perhaps a month or two. Pick a number out of the hat, say the cost is $3 trillion in lost output and $3 trillion in capital losses. Most importantly, lots of hardships for ordinary people.

    Now, since C19 came to American shores, 150,000 Americans have died. Well, actually they died from cancer. 600,000 deaths every year. And we never gain herd immunity. You may gain immunity from C19, but never from cancer.

    Many cancers are triggered by artificial carcinogens. Preventable to some degree. So?

    Interesting topic.

    Another amazing Story. This scientist contends that this shutdowns in China saved far more lives by reducing air pollution then we’re saved by reducing coronavirus deaths.

  31. Gravatar of Carl Carl
    25. March 2020 at 07:46

    There’s an editorial in the WSJ this morning by some Stanford researchers speculating that we may be miscalculating the fatality rate by well over an order of magnitude for COVID-19.
    They caution that they are calculating based on very small sample sizes where testing was done without concern for symptomicity. The groups they listed were: the city of Vo, Italy, expatriates airlifted out of Wuhan, NBA players and some test group in Iceland(I don’t remember the delineation of the Iceland group). Extrapolating from these small groups they come up with shockingly low fatality rates.

    The authors recognized that the sample groups used were a hodgepodge. NBA players, for example, are not average in their travel profile and collegiality. They also recognize the catastrophe unfurling in emergency rooms in hot zones and the need for containment measures.

    One key takeaway is that we desperately need random testing.

  32. Gravatar of Spencer Hall Spencer Hall
    25. March 2020 at 08:10

    The FED is still too tight. Prima facie evidence that the FED has eased monetary policy is an expansion of the money stock in the face of, to offset, falling transaction’s velocity of funds.

    Total checkable deposits, our means of payment money supply, has not been altered whatsoever. Where’s the meat?

  33. Gravatar of John Arthur John Arthur
    25. March 2020 at 08:26

    Well it looks like the market is sharply up today, on anticipation of a stimulus plan from the US government. The market seems to think that this bill, of giving people money, is a very good idea for America.

    Also, America’s stock market is quickly reversing the losses it had, and it looks like the Chinese stock market is quickly rising in response to the stimulus rise passed by the US congress, since the sharp rise occurred today.

    An argument that I have long had is that the US has the largest stock of wealth for any big country, both in aggregate and in per-capita and its resulting consumer spending is what drives the global economy, more than even China does. The market reaction to the US possible shutting down was far greater than the reaction of China shutting down, and even when it largely recovered, the global and Chinese markets did not drastically change.
    Now, when a bill passes that *might* keep consumer spending up in the US and might reduce the spread of coronavirus, the world markets go into a jubilee.

    Also, I highly doubt that the US economy will contract in a massive way this year, probably a 1-2% contraction at most.
    We have been two weeks into the shutdowns, and the AtlantaFed still has Q1 GDP at 3.1%. Of course, the true impact of coronavirus is still to come, but it must have shown up in the data by now. So far, it is not showing up in the aggregate data.

  34. Gravatar of Student Student
    25. March 2020 at 08:37


    Put your money where your mouth is and go infect yourself on purpose and self quarantine. Then if you recover you can volunteer to help take care of the sick.

    The funny thing about the herb immunity folks is that they always recommend other people sacrifice themselves.

    If we were going to go herd immunity it would have to be done in an orderly fashion such that the healthcare system doesn’t get swamped. If it gets swamped, the death rate will double or triple what it could be.

    Suppose we shut the entire us economy for 6 months (no one is saying, and it’s not even possible, that but just suppose). That’s about $10.5 trillion.

    Now suppose we go herd immunity. Say 33% of Americans get it. Of that, say 3% die (remember hospitals will be swamped so it could be double that percentage). That would be about 3 million people. So, if a person is is worth more that 3.5 million dollars (10.5 trillion / 3 million), it would make sense to shutdown the economy for 6 months.

    Unlike cancer, a virus’ rate of growth is some function of the number of people with the virus. It can be eradicated.

  35. Gravatar of Student Student
    25. March 2020 at 08:40

    Random testing is one of the few things we could do today to fight this. I cannot fathom why we haven’t been doing this since mid February. It boggles the mind that we are not.

  36. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    25. March 2020 at 09:52

  37. Gravatar of Ray Lopez Ray Lopez
    25. March 2020 at 10:28

    @Student – you are quite ignorant, but I admire your attempt to educate yourself. Let me set you straight.

    1. Your $3.5M per Covid-19 death figure is too low. It’s more like $30M per Covid-19 death saved because of this: “Superforecasters: a 70% chance of less than 23M Americans infected by Covid-19 and a 80% chance of less than 350k deaths in the USA. See: “. So it’s not 3M dead but more like 350k, about one-tenth as many dead. BTW the Fed govt values human lives at about $10M each. This is a point against your theory.

    2. Herd immunity assumes after you get Covid-19 you’ll be immune, at least for the season, like the common cold. Sounds reasonable but it’s never been tested and some anecdotal evidence suggests it’s not true. This is a point in favor of your theory.

    3. Herd immunity ignores some Covid-19 sufferers will have long term health problems. Id.

    Finally, your question as to why not more Covid-19 testing: the NY Times has an article on this, Covid-19 testing is hard to scale up due to supply bottlenecks. “Mass pooling” of testing (entire group is tested at once in a common pool of snot) might speed this up a bit, but it’s still hard.

  38. Gravatar of Student Student
    25. March 2020 at 10:36


    Those forecasts are based on the assumption that we continue the partial shutdown of the economy. The 3 million would be the figure without the shutdown. You are comparing apples to oranges.

    Number 3 is a good point though.

    Random sampling wouldn’t require that many tests. Tens of thousands maybe. NYC is conducting that many alone. I think it could probably be done now but I am not sure about that.

  39. Gravatar of ssumner ssumner
    25. March 2020 at 10:39

    TravisV, Thanks, I added an update to today’s post.

    Lorenzo, Yes, most are doing a poor job, but that’s no excuse for any individual government. East Asian governments are clearly doing better than European governments, for instance.

    Todd, Most of us have expected the curve to flatten as social distancing kicks in, and that seems to be happening.

    Saturos, That’s a tough call. I certainly don’t believe that 30% will be unemployed for 6 to 12 months, but it could happen for a few months. I’ve argued we must let NGDP fall in the immediate term, and instead target NGDP 12 months forward.

    There are multiple factors to consider; the optimal NGDP for the financial markets is higher than the optimal NGDP for the labor market, during this crisis.

    Michael, As I said, it’s just one price, but almost all the other asset prices are also indicating tight money.

    Carl, That study seems bizarre. You’d expect zero deaths among NBA players using the standard estimates of mortality. We don’t know the mortality rate in Iceland, as most cases are quite recent.

    The cruise ship death rate (10 out of 712) strongly suggests that the death rate is not an order of magnitude below 1%. Yes, they skew older, but also relatively healthy older people. And there were also plenty of young people on that boat.

    John, You said:

    “We have been two weeks into the shutdowns, and the AtlantaFed still has Q1 GDP at 3.1%.”

    This is becoming comical.

    Student. Yes, testing is the number one failure. But other things like a shortage of masks is a close second. In January, Taiwan had the capacity to produce 2.44 million masks per day. Now they are producing 13 million/day, and they have no shortage.

  40. Gravatar of Carl Carl
    25. March 2020 at 11:22

    Fair point. The cruise ship is a better controlled sub-population than any of the ones they cited in the WSJ article.

    One promising thing I saw yesterday was that Johns Hopkins researchers are not finding any significant mutations among the 1000 coronavirus samples they tested. They likened the mutations to chickenpox and not the flu. If that holds, it bodes well for our ability to build up herd immunity between now and when a vaccine is available and for the efficacy of that vaccine when it is available.

  41. Gravatar of Ray Lopez Ray Lopez
    25. March 2020 at 12:00

    @Student – You are wrong that the Superforecasters are assuming quarantine, since the site itself says the poll was conducted on March 13, 2020, a week before the first major lockdown, which was California on March 20. They are not assuming quarantine likely, or it’s a mix of assumptions.

    As for the minimum sample size for random sampling to see who has Covid-19 (and who are the asymptomatic super-spreaders), your nym namesake, namely, Student of the famous Students-T distribution, showed that the minimum, if the sample is representative, can be very small, as small as four! (Student-T’s original paper). More details here:

    The problem will be however the tests for Covid-19 apparently vary widely in accuracy, and Covid-19 has a nasty habit of coming and going away in the same patient, from anecdotal evidence.

  42. Gravatar of Christian List Christian List
    25. March 2020 at 12:22

    Thank God for globalization.

    I agree that globalization is nice, but your specific example is kind of terrible.

    “Thank God for globalization”, so that a single country can cover the whole globe with a dangerous virus within a few weeks, so that the very same country can sell us 1255 ventilators. Wow, that’s so great, thank you Lord Jesus indeed. Awesome!

    Taiwan had the capacity to produce 2.44 million masks per day. Now they are producing 13 million/day, and they have no shortage.

    That’s the globalization that you were praising a moment ago, Scott. WTF??? The vast majority of masks have been coming from Asia for at least a decade and Taiwan is one of the Asian countries that specialized in mask production. I bet their world market share is relatively large, especially in relation to the size of the country. THAT’s globalization Scott, look it up. 😉

  43. Gravatar of Ray Lopez Ray Lopez
    25. March 2020 at 12:35

    @Christian List – your concept of ‘economic self-sufficiency’ without free trade and globalization is called AUTARKY. Besides the USSR, do you know who else promoted AUTARKY? Adolf. Friend of yours?

  44. Gravatar of Christian List Christian List
    25. March 2020 at 12:50

    The very best were politicians from Germany and France, who imposed an export ban on masks, only to find out one day later that their own mask production was about 0, but it was too late, because the previous supplier countries from Asia said: Well, if you do export bans, then we will do export bans, too.


  45. Gravatar of Christian List Christian List
    25. March 2020 at 12:53

    Omg Ray, your reading skills and your reading comprehension are so poor a blind man would do better.

  46. Gravatar of Ray Lopez Ray Lopez
    25. March 2020 at 14:06

    @Christian “White Devil” List – as reported by news media here (AP): “PARIS (AP) — Young German adults hold “corona parties” and cough toward older people.”

    Rude Germans threatening people’s health…what else is new?

  47. Gravatar of ssumner ssumner
    25. March 2020 at 16:24

    Carl, I think herd immunity is a pipe dream. The vaccine will come before even 5% are infected. (In America, 5% is 17 million cases.)

    Christian, Globalization does not cause global epidemics. Maybe it speeds them up a bit, but so what? It’s not like having an extra two months to prepare would make any difference, as we know that countries prefer to use that extra time to twiddle their thumbs. America and Europe were no better prepared than 14th century Europe.

  48. Gravatar of Michael Rulle Michael Rulle
    26. March 2020 at 08:29

    Re: Herd Immunity

    interesting stats. As of today 99.9% of Americans do not have the virus (derived from Worldometer). As of today 1 out of 321,000 Americans have dies from the Virus—average age 75-82.

    However, what about India, Africa—-to pick the two largest areas which also are relatively poor (Africa is not relatively poor it is poor)? They will be relying on herd immunity primarily.

    Re: 14th century Europe

    Sometimes exaggeration to make a point is so great, one wants to dispute the point entirely

  49. Gravatar of Carl Carl
    26. March 2020 at 08:43

    I went back to the Imperial college study which I believe is looked at as one of the gold standard studies,, and found it to be in line with your statement.
    Where are you getting your 5% number.

  50. Gravatar of Michael Rulle Michael Rulle
    26. March 2020 at 08:45

    Re: market up

    Volatility has been so high one cannot easily make a point by observing equity price changes. yesterday, was the first time (in a long time–like a few weeks to maybe a month or so)the market was up two days in a row. As of 12.30 Pm EST it is up about 5% (means nothing we have seen hi/lo in a day of 10% many times recently)—but assume it is up by a few percent today. 3mil filed for unemployment—I thought that was low—well not really—but if it were 5mil it would not have been surprising.

    It as if we are seeing this entire ARC begin to bend the right way—Slight bend in virus, The Fed acts, State and Feds at least are not trying to call each other killers—passing this bill (which is kind of designed—in messaging anyway—as a “bridge loan”—as all debt, in theory, must be repaid–caveat, caveat), Trump and Fauci trying to agree.I think the spending bill is more about an ability to “agree” than its substance

    Of course, 3 days of reasoning from a price change is not optimal—guessing as to reasons for the price change—and the reasons may all be phantoms.

    Of course, this is what we want to believe—

  51. Gravatar of Christian List Christian List
    26. March 2020 at 09:39

    Maybe it speeds them up a bit, but so what?

    Scott, for Italy there was close to no preparation time because the Chinese lied. The Swiss are very precise, but they also had hardly any preparation time. We Germans had a bit of preparation time, and that was used a bit. Nevertheless every single additional week would help a lot. So globalization has a lot to do with the current situation, that’s obvious.

    Of course, globalization has also a lot to do with supply chain interruptions and specialization of certain products (masks, ventilators, medicines) in certain countries. In normal times this has many advantages but in these times disadvantages are beginning to show.

    Young German adults hold “corona parties” and cough toward older people.”

    Ray, you’re so fixated on nationalities, it’s really funny. Are you sure that you’re not the Nazi? Corona parties was your strategy until a few days ago by the way. And now you’ve made this complete coward u-turn because you got cold feet. Why don’t you finally prove your herd immunity theory and get infected on purpose? We are waiting.

    Your chances of survival are 99%, let it be 75% because you are a smoker and mentally retarded. Hey, that’s still not too bad!

  52. Gravatar of ssumner ssumner
    26. March 2020 at 13:06

    Carl, I expect it to be below 5%, I picked that to be on the safe side.

    Christian, You said:

    “Scott, for Italy there was close to no preparation time because the Chinese lied.”

    That’s crazy. Yes, they lied, but a week later everyone knew they lied. And smarter people like the Taiwanese always knew it. But then after figuring out they lied (in mid-January), virtually all western countries spent 2 months twiddling their thumbs.

    I bought masks and stocked up on food in January. What were Western governments doing? Almost nothing. Lack of warning was NOT the problem.

  53. Gravatar of Christian List Christian List
    26. March 2020 at 13:38

    Okay Scott, I give you that point, when you admit that your argument “globalization doesn’t matter because Western governments are so incompetent anyway” is rather weak.

    One does not become substantially less guilty just because the victim is an incompetent idiot, who didn’t prepare for the worst in time.

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