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April 02, 2020

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And...Janie and I cross-posted, but some of her comment seems to address what I was saying, if I understand it correctly.

JanieM, what you're talking about is the velocity of money, which multiplied by the money supply results in GDP. How much money is there, and how fast does it change hands?

https://en.wikipedia.org/wiki/Velocity_of_money

I framed the thought experiment to take money out of the equation, even though money is a big part of the experiment. It's kind of a ceteris paribus assumption, such that the only difference is what people do, consume, and make, leaving the money side unchanged. That way, no one is any worse off from a purely financial perspective. What did they otherwise lose (or even gain) without whatever stuff didn't happen? I write that as someone who loves eating out; traveling; going to concerts, sporting events, museums, bars, etc. to the extend that I can reasonably afford to do those things.

But do I need to do those things? Can I do more other things that don't involve as much economic activity to fill the void left from not doing those things?

Maybe a bit esoteric and dry. And may not answer the questions being raised.

"The weak link in monetary policy is the connection between money as a stock and money in circulation, the so-called velocity of money. The velocity of the circulation of money refers to the frequency of the monetary transactions in an economy. One unit of money serves for several transactions over time.

Because “money” is not a definite term, the dimension of the stock of money depends on the definition of the aggregate. To determine the velocity of money, the monetary authorities use various aggregates such as the monetary base or the monetary stock M1 (cash and deposits) or the wider aggregates M2 or M3 as references."
What Is Money Velocity and Why Does It Matter?


"Some commentators are of the view that when the velocity of money rises, all other thing being equal, the buying power of money declines, (i.e., the prices of goods and services rise). The opposite occurs when velocity declines.

If, for example, it was found that the quantity of money had increased by 10% in a given year, while the price level as measured by the consumer price index has remained unchanged it would mean that there must have been a slowing down of about 10% in the velocity of circulation.
...
Contrary to popular thinking, the velocity of money does not have a life of its own. It is not an independent entity and hence it cannot cause anything, let alone offset the effect of changes in the supply of money on the prices of goods and service"

The Problem with "Velocity of Money"

Thanks hsh and CharlesWT.

Lots to think about.

Contrary to popular thinking, the velocity of money does not have a life of its own. It is not an independent entity and hence it cannot cause anything

Of course it has a life of its own. It isn't independent, in the sense that it is the result other actions and not subject to simple adjustment, the way an interest rate is. But it can't go to zero. Indeed, it will only vary within a relatively narrow range, absent a major upheaval -- such as we are currently experiencing.

Also, as the article notes, the velocity can't be directly measured the way you measure the velocity of an airplane or a baseball. But the fact that it's calculated doesn't mean it's arbitrary, or any less real.

How did I know there would be a Mises link? ;^)

I don’t know how many people would think there’s any such thing as a truly independent variable in a system as complex as a large, modern economy. Maybe some models treat them that way as a simplifying assumption, like ignoring negligible friction in a basic physics problem. Either way, dependent or independent, they can still be multiplied.

It’s beside the point, though, (at least my point) since my thought experiment was designed to leave money unaffected, whether in supply or velocity.

Before you read this, it's just my mind working through the question.

Well, simply, without stuff money doesnt exist. Money is simply a store of value, like JanieM's savings, thanks be exchanged for other things of value.

Money allows the farmer to sell to the store owner without taking goods as payment.

Farm workers take money rather than food and shelter.or farm goods they would then have to trade. All simple so far.

In hsh's question you have to search for the initial source of value. Something is created, if not there is no movement of value from one person to the next, so there is no need for money. So the amount of money in the system is the total amount of value, goods and services, that has been created but not consumed plus the stored value.

So, whose value store gets depleted if we pay for no goods or services being created? Not to mention the complexity of varying levels of effort and materials to create the required(?) Goods and services that would become scarcer as people dudnt need to create anything to maintain their value store.

And gain I'm not answering his question, I'm thinking about it out loud.
It's more fun than looking it up.


I'm not sure I understand, hsh.

Ipay the restaurant for meals I didn't eat. But I still have to eat, and on top of my normal expense for food I eat at home I have to buy food to substitute for those restaurant meals.

So how would that work?

You tell me. Everyone gets to play. Maybe you get the food at a discount, only paying what you otherwise would have spent at the store. Ultimately, people need to eat no more than before, and now there is less cost in preparation because you’re eating a chicken breast instead of sushi. All of which boils down to the original premise - money does what it otherwise would have, but people and stuff do way less.

So if we just paid a lot more for the basics and the extra was redistributed to people who didnt/couldn't work how would that do?

There are likely more efficient ways to redistribute, tax everyone and pay a UBI, but ultimately the impact is the same.


If we get through this episode more or less intact as a nation, then:

Some form of a permanent UBI will not seem as outlandish (though it will be just as "socialist") as before.

"Telecommuting" will become way more common. You can't manufacture toilet paper over the internet, but there are precious few manufacturing plants in big, congested cities. Big cities are where the office jobs are.

Hand washing and other forms of hygiene may become as ingrained as taking your shoes off at the airport. Probably to better effect.

"Undocumented" people will either be already starved to death, or taking up arms to survive, or -- we can but hope -- finally become eligible for "government benefits" like, you know, people.

--TP

"You can't manufacture toilet paper over the internet"

3D printing!

Okay, maybe not, but I've been sorely tempted to buy (online) one of those japanese Toto "smart, washlet" heated toilet seats with bidet.

And remote control, because of course it has to have one.

I've wanted one for *years*, but have delayed because I wasn't sure how well it would work out long-term (reliability, cleaning, stuff like that), and concerned it might wind up being a PITA.

The best possible outcome would be the end of the notion we should all live in huge cities, to go with Tony's telecommuting, saving the environment and reducing the risks of pretty much all threats to people.

i hope air quality scientists are getting good data right now.

i'd love to see what this is doing for air pollution from cars, planes and trucks.

Justin Amash favorers something like a UBI over other types of economic intervention for the duration of the pandemic.

Libertarians are generally against UBIs, but prefer them over other types of aid since the money bypasses bureaucracies to go directly to individuals with few or no strings attached.

The US exports about 800,000 rolls of toilet paper a year. And imports about 1.2 billion rolls. The run on toilet paper wasn't totally nuts. Estimates are that people when stuck in their homes, use about 40% more than normal.

An argument for continued urbanization.

"Urbanization is on the rise around the world. By 2050, some 70 percent of humanity will live in the cities and that is good news for the environment. Many of the environmental advantages are derived from living spaces being condensed. For example, electricity use per person in cities is lower than electricity use per person in the suburbs and rural areas.

Condensed living space that creates a reduction in energy use also allows for more of the natural environment to be preserved. In a suburban or rural environment, private properties are spread out, because land values are relatively low. So, more of the natural environment is destroyed. In cities, property values are higher and space is used more efficiently. That means that more people live in the same square mile of land than in rural areas. Another environmental advantage of cities compared to rural areas is a decrease in carbon emissions per person. In a rural or suburban area, people normally use their own vehicles to drive to work or anywhere else. Due to congestion, the use of personal cars in the city is much less attractive. More people use public transportation instead and that means that less carbon dioxide gets released into the atmosphere."
Urbanization Is Good for the Environment: By 2050, some 70 percent of humanity will live in the cities and that is good news for the environment.

Yeah Charles, we need to reverse that stupidity. Every bad thing that happens to human beings happens more often as population density rises.

Okay, maybe not, but I've been sorely tempted to buy (online) one of those japanese Toto "smart, washlet" heated toilet seats with bidet.

No heated seat, but after I had my second kid, a VBAC delivery of a ten-pound baby (with all that implies), the nurses gave me an empty rubber bottle that had held Betadine to use as a sort of portable bidet. I've kept one on hand ever since. Regular use can cut way down on toilet paper consumption.

Toilet paper -- it turns out I'm usually pretty careless with it. For the past month I've managed to make each roll last about twice as long as before, out of an abundance of whatever. Not at the "Monkey Ward" catalog phase yet....

Do people stuck in their homes use 40% more than normal overall, or just 40% more at home than they normally use at home? I mean, if it's the former, a little habit adjustment and awareness would seem to be called for, FCOL.

There are likely more efficient ways to redistribute, tax everyone and pay a UBI, but ultimately the impact is the same.

Perhaps, but the point of the mental experiment is to at least try to stop thinking about money and think about how people live and use real resources to do so. What do we really need? What do we do if we don’t have to work as much? How do we remain happy and healthy with less economic activity?

I've wanted one for *years*, but have delayed because I wasn't sure how well it would work out long-term (reliability, cleaning, stuff like that), and concerned it might wind up being a PITA.

I want one too, and don't have one yet (and, yes, the rubber bottle method works, but is not nearly as glamorous). I've used them though in friends' houses and hotels. When I was in Turkey, every toilet (not just fancy places) had a simple bidet streaming thing, which seemed to make a lot of sense. What has taken us so long for at least these simple ones to be standard? Seems a little more sanitary.

If you like a chart that moves:

https://digbysblog.net/2020/04/its-not-just-like-the-flu/

I believe the 40% increase is a 40% increase in home use due to being home all the time.

I messed up the export/import figures. 802 million export, 2.2 billion in import.

"According to Sta​tista​.com, the United States leads the world in toilet paper consumption, averaging 141 rolls of the fluffy stuff per person per year. So, the precious supply that U.S. producers exported last year could have sated the derrieres of some 5.7 million Americans. Juxtapose that stat against the wrestling matches you’ve witnessed in your grocer’s paper products aisle."
A Quick and Dirty Lesson about the Trade Deficit

I'd love to see what this is doing for air pollution from cars, planes and trucks

In the San Francisco Bay Area, the numbers I've seen have been on the order of down 1/3.

I'd be curious whether those TP imports are just from Canada -- which would actually be closer than domestic manufacturing sites in many cases. Or are we actually shipping them some significant distance?

"Toilet paper, similar household sanitary items, the No. 257 import by value totaled $98.37 million for the month of February, $214.25 million through February of 2020, and $1.29 billion for all of 2019, the latest annual data available, according to U.S. Census Bureau data analyzed by WorldCity."
Imports: Toilet paper, similar household sanitary items: #1 YTD China: $93.58 million

OT, please forgive me.

There's a thing now where people go outside at 7 PM and make noise. 7 (AM or PM) is shift change at many hospitals and other first-responder places, the noise-making is intended to signal gratitude and appreciation.

Our neighbors across the street are a Cambridge MA cop and a nursing home nurse. Next door neighbor is a nurse at our local hospital. So everyone on the block went outside to make a racket at 7.

Chatting afterwards, the neighbor across the street who is a nursing home nurse shared that she has one N95 mask allocated to her, which she re-uses every day. The direction she has from her employer is to "hang it in the sun" when she is not using it, as a way of disinfecting it.

Every bad thing that happens to human beings happens more often as population density rises.

Not really. For instance, suicide by firearm. Or alcoholism, or opioid addiction, or smoking.

Don't mistake your personal preferences for the full picture.

The phenomenon of the hoarding of toilet paper during crises is, I believe, referred to as "risk displacement" or "risk transference", I may have the term wrong, in which the seeking out and finding toilet paper in quantity gives us the sense, the illusion, of at least controlling one thing, one simple aspect of our lives, when things go off the rails, when the Earth's magnetic poles shift, when the moo cow is swept from the barnyard into the funnel of the tornado, never to be seen again.

https://www.youtube.com/watch?v=EXEIQLcW54A

the seeking out and finding toilet paper in quantity gives us the sense, the illusion, of at least controlling one thing, one simple aspect of our lives, when things go off the rails

When faced with similar circumstances, some people re-arrange their junk drawers.

The direction she has from her employer is to "hang it in the sun" when she is not using it, as a way of disinfecting it.

My very close friend (as in best man at my wedding) is a nurse, as is his wife, in the University of Pennsylvania hospital system. World class in the richest nation in human history. He says they’re told to reuse their PPE in inappropriate ways, presumably because that’s the best option. Whatever the “whereby”s and “wherefore”s, that is f**ked.

US hospitals can save you life with cutting edge medicine. And then kill you with faulty patient management.

"US hospitals can save your life with cutting edge medicine. And then kill you with faulty patient management."

Yes, my sister went the way of all flesh thataway.

Return on investment for the large publicly-traded hospitals chains is out of this world, however.

It's a trade-ff none of us signed off on, but which Larry Kudlow and millions pad their fortunes with.

Plus they may turn away all of those Covid-19 victims without the recourse to pay to the publicly-owned gummint hospitals, after a courtesy and cursory temperature check, and offload the excess to the city and municipally-pwned hospitals and save space in their basement mortuaries for the luckier dead f*cks among us who make thru check-in.

https://www.motherjones.com/coronavirus-updates/2020/03/coronavirus-could-cause-health-premiums-to-skyrocket-new-study-finds/

There is a Libertarian solution to what's coming.

It's somewhat like China's rumored, thus far not confirmed, practice in Wuhan Province.

Mobile incinerators for the uncounted dead.

There is an upside however in Trump's Marxist, Maoist, some might say, Sanders-like move to simply universally pay the bills of all of the Covid-19 sufferers outright with tax dollars, thus saving them and the hospitals from outright penury.

What do you call a Libertarian during a global pandemic when you see him or her coming at you on a city sidewalk, offering his or hand in greeting and mask-less, just off from a condom-less make-out party and drinks at the off-license, unregulated cabaret of the type recently opening here and there, so that freedom may ring?

A rabid dog.

Not you Charles; I get that all of the other casual Libertarians in America have misunderstood your ideology.

I am incorrigible.

Jack Burns is my hero, so it's not like I don't harbor some sentimental libertarian fuck private property tear down that wall feelings my own self.

https://www.lawyersgunsmoneyblog.com/2020/04/the-outflanking-iv-tired-of-all-the-outflankening

Mobile incinerators for the uncounted dead

They're using refrigerator trucks as mobile morgues now in NYC.

I am superstitiously controlling my smallish immediate environment by re-arranging all of my drawers, closets, the trunk of my car etc, washing my hands before and after.

My hands, especially the backs of them, are beginning to look like old crone washerwoman's claws in a Thomas Hardy novel.

I've opened up little wounds from the scrubbing.

Trump's hands show nothing, not a scrape from labor, not a callous, except perhaps on the tip of the thumb which he uses to flip through the TV channels on the remote seeking a fawning petting zoo for the animal called his ego.

His tiny crabbed black character is a thick carapace of dead callous.

The direction she has from her employer is to "hang it in the sun" when she is not using it, as a way of disinfecting it.

sadly, from what i've read, UV from the sun isn't intense enough to do the job.

i have a box of 7 N95s in my garage, leftover from a stone-cutting project. i'm torn on whether i should find a way to donate them to a hospital, or hang onto them for our own use.

Not keeping count, but counting the wrong thing instead.

https://www.nytimes.com/2020/04/05/us/coronavirus-deaths-undercount.html

Meanwhile, I think I know where that $500 billion Mnuchin is sitting on is now going albeit with Trump's demand that it be kept unaccountable.

Dow Jones futures are up 800 points this morning, as the means of producing a Trump win in November goes into full operation, IF an election is actually held.

My prediction regarding the VIX (Volatility Index) a week or two ago, that it was signaling at least a temporary bottom in the market, turns out to have been on the money, as the indicator has been halved since then, though it is still roughly four times above it's steady state levels maintained over the past few years.

https://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=VIX&insttype=Index&freq=2&show=&time=12

I haven't capitalized on it. Too paralyzed, or rather too distracted, like Henry Hill in the final frenetic ending of "Goodfellas", when he's juggling the meatballs and the stirring pot of marinara on the stove, his utterly paranoid wife, the stubborn goofy teenage courier who needs to drive across town to retrieve her lucky hat for the plane ride to Pittsburgh carrying product and craning his neck trying to get a bead on that helicopter that seems to be tracking his very move.

Throw in 35 hand washings (20 seconds each) and you see what I mean.

Been paying too much attention to this guy doing his mash-up, Will o'the Wisp impression of Nikolai Bukharin, Antonio Gramsci, and Che Guevara:

https://www.msn.com/en-us/money/markets/%e2%80%9ckill-your-earnings%e2%80%9d-jim-cramers-surprising-take-on-the-coronavirus-crisis/ar-BB12dDfk

I expect him here soon to begin affecting a sort of Sartrean persona, perhaps delivering his carny barker bromides with a beret jauntily covering one eye, and grasping the nub of a Gauloises ciggie French-style between his ring finger and his bird finger, one eye squinting from the ascending smoke, as he gives out with some impenetrable Marxist theory.

Meanwhile, here, the intermittent around-the-edges amateur socialists receive an eye-poking from one conservative/libertarian guest or another, when really the latter should take that pokey finger of theirs, insert it firmly up their butt holes, and sit down on it hard.

Welp, that'll be enough from me already early on a Monday morning before I go just a ..... little outside, as Uecker might say.

Stay safe, all.

Navigating today's world:

So my boss calls this morning, to ask if we have those masks that are now being recommended for everyone when we go out. (We do.) Seems it has occurred to her that they might be a business expense. I point out that we haven't had an in-person meeting in a couple of years, so I doubt it. To which she responds: "But I don't want you guys to die!" Gotta appreciate the sentiment anyway.

I don't want you guys to die, either, wj, FWIW. ;^)

Same to everybody here!

But there's no way ObWi constitutes a business for tax purposes. Sigh.

Having no ready-made masks, I made some experiments in what I call "McGyver engineering".

Thinking that easily disposable is better than washable, the first thing I tried was (don't laugh) coffee filters.

First test: yes, I can breathe through one or even two of them.

Second test: can I fog a mirror by exhaling through the filter? (My notion being that fog on the mirror equals microscopic droplets of moisture in my exhaust, which is what we're trying to prevent.) Well, no and yes.

Turns out that exhaling through the filter directly on to a mirror 1-2 inches away does not fog it. BUT: unless I taped the filter to my face all around, my exhaust would get through unfiltered somewhere -- and fog my glasses, for instance. No tape I have handy will stick to my skin very long, alas. I have some surgical tape somewhere that I will try when I find it.

I did find an old (like, 20 years old) carpenter's dust mask, which has a somewhat rigid plastic mesh structure shaped to cover the mouth and nose somewhat conformally. It seems to pass the mirror-fogging test, but the felt-like lining that does the actual filtering may be hard to clean reliably. So another thing I will try is to find some way, however dorky looking, to fasten a coffee filter to the outside of it.

It strikes me, BTW, that many companies I have consulted for operate clean rooms, in which gloves and masks are de rigeur. But I haven't heard anything about possibly commandeering some of those in this trying time of crisis nd universal brouhaha.

--TP

Boris is in the ICU?

yipes.

Al Kaline died today.

He had a better throwing arm than Boris.

Kids baseball gloves (at least back in the day) came "signed" by a player. Mine, it occurs to me, was an Al Kaline glove.

Boris is in the ICU?

yipes.

So far they're saying he's not on a ventilator, but that his symptoms worsened during the afternoon and they have moved him to ICU "to have easy access to ventilators if necessary".

It's looking very dicey. I've just been in a multi-person skype, full of my dearly beloved (lefties all). Not a one wishes any harm to come to him, we were all worried about the destabilising effects if he should die. The only upside would be that maybe those who are not yet taking the lockdown seriously would suddenly do so.

Tony P: I have to go out tomorrow, and into two shops, one of them for masks. I am otherwise not going out at all and having groceries etc delivered, I was worried, but hadn't thought of coffee filters - brilliant! I have some adhesive tape which was used to put an eye guard on after an eye operation, so I know it works on skin. Many thanks.

Other nonwovens - antibacterial wipes, washed and dried out, for example - should do the job, too.

Good idea, Nigel, thanks.

The CDC has a few DIY mask ideas. I like the "no sew" t-shirt mask. Super simple.

https://www.cdc.gov/coronavirus/2019-ncov/prevent-getting-sick/diy-cloth-face-coverings.html

I like the no-sew masks too! But it makes me feel bad that my very meager skill set is wasted.

"Boris is in the ICU?

yipes.

So far they're saying he's not on a ventilator"

He's "helping the doctors with their inquiries", I'm sure.

I'm praying to a Road to Damascus epiphany, but I doubt it.

it would be nice if Fox News get its ass handed to it on account of its misinformation re C19.

since the GOP won't take any action for Trump's continued misinformation spewage, a little accountability would be nice.

I'd like it too, cleek, but I'm dubious that goes anywhere.

IANAL, of course.

We are being Orbanized.

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