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Email this7:42 pm
August 9, 2014
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Consider China is an extremely important part of global chains of production, this new virus may cause shortage of goods and trigger inflation. Furthermore, this virus may impact sentiment for consumption and investment around the world. Consequentially, is it possible that the world will face stagflation as the epidemic drags on, especially because central banks around the world had significantly increase the money supply in the last decades via QE, and the panic purchase as a result of this disease may significantly increase velocity of money (the speed in which money change hand) ?
9:56 pm
October 21, 2013
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I don't fully understand the question.
Can you break it down into shorter sentences for dummies like me?
and what is "the panic purchase of this disease"?
From the bits I do understand,
I think this situation might accelerate a trend that is already underway towards reduced consumption. You have no doubt read about "the end of growth".
"Growth" is the only thing our kind of economy recognizes as "success"; and this seems to mean more consumption. Sooner or later, it's going to end. We will have outstripped resources if nothing else.
Take two small examples in the "advanced economies". Recycling is becoming an art , with no stigma for re-use. and some people eschew spending as a matter of pride or conviction. Second, new housing units are becoming smaller and require fewer furnishings. The latter was cited recently as a factor in the closing of Barrymore, a longstanding quality furniture manufacturer in Toronto.
It would be hugely ironic if a tiny bug invisible to the naked eye brought the teetering global economy, dependent as it seems to be on QE and ever-lower interest rates, to its knees. I'm not sure what you meant by "novel", but even the best scifi writers would have to tip their hats to "The Bug that Slayed the Economy".
I've never been to China and don't really understand the thinking. I would imagine that with all the measures taken that the bug would spin itself out soon. But maybe not. I wish I understood more about the epidemiology, but I don't have the kind of details I would need in order to come to a considered opinion - or the time to read them if I did. It does seem clear that the Chinese gov't understands, perhaps belatedly, that this is a huge threat to both their economy and to their global image as what I might call a competent emerging superpower.
But I have to admire them for being able to build a large new hospital from scratch in a couple of weeks. In Ontario, we are told it takes years and years and we can't afford it. I hope the thing doesn't fall down next year!
11:07 pm
August 9, 2014
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My questions involve an understanding in economics, where money supply multiplying by the velocity of money circulating in the economic system is equivalent with price level multiplying the real GDP.
QE conducted by central bank have significantly increase money supply, however, we don't have sky rocketing inflation because the velocity of money remain slow, as there are factors of production in the economy that are not used. (This mean increase money supply ideally increase the real GDP, with little effect on inflation) When the virus cause havoc in the global supply chain (Factors of production are diminished, or being use less effectively), people may "panic purchase" as shortage are expected, this is going to increase the velocity of money changing hand in the economic system. When the base of money have elevated significantly due to QE, the increase in inflation can be spectacular as a result.
This of course, dependence on degree of interruption to the supply chain, and people's sentiment, which cannot be predicted. 
"I can calculate the motion of heavenly bodies, but not the madness of people."
Sir Issac Newton - after he lost lots of money in the South Sea Company Bubble
P.S: Novel coronavirus is COVID-19, before it was formally codified by WHO.
5:52 am
October 21, 2013
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I don't always understand what you're talking about, Jon, but I appreciate you bringing these questions up anyway. Sometimes I learn something I can remember.
Think I'll go buy some batteries, just in case.
And tonight we'll go out for Chinese food. The restaurants are hurting but there is no reason to avoid them. There's a lot of irrational fear going around.
9:06 am
October 29, 2017
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We should see inflation first and that will quickly turn into a deflationary spiral. That’s if this Novel Coronavirus becomes the trigger.
10:29 am
April 6, 2013
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It is way too early to be considering the end of the world.
CDC estimated that 151,700 to 575,400 died worldwide from the H1N1 virus in its first year (2009). World didn't end economically then.
So far, the worldwide fatalities from the novel coronavirus is in the range 2,000 to 3,000.
Are people trying to rewrite history now and say that the 2008 Great Recession was from the H1N1 virus instead of from seriously-flawed mortgage lending?
6:07 pm
September 11, 2013
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So far death rates for those under 70, i.e. those who keep the place going, are minimal, pretty well everybody survives, from what I can tell no evidence this is another plague. 1.2 million or so die every year globally due to traffic accidents alone, no-one even notices, plus about 360K babies born every day. We're good.
3:53 pm
October 29, 2017
Offline5:13 pm
February 20, 2018
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A lot of empty seats at U.S. health secretary Azar press conference. Only a dozen or so attendees
9:09 am
January 12, 2019
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.
It's time to put the COVID-19 Coronavirus into proper perspective❗
According to WHO ... Globally, the 'Flu' kills up to 650,000 people per year.
Health.com ➡ https://www.health.com/condition/cold-flu-sinus/how-many-people-die-of-the-flu-every-year
" Live Long, Healthy ... And Prosper! "
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