2019 Novel Coronavirus Covid-19 Discussion

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#2580994 8-Oct-2020 01:19

tdgeek:

mattwnz:

It is also all the money that is printed and pumped into it.

NZ isn't much different. We are apparently printing $100 billion, and much is also going into assets like housing to keep the bubble going.

OMG are you serious? Last I heard it was way less than 100B, and an amount of that is held back. It was spent supporting wage earners and employers. It wasnt spent building Kiwibuilds other 99486houses, nor buying spec homes

OMG

I think you are talking about what the government borrowing. Not the Quantitative Easing / Money printing that the Reserve Bank is doing, where they have now expanded it up to 100 billion. They were only going to do 60 billion. The reserve bank are independent from the government.

It is stated here

Covid 19 coronavirus: Reserve Bank expands QE to $100 billion

https://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=12355886

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GV27

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#2581020 8-Oct-2020 07:17

The $100b is basically underwriting the short and medium term credit cycle - it means banks keep lending and issuing overdrafts where needed, businesses keep spending etc. Think of it as spraying a massive amount of WD40 on a nut that's seized up. The unfortunately flow-on effect is that a huge swathe of that has found its way onto the mortgage market and a lot of the extra activity is happening there - or in our case, the nut is starting to move so freely that it's at risk of flying off the bolt altogether and leaving earth's orbit.

This is separate to the government's budgeting process and things like Kiwibuild - that's operational spend/treasury stuff. We aren't at the point where RBNZ is directly underwriting government debt, although this is an idea that is starting to get some traction in some circles due to the problems central banks are facing (and arguably causing) at the moment, especially around house prices, and how low-wage, high-cost economies like NZ can fund things like infrastructure without punishing income taxes.

Then again the people who think this is a viable plan seem to act like it's some sort of 'The Secret' style economic theory, and given the speed it takes RBNZ to actually do anything (other than cutting interest rates), it's a way off being accepted as a realistic option.

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#2581021 8-Oct-2020 07:30

So QE is a bad idea? The purpose is to maintain inflation, stimulate the economy and increase employment. You can reduce the OCR, but sorry, thats run out. Assuming the effect of Covid and the "cap" of 100B work out, the bond buying can stop, and the amount of QE can level off. Perhaps they may gradually wind it back using real money over time, but at the end of the day its a tool that is used to maintain a low inflation rate (but an inflation rate) an active economy and a low level of unemployment

I guess if we need to blame someone, we can blame nature. We could also forego a tool like this and just let the economy stagnate, unemployment to increase, tax revenue to decrease. Or the money supply can be managed to allow the economy to operate. Cashflow is oil, it needs to circulate through all sectors of the economy, this tool helps that. Or just let it seize up

GV27

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#2581037 8-Oct-2020 08:24

tdgeek:

So QE is a bad idea? The purpose is to maintain inflation, stimulate the economy and increase employment. You can reduce the OCR, but sorry, thats run out. Assuming the effect of Covid and the "cap" of 100B work out, the bond buying can stop, and the amount of QE can level off. Perhaps they may gradually wind it back using real money over time, but at the end of the day its a tool that is used to maintain a low inflation rate (but an inflation rate) an active economy and a low level of unemployment

The inflation rate is basically meaningless as it excludes anything that would meaningfully measure housing affordability issues. QE is fine, but it was entirely predictable it would flow through to the real estate sector and inevitable once the LVRs were lifted. So it gets hard to figure out how we pay for infrastructure and maintaining the state if people can't afford moderate taxation because their living costs have exploded. I suspect with the benefit of hindsight, we'll come to think that money printer going brrrr was just one bit of it - we probably needed to put in place some safeguards before we flooded the economy with new money. I think we'll inevitably end up embracing MMT, but it won't necessarily be by choice.

tdgeek

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#2581043 8-Oct-2020 08:38

GV27:

The inflation rate is basically meaningless as it excludes anything that would meaningfully measure housing affordability issues. QE is fine, but it was entirely predictable it would flow through to the real estate sector and inevitable once the LVRs were lifted. So it gets hard to figure out how we pay for infrastructure and maintaining the state if people can't afford moderate taxation because their living costs have exploded. I suspect with the benefit of hindsight, we'll come to think that money printer going brrrr was just one bit of it - we probably needed to put in place some safeguards before we flooded the economy with new money. I think we'll inevitably end up embracing MMT, but it won't necessarily be by choice.

The housing affordability issues are just too bad. They existed prior to Covid and are not caused by Covid. That interest rates are now lower due to Covid responses is just an effect that happens, its too bad. Thats another story for another day

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#2581124 8-Oct-2020 10:53

Regarding "How expensive is it to have COVID in the US?"

All figure in US dollars: USD $100 = NZ $152

These are "in-network" costs meaning the cheapest in the US: insured, and using insured resources exclusively. You'd still be responsible for the deductible, which is definitely in the thousands, and varies wildly.

Under-insured or no insurance? you're really screwed.

FairHealth: Median Charge for COVID-19 Hospitalization Ranges from US $35,000 for Patients Aged 23-30 to US $46,000 for Those Aged 51-60, per FAIR Health Study

Chronic Kidney Disease and Kidney Failure the Most Common Comorbidity of Hospitalized COVID-19 Patients

Nationally, the median charge amount for hospitalization of a COVID-19 patient ranged

from $34,662 for the 23-30 age group
to $45,683 for the 51-60 age group

. The median estimated in-network amounts ranged

from $17,094 for people over 70 years of age
to $24,012 for people aged 51-60 years.

The West was the region with the widest range of costs for COVID-19 hospitalizations. There, median charge amounts ranged

from $21,407 for the 19-22 age group
to $93,459 for the over 70 age group.

Median estimated in-network amounts ranged

from $15,289 for the 19-22 age group to
$60,205 for the over 70 age group.

...

DS248

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#2581267 8-Oct-2020 12:12

Princeton University report on the NZ Covid response. Quite a long read but does provide some interesting background. Of course, does not answer whether it was the right decision.

https://successfulsocieties.princeton.edu/sites/successfulsocieties/files/NewZealand_COVID_FInal.pdf

Oblivian

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#2581274 8-Oct-2020 12:19

And now that the 'yay we've done it again!' posts are all done with for 72hrs. Good to see them get straight back onto the borderline dubious stirring sluglines behind paywall

'Pathetically low screening rates': Doctor's Covid warning as virus spread undetected

(Sublines.. Refers to historical : Govt was warned against closing Auckland testing sites as Covid spread undetected, documents show)

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#2581275 8-Oct-2020 12:22

DS248:
Princeton University report on the NZ Covid response. Quite a long read but does provide some interesting background. Of course, does not answer whether it was the right decision.

https://successfulsocieties.princeton.edu/sites/successfulsocieties/files/NewZealand_COVID_FInal.pdf

Iirc the decisions we (and the whole world) made were based on advice by WHO. Which were compete rubbish in hindsight. Which led to the accelerated pandemic. We will never know with the absolute correct response by countries outside China (China did the massive lockdown but the world carried on as normal - we were doing the same just like everyone else initially even given a 1-2 month handicap) whether we would get to where we are now. Might have been inevitable, but human nature facilitated this.

DS248

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#2581298 8-Oct-2020 13:02

Batman: ... (China did the massive lockdown but the world carried on as normal ...

Well, not quite the whole world. A few mainly east Asian countries including Taiwan, Vietnam were prepared and took very prompt action

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#2581301 8-Oct-2020 13:05

DS248:
Batman: ... (China did the massive lockdown but the world carried on as normal ...

Well, not quite the whole world. A few mainly east Asian countries including Taiwan, Vietnam were prepared and took very prompt action

Yes these guys didn't listen to the WHO.

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#2581302 8-Oct-2020 13:05

Just occurred to me that is the first day we're all in level 1.

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#2581304 8-Oct-2020 13:07

DS248:
Princeton University report on the NZ Covid response. Quite a long read but does provide some interesting background. Of course, does not answer whether it was the right decision.

https://successfulsocieties.princeton.edu/sites/successfulsocieties/files/NewZealand_COVID_FInal.pdf

It was absolutely the wrong decision. But I doubt any government would have done anything different or better. Let's keep separate the two sentences.

There were countries who started off well and then imploded too don't forget. (Sg)

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#2581305 8-Oct-2020 13:12

@Batman:

DS248:

Princeton University report on the NZ Covid response. Quite a long read but does provide some interesting background. Of course, does not answer whether it was the right decision.

https://successfulsocieties.princeton.edu/sites/successfulsocieties/files/NewZealand_COVID_FInal.pdf

It was absolutely the wrong decision. But I doubt any government would have done anything different or better. Let's keep separate the two sentences.

There were countries who started off well and then imploded too don't forget. (Sg)

Why was is the wrong decision? What negative impacts outbalanced the positive results? Please show your reasoning.

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Batman

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#2581312 8-Oct-2020 13:22

Sorry I didn't read the article, i thought it said something else.

I was meaning we should have closed the borders and quarantined arrivals from the start, essentially do at the start what we are doing now. Essentially like Taiwan did. That would have avoided all the lockdowns.

But better late than never.

I think some people mentioned way back that no government would have done this at the start, and if they did, would risk mass rioting etc, which I agree!

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