1) Technological deflation was impacting economies long before Covid19. With technology you would continue to get more for less. If natural forces were at play, prices of EVERYTHING would fall.
2) That didn't happen. It was hidden - through massive injections of debt that could never be re-paid. 185 trillion added in last 20 years to achieve 46 Trillion of GDP growth. Creating a problem so BIG - that governments continue(d) to be "forced" to bail out existing system.
3) Not because they wanted to - but, because letting the system fail and go through a disorderly unwind (as Capitalism calls for) might have been a worse alternative in a set of bad choices. ie - a global banking system collapsing and entering into a prolonged global depression.
4) But - The byproduct of bailing out the system, where it would otherwise fail, only prop(s) up asset prices, stock prices unnaturally. Effectively acting as socialism for the rich. Asset owners win - Non asset owners lose.
5) Ironically, Covid19 actually speeds the adoption of technology, driving the trend faster and driving more dislocation into the existing economic model.
6) And so once again - the calls for massive injections of money to "save" the system again. This time only bigger $$$ Name an industry that isn't asking for a bailout.
7) Technology companies are actually beneficiaries. Ex. - Zoom going from 10 million users to 200 million in a month. Think how companies "might" decide that working from home is efficient and impact on commercial real estate prices and the loans on those assets.
8) Ex - Retail was already under enormous pressure before Covid19. Again, this only accelerates the trend to ecommerce that was there all along. Technology is moving faster now!
9) There needs to be a policy response - but bailing out existing system without understanding the key STRUCTURAL change is like adding candy isles to Blockbuster to try to stop Netflix. Massive money will be wasted and it will fail regardless.
10) and more people in the end will be hurt.
Never waste a good crisis. There is an opportunity to make the system better.
Never waste a good crisis. There is an opportunity to make the system better.
