{"id":51931,"date":"2020-03-24T15:16:39","date_gmt":"2020-03-24T20:16:39","guid":{"rendered":"https:\/\/olduvai.ca\/?p=51931"},"modified":"2020-03-24T15:16:47","modified_gmt":"2020-03-24T20:16:47","slug":"for-an-effective-response-to-the-upcoming-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=51931","title":{"rendered":"For An Effective Response To The Upcoming Crisis"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.dlacalle.com\/en\/for-an-effective-response-to-the-upcoming-crisis\/\">For An Effective Response To The Upcoming Crisis<\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Before analyzing the emergency plans that the global economy needs, we must remember that, as in the past,&nbsp;<strong>the prudence and responsibility of the civil society and businesses will help us to get out of this crisis<\/strong>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">In the face of an unprecedented crisis, we have to be realistic, responsible and cautious.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">This is a supply shock added to a mandatory shutdown of the economy. As such, a serious response must be supply-side driven. It is ludicrous to try to stimulate demand with printed money and public spending in a forced lockdown where any extra demand will not drive supply up, even may drive it down.<\/p>\n\n\n\n<figure><iframe loading=\"lazy\" width=\"604\" height=\"340\" src=\"https:\/\/www.youtube.com\/embed\/OHpgf2O1bX4?feature=oembed\" allowfullscreen=\"\"><\/iframe><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">A mandatory shutdown due to a supply shock is not solved with government spending or demand-side measures. Printing money and lowering rates help the already indebted and governments with already historic-low bond yields, deficits are already going to soar due to automatic stabilizers, so governments need to work on three things:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">First, make sure that once there is a tested and approved vaccine, the production, distribution, and healthcare networks are going to be adequately prepared to respond to the population requirements.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Second, make sure that businesses don\u2019t collapse due to working capital build in a domino of bankruptcies that leads to mass unemployment.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Third, eliminate all unnecessary spending to effectively use all fiscal space to mitigate the crisis effects and allow the economy to breathe and recover.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Governments that overspent in growth times, massively increased debt and ignored the pandemic risks only to then create a widespread lockdown cannot present themselves as the solution.&nbsp;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Small and medium enterprises do not need a government to incentivize demand, because this is not a demand problem, the shutdown is imposed by law due to a health epidemic that lawmakers preferred to ignore.\u00a0<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>For An Effective Response To The Upcoming Crisis Before analyzing the emergency plans that the global economy needs, we must remember that, as in the past,&nbsp;the prudence and responsibility of the civil society and businesses will help us to get out of this crisis. In the face of an unprecedented crisis, we have to be [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,4],"tags":[28817,16957,303,11030,3650],"class_list":["post-51931","post","type-post","status-publish","format-standard","hentry","category-economics","category-environment","tag-coronavirus","tag-daniel-lacalle","tag-fed","tag-supply-shock","tag-us-federal-reserve"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51931","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=51931"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51931\/revisions"}],"predecessor-version":[{"id":51933,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/51931\/revisions\/51933"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=51931"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=51931"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=51931"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}