{"id":53136,"date":"2020-05-10T09:43:33","date_gmt":"2020-05-10T14:43:33","guid":{"rendered":"https:\/\/olduvai.ca\/?p=53136"},"modified":"2020-05-10T09:43:38","modified_gmt":"2020-05-10T14:43:38","slug":"its-only-paper","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=53136","title":{"rendered":"It’s Only Paper"},"content":{"rendered":"\n

IT\u2019S ONLY PAPER<\/a><\/h3>\n\n\n\n

The response to the virus has added a new mechanism of capital consumption to the many we have documented over the years<\/a>. Businesses are shut down, yet they continue to incur expenses. There is a popular misconception out there that this is merely a paper<\/em> loss. One can almost picture a neutron bomb that somehow wipes out only paper, leaving all the physical assets and plant unscathed. It\u2019s a pleasant fantasy. And it\u2019s quite a popular one\u2014not only amongst all the usual suspects, but even an Austrian school economist of our acquaintance asserted it.<\/p>\n\n\n\n

As an aside, this illustrates that, too often, economists are unfamiliar with business. The economist looks at a closed restaurant and thinks there\u2019s no reason why this restaurant can\u2019t be mothballed for a day, a week, a month, or a year. The owner of the restaurant would object that he\u2019s still paying certain expenses, even if he\u2019s laid off all of his staff. And the economist retorts, \u201cThat\u2019s just paper!\u201d<\/p>\n\n\n\n

The economist\u2014and politicians\u2014are tempted to think that the government and its central bank can restore the lost paper <\/em>capital by extending a loan, or even doling out free money<\/em>. This is simply not true.<\/p>\n\n\n\n

One thing should be bloody clear: whatever expenses this restaurant pays, is a transfer of real resources from the restaurant to the recipients. Those recipients are buying food, fuel, clothing, shelter, etc. It\u2019s not just paper.<\/em><\/p>\n\n\n\n

Looking deeper into the restaurant, we see that, even when it\u2019s closed, it\u2019s still burning some electricity (even if not as much as when it\u2019s operating). There\u2019s insurance premiums. And building maintenance. Over time, exposure to sun, wind, rain, and snow damages the roof, windows, and even the walls. <\/p>\n\n\n\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"

IT\u2019S ONLY PAPER The response to the virus has added a new mechanism of capital consumption to the many we have documented over the years. Businesses are shut down, yet they continue to incur expenses. There is a popular misconception out there that this is merely a paper loss. One can almost picture a neutron bomb that somehow […]<\/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],"tags":[7380,309,6039,7957,29428,29666,855],"class_list":["post-53136","post","type-post","status-publish","format-standard","hentry","category-economics","tag-cobden-centre","tag-fiat-currency","tag-free-money","tag-keith-weiner","tag-lockdowns","tag-paper-losses","tag-viral-pandemic"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53136","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=53136"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53136\/revisions"}],"predecessor-version":[{"id":53137,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/53136\/revisions\/53137"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=53136"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=53136"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=53136"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}