Sweden Dealing with Covid the Right Way

[ckissick]

New studies suggest that Covid-19 was in California in November or December last year. So why didn't we have noticeably more disease and terrible death counts while we did nothing for up to 3 months? They say we had been having a worse flu season than normal, but not that much worse. Doesn't this mean we would be fine doing what Sweden is doing?

[dad911]

Originally Posted by ckissick

New studies suggest that Covid-19 was in California in November or December last year. So why didn't we have noticeably more disease and terrible death counts while we did nothing for up to 3 months? They say we had been having a worse flu season than normal, but not that much worse. Doesn't this mean we would be fine doing what Sweden is doing?

Link?

https://komonews.com/news/coronavirus/seattle-researcher-debunks-theory-covid-19-spread-in-calif-in-november

There is a lot of Twitter chatter surrounding a rumor that circulation of #COVID19 in California in fall 2019 has resulted in herd immunity. This is empirically not the case. COVID-19 was first introduced into the USA in Jan/Feb 2020.

[Sooner or later]

Where would NYC's case count be if they had used Sweden's model?

Some areas of the US could have probably done fine with less restrictions. Other areas would have been disastrous.

[ckissick]

Originally Posted by dad911

Link?

https://komonews.com/news/coronavirus/seattle-researcher-debunks-theory-covid-19-spread-in-calif-in-november

A local news channel, talking about a Stanford study. Apparently, the experts do not agree.

[jyl]

Originally Posted by McLovin

This is the part I need explained.

Our federal yearly budget (total spending) is roughly $4.2 trillion.

Our total revenue on that spending is roughly $3.8 trillion.

I can see where we have an unexpected emergency and spend/“print” a few hundred billion. And calling that a minimized economic impact on our economy.

But 2.2 trillion? Or more likely $4 or $6 trillion?

We can “print”/spend as much as our yearly budget and that can be accurately described as having a “minimized” economic impact on us.

Please explain. I’d be happy to understand, because maybe I’m worrying about nothing. It seems to violate the “there’s no free lunch” principle, or math as I understand it, but I hope I’m wrong and there’s something going on that I’m missing.

Mechanically, it will work like this: Treasury issues $X trillion of Treasury bonds, primary dealers (about 10 large banks) buy them, some get resold to investors, the bulk get bought by Federal Reserve. The Fed simply creates US dollars (USD) from thin air, aka printing money. USD is a fiat currency, not backed by gold or anything tangible.

In the short run (months, maybe a couple years) this may have no obvious consequence. The Fed did the same thing in 2009-2018 and inflation didn’t rise nor did the USD fall vs other currencies. That was at a much slower and smaller scale than what the Fed is doing today. But the demand for USD is if anything higher in this crisis. The global financial system runs on USD, the majority of the world’s businesses must pay bills and buy materials in USD, in times of crisis people and companies hoard USD taking trillions of USD out of circulation, so the demand for USD is extreme and the Fed can simply print more with minimal negative consequence.

I don’t like this, I don’t think it is healthy or good, but I’m just telling you how it is.

In the longer run (more than a couple years), the virus crisis will pass and global business will get up and running in a normal-ish manner. When the demand for USD eases and more of the existing USD goes back into circulation, then I fear printing USD will run into limits. Some think the value of USD will decline, inflation will rise, Treasury bond yields will rise, etc. Others point to the 2009-2018 experience to say that this doesn’t have to happen. I don’t know. Pretty clearly the Fed can print some amount of USD each year without dramatically breaking things, but is that $1TR, $4TR, or what?

We are conducting an unplanned, unintended experiment with Modern Monetary Theory. I don’t like MMT, I viscerally think it’s bad and dangerous, I can make arguments why MMT will end badly and previous efforts at MMT ended with currency crises and economic damage but none were by the dominant economic force wielding the dominant global currency, so it is fair to say that arguments pro and con are just arguments and no-one knows.

[McLovin]

I agree the answer is likely unknown. Although I do not believe that the economic damage long term is going to be minimal.

A few thoughts:

1. I don’t think what we’re doing has any comparison to 2008. The numbers are in a completely different stratosphere. And my understanding of 2008 was that was mainly a liquidity crisis, so a big part of the money the FED put out was returned (and relatively quickly).

2. Right, the Fed can print some amount without breaking things. Everyone would agree that $10 would have no impact. Most (but surprisingly not everyone) would agree that printing and giving $1 million to every citizen would break our system. I’d have to think that the numbers we are talking/doing today ($2.5 to $6 trillion, in a system with yearly revenues of $3.8 trillion), has to be more towards the latter than the former.

3. I suppose all of it has to be in the context of existing debt. If we had zero existing debt we could add a bunch and still be better off than we are today. But we’re in a reality where we went from $5 trillion in 2000 to $23 trillion today. That must have an impact.

[jyl]

Yeah, I have similar concerns.

Normally, if you’re worried about inflation you buy equities and if you’re worried about inflation and interest rates you buy income assets like real estate. But we’re seeing that rents from real estate can simply be cut off with no recourse by the property owner. Lots of small landlords are being driven to the wall by tenants not paying rent due to soaring unemployment. I understand why many tenants can’t pay and why governments won’t let millions be evicted, but the risk of real property just went up.

[Shaun @ Tru6]

If you look here: https://www.worldometers.info/coronavirus/

Sweden has significantly higher deaths/1M pop than Germany, Norway, Finland, Denmark and the U.S.

Or is that unimportant?

[Iciclehead]

Originally Posted by jyl

Mechanically, it will work like this: Treasury issues $X trillion of Treasury bonds, primary dealers (about 10 large banks) buy them, some get resold to investors, the bulk get bought by Federal Reserve. The Fed simply creates US dollars (USD) from thin air, aka printing money. USD is a fiat currency, not backed by gold or anything tangible.

In the short run (months, maybe a couple years) this may have no obvious consequence. The Fed did the same thing in 2009-2018 and inflation didn’t rise nor did the USD fall vs other currencies. That was at a much slower and smaller scale than what the Fed is doing today. But the demand for USD is if anything higher in this crisis. The global financial system runs on USD, the majority of the world’s businesses must pay bills and buy materials in USD, in times of crisis people and companies hoard USD taking trillions of USD out of circulation, so the demand for USD is extreme and the Fed can simply print more with minimal negative consequence.

I don’t like this, I don’t think it is healthy or good, but I’m just telling you how it is.

In the longer run (more than a couple years), the virus crisis will pass and global business will get up and running in a normal-ish manner. When the demand for USD eases and more of the existing USD goes back into circulation, then I fear printing USD will run into limits. Some think the value of USD will decline, inflation will rise, Treasury bond yields will rise, etc. Others point to the 2009-2018 experience to say that this doesn’t have to happen. I don’t know. Pretty clearly the Fed can print some amount of USD each year without dramatically breaking things, but is that $1TR, $4TR, or what?

We are conducting an unplanned, unintended experiment with Modern Monetary Theory. I don’t like MMT, I viscerally think it’s bad and dangerous, I can make arguments why MMT will end badly and previous efforts at MMT ended with currency crises and economic damage but none were by the dominant economic force wielding the dominant global currency, so it is fair to say that arguments pro and con are just arguments and no-one knows.

Good argumentation, interested in your point of view as to the difference that being the reserve currency and effectively the monetary (fiat) instrument of last resort has on where you project things are going.

Tabs and I have had this running debate over the years where I tend to the camp that it can be worked out as much of the debt is held within US governmental institutions...sort of a giant Grandma's cookie jar...with the proviso that as long as every kid thinks that their cookie is safely in Grandma's jar, then all is well, particularly if grandma is there to administer and control the rate of cookie outflow as well as bake more cookies at a rate high enough to meet demand.

The issue is when either someone sees the jar is emptying rapidly yet grandma keeps on promising cookies to the new kids in the family faster than she can bake them and begins to fear that their cookie is purely a figment of grannie's imagination.

Then the chips really begin to hit the chipper to badly mix my metaphors.

The kids down the block who are also expecting cookies out of the jar (e.g. China, Japan, outside cookie owners) don't dare complain even when they fear the contents of the jar are effectively empty, both as raising the fear will cut off their cookie supply and also, they'll get shot by grandpa at grandma's behest if she doesn't like them.

No cookie is worth that.

...and so far, the only reliable supply of cookies is the US fed, they make the best blue chip versions, no one else has and so far everyone who wants stability wants grandma's cookies.

If grandma gets replaced by, let's say grandma's insane cousin Grandma Biden or worse yet, Grandma Hitlary, then all bets are off. Either of those two morons will either tell people how many cookies are left....or eat them themselves...or just dump them in front of the kids and call it socialism.

...and that will be the end of cookies for as long as we live kiddo's....and then Tabs will be proven right.

Dennis

[island911]

Originally Posted by Shaun @ Tru6

If you look here: https://www.worldometers.info/coronavirus/

Sweden has significantly higher deaths/1M pop than Germany, Norway, Finland, Denmark and the U.S.

Or is that unimportant?

And 1/3 the deaths/1M pop than Spain Italy Belgium...

Or is that unimportant?

[McLovin]

It’s important, but it’s not the only important thing.
You wouldn’t want to live in a society where the only important thing was preventing as many deaths as possible.

[island911]

Some people really want to see Sweden go really ugly.

They have vested themselves in the idea that there is only one way to slow the viral death. ...and that Sweden is doing it WRONG.

[Shaun @ Tru6]

Originally Posted by McLovin

It’s important, but it’s not the only important thing.
You wouldn’t want to live in a society where the only important thing was preventing as many deaths as possible.

As a one time deal, that wouldn't be too bad. Like now for example. But it's a good backdrop for the dystopian movie of the week. I'm sure one or more will come out soon.

I am surprised Sweden's death rate per M population is so much higher than neighboring countries with similar cultures.

[McLovin]

Originally Posted by Shaun @ Tru6

As a one time deal, that wouldn't be too bad. Like now for example.

Of course it would be bad. It would be horrible. No country on Earth is doing or would do that.

[Shaun @ Tru6]

I guess it's a matter of perspective. Obviously the devil is in the details. And time. Time is sort of meaningless when you are dead.

Anyway, I'm surprised Sweden is doing so poorly when "Sweden is Dealing with Covid the Right Way."

[Sooner or later]

Originally Posted by Shaun @ Tru6

I guess it's a matter of perspective. Obviously the devil is in the details. And time. Time is sort of meaningless when you are dead.

Anyway, I'm surprised Sweden is doing so poorly when "Sweden is Dealing with Covid the Right Way."

Sweden believes they can keep the hospitals from overfilling and take the hit over a shorter period of time. If they are correct they will come out of it sooner than others. Finland and Norway are trying to drag it out over a longer term. We should expect Sweden to be higher over the short term. Over the long term the numbers would even out if all other things are equal. Sweden would benefit by losing less of the economy over a shorter time frame.

The key is keeping their hospitals operating efficiently. So far they have managed to do so.

[Shaun @ Tru6]

That shouldn’t be too difficult for a country with 10 million people. I hope it works for them. And it could work (if it does) in the bread belt in the US as long as no one from Kansas goes to the coasts. NYC has 18 million people. Sort of different than Sweden with 10.

[Sooner or later]

Originally Posted by Shaun @ Tru6

That shouldn’t be too difficult for a country with 10 million people. I hope it works for them. And it could work (if it does) in the bread belt in the US as long as no one from Kansas goes to the coasts. NYC has 18 million people. Sort of different than Sweden with 10.

I agree.

Their folks also trust the government and pretty much do as told. Here, not so much.

[rusnak]

I'm beginning to think that the most important metric is the deaths per confirmed case, not per million population. The longer this plays out, the more important that will become.

[island911]

Originally Posted by Sooner or later

I agree.

Their folks also trust the government and pretty much do as told. Here, not so much.

meh.... I do't know about that first part.