Deflationary Risk - Anyone Spending?

[kmiklas]

I've had the same $20 in my pocket since Friday. I haven't spent a penny in five days.

Anyone spending? My friend won't even go to McDonald's because he fears food handling may spread germs.

I see the demand-size shrinkage and deflationary risk in this situation as mammoth:

- During the shutdown, peeps will not spend because they can't--stores are closed! It effectively forces prices to zero! Also, peeps and companies alike are also holding tightly to cash.
- After the shutdown, peeps will have gotten used to living without a lot of stuff. There will also be a contraction and long recovery. To restart the world economy is like moving an aircraft carrier... it will take a tremendous amount of power to get it going.

The deflationary risk in this situation is shocking.

 

[Specterx]

I've had the same $20 in my pocket since Friday. I haven't spent a penny in five days.

Anyone spending? My friend won't even go to McDonald's because he fears food handling may spread germs.

I see the demand-size shrinkage and deflationary risk in this situation as mammoth:

- During the shutdown, peeps will not spend because they can't--stores are closed! It effectively forces prices to zero! Also, peeps and companies alike are also holding tightly to cash.
- After the shutdown, peeps will have gotten used to living without a lot of stuff. There will also be a contraction and long recovery. To restart the world economy is like moving an aircraft carrier... it will take a tremendous amount of power to get it going.

The deflationary risk in this situation is shocking.

For me, coffee shops, restaurants and other "pocket money" type spending is only 5-10% of the total. 90-95% of my spending goes on mostly or wholly unavoidable things like groceries, utilities, taxes (not even counting income taxes), insurance and other admin costs, cable/streaming subscriptions, travel (which is only partly discretionary, e.g. annual visits to in-laws abroad), gifts for others' birthdays/weddings/etc, home/auto repairs, and of course market data+trading software. With the exception of travel, which has been postponed rather than cancelled, all of the above has been completely unaffected by the virus and would only be reduced if I had some kind of personal financial disaster. And even that 5-10% of purely discretionary spending on eating out and miscellaneous shopping has dropped only partly, maybe a third to half, with the rest merely redirected to takeout and Amazon.

 

[gaussian]

At least anecdotally in my case I'm not spending anything. I'm more or less completely out of trading at the moment (which is usually where I place some of my discretionary "fun" funds), I'm not buying anything except absolute necessities and I'm limiting my travel outward until the curve starts falling. I get the luxury of working remotely so I can shelter in place as long as I have food, water, and whisky. Presently I am implementing a cash hoarding plan. I want to make sure I have 12-14 months of expenses sacked away (currently around ~6-7) and another 2-3 in my LLC for a business dry spell (I am a consultant). Who knows how long it will be until we return to normal. All I know is if suddenly a bunch of companies go under I want to make sure I can weather a year without a job before I have to panic.

 

[wrbtrader]

I've had the same $20 in my pocket since Friday. I haven't spent a penny in five days.

Anyone spending? My friend won't even go to McDonald's because he fears food handling may spread germs.

I see the demand-size shrinkage and deflationary risk in this situation as mammoth:

- During the shutdown, peeps will not spend because they can't--stores are closed! It effectively forces prices to zero! Also, peeps and companies alike are also holding tightly to cash.
- After the shutdown, peeps will have gotten used to living without a lot of stuff. There will also be a contraction and long recovery. To restart the world economy is like moving an aircraft carrier... it will take a tremendous amount of power to get it going.

The deflationary risk in this situation is shocking.

Yeah...groceries and medicine from the pharmacy only.

Have put off some expensive purchases because I would feel too guilty around close friends that are struggling although most are able to work from home.

wrbtrader

 

[Turveyd]

In the UK Mc donalds is shut very few places to actually spend money, Pound Land I did go crazy in there earlier to be fair and food shops

Can't spend it, or make it, so kinda limbo mode!!

Via La da Revolution I say!!

 

[00wreckless]

[/QUOTE]Anyone spending? My friend won't even go to McDonald's because he fears food handling may spread germs.[/QUOTE]


McDonald’s is Testing Kitchen Robots and AI-Powered Drive-Thrus. It’s About time
https://thespoon.tech/mcdonalds-is-testing-kitchen-robots-and-ai-powered-drive-thrus-its-about-time/

I do think things will never be the same after this. The financial crisis of 08' help to exacerbate static wages, and it took 10 years to get back to 4% unemployment. I think technology was the culprit there. Business has the opportunity to produce more goods and services with less labor commodities through efficiencies in technology.

 

[Turveyd]

Anyone spending? My friend won't even go to McDonald's because he fears food handling may spread germs.[/QUOTE]


McDonald’s is Testing Kitchen Robots and AI-Powered Drive-Thrus. It’s About time
https://thespoon.tech/mcdonalds-is-testing-kitchen-robots-and-ai-powered-drive-thrus-its-about-time/

I do think things will never be the same after this. The financial crisis of 08' help to exacerbate static wages, and it took 10 years to get back to 4% unemployment. I think technology was the culprit there. Business has the opportunity to produce more goods and services with less labor commodities through efficiencies in technology.[/QUOTE]


So this nothing burger forcing companies to cut more jobs, awesome.

AI cars for delivery and everyone can just stay home, no point leaving, no jobs.

 

[Sig]

deflation, inflation, blah blah... all smoke and mirrors.

what is at the core of this whole game - masters and slaves.

does it matter what gadgets are priced at? as long as the slaves are working, to produce goods and services, and earn some food on the table, they are happy and the masters are happy.

that's the beauty of the modern money theory, everything is flexible, infinite liquid is always ready on tap... no problem whatsoever.

CPI, PPI, who cares... infinite print = infinite price..

the masters are gonna pretend they care about inflation/deflation... they don't....

what they care about is that the slaves don't stop producing and don't start a revolution.

If you want to go the nihilist route feel free, but hard to understand why you'd waste your time discussing something like the subject at hand if that was your belief? Some of us are here to talk about economics and probabilities of how the current situation will work out with some kind of rigor. If you think it's all bullshit that's fine, it's just this is probably the wrong conversation (and forum) for you. Kind of like me as an agnostic joining a Christian discussion board and jumping into a conversation discussing thoughts on intercession with a screed about how Christianity is all bullshit. Pointless and a bit of a jerk move.

 

[Sig]

it is completely valid to point out the 'subject at hand' is invalid.

The subject at hand is if the current situation will create deflation. Your assertion is that it's all bullshit, we're all sheep, and therefore it's pointless to even think about it. Fine, that's a nice opinion. Now let those of us who are actually interested in the question discuss the question.

Again, what exactly are you trying to accomplish? Get us to all throw our hands up and declare that life is pointless?

 

[Sig]

the point is don't worry about it, study the core of what this game is truly about and act accordingly.

If the core of this game is "masters and slaves" as you assert then the only rational way to "act accordingly" would be to throw your hands up and give up; your post is the very definition of nihilism.
Since the rest of us are all about actually going over things with a rigorous framework, like economics, there's not a lot of place for tinfoil hat bullshit in the discussion. So go away and find a place where your kind like to play, you'll enjoy it a lot more and so will the rest of us!