It Is Easy to Overreact to the Chinese Coronavirus

Recently, a new coronavirus has been causing many illnesses and deaths. The virus first became active in Wuhan, China, but it has already spread to the rest of China. Scattered cases have been identified around the rest of the world as well.

There are two important questions that are already being encountered:

  • How much of an attempt should be made to limit the spread of the new virus? For example, should businesses close to prevent the spread of the virus?
  • Should this disease be publicized as being far worse than flu viruses that circulate each year and cause many deaths among the elderly and people in poor health? The median age of those dying from the new coronavirus seems to be about 75.

Unfortunately, there aren’t easy answers. We can easily see the likely outcome of under reaction. More people might die of the disease. More people might find themselves out of work for a couple of weeks or more with the illness. We tend to be especially concerned about ourselves and our own relatives.

The thing that is harder to see is that reacting too vigorously can have a hugely detrimental impact on the world economy. The world economy depends on international trade and tourism. China plays a key role in the world economy. Quarantines of whole regions that last for weeks and months can have a very detrimental impact on the wages of people in the area and profits of local companies. Problems with debt can be expected to spike. The greater the reaction to the coronavirus, the more likely the world economy will be pushed toward recession and job loss.

The following are a few of my thoughts regarding possible overreaction:

[1] The Chinese coronavirus seems to be extremely contagious, even before a person who has been exposed shows any symptoms. The only way we can be certain to contain the virus seems to be through quarantines lasting up to 14 days.

China’s National Health Minister, Ma Xiaowei, has provided information that seems quite alarming. With the new virus, a person may become communicable shortly after he/she has been infected, but symptoms may not appear for up to 14 days. This allows the infected person to infect many others without realizing that he/she is a carrier for the disease.

Today, the United States and many other countries screen for the virus by checking passengers arriving on planes from affected areas for fevers. Given the information provided by China’s National Health Minister, this approach seems unlikely to be sufficient to catch all of the people who may eventually come down with the disease. If a country really wants to identify all the potential carriers of the disease, it appears that a 14-day quarantine for all travelers from infected areas may be needed.

Such a quarantine becomes administratively difficult to handle for the huge number of people who are likely to travel from China. Such a quarantine would make it impossible for pilots and other airline workers to make a living, for example. They would be spending too much of their time in quarantine to do the work needed to support themselves and their families.

A related concern is that person-to-person transmission is very easy with the Chinese coronavirus. We don’t know for certain how many people each infected individual infects, but one estimate is that each infected person transmits the disease to an average of 2.5 other people. With this transmission rate, the number of people having the disease can be expected to grow exponentially, perhaps for several months.

Based on these concerns, it seems to me that funds spent on trying to contain the coronavirus are likely to be largely wasted. The new Chinese virus will spread widely, regardless of attempts to contain it. At most, quarantines will slightly slow the transmission of the disease. At the same time, quarantines will be quite disruptive of commerce. They will tend to reduce both total wages and total output of goods and services of the area.

[2] Deaths from pathogens are part of the natural cycle. They help prune back the population of the old and weak.

We know that in ecosystems, one of the functions of naturally occurring fires is to clear out “deadwood,” to allow healthy new growth to occur. In fact, some types of seeds seem to require smoke for germination. When inadequate natural burning takes place, bushfires as seen in Australia and forest fires as seen in California become an increasing problem.

Deaths from pathogens seem to play a similar role in human economies. This is especially the case with pathogens that especially target the weak and old. Most flu viruses have this characteristic. Early reports of deaths from the coronavirus suggest that this same pattern of targeting the old and weak is occurring with this virus as well. As noted above, the median age of those dying from the new coronavirus seems to be about 75 years.

Since the 1940s, modern medicine has been able to develop antibiotics and vaccines to counteract the impact of many pathogens. This, of course, makes citizens happy, but it has the disadvantage of changing the population in a way that leaves the economy with a much higher percentage of elderly people and others in poor health. This higher level of elderly and medically needy people makes it easy for viruses and other pathogens to make their rounds, just as leaving deadwood on the forest floor makes it easier for fires to spread.

With this rising population of people who cannot support themselves, tax rates for the remaining citizens tend to become very high. Young workers may become discouraged because they do not have enough income remaining after paying taxes to raise their own families. In effect, they cannot support both their young families and the many old people.

Viewed from this unusual perspective, the operation of the Chinese coronavirus might even be considered a benefit to society as a whole. The world has overcome the impact of measles, typhoid, polio, and many other diseases. In some sense, it “needs” a new disease added to its portfolio, to replace the ones that have been mostly taken care of by modern medicine. In this way, pensions and other payments targeting the old and weak don’t become too great a burden on the young.

[3] If the Chinese coronavirus were simply allowed to run its course, without publicity that it was in any way unusual, somewhat less than 1% of the world’s population might be expected to die. 

To see what would happen if the Chinese coronavirus were to run its course, we might look at what happened with the Spanish Flu, back in 1918. At that time, doctors did not have a way of treating the virus and authorities downplayed concern for the disease. The US Center for Disease Control reports that 500 million people, or one-third of the world’s population, became infected. At least 50 million people (about 10% of those infected) died.

We don’t yet know with accuracy how many of those infected will die from the current virus. A recent estimate is that about 2.3% of those who are infected will die of the disease (based on 107 dying out of 4,600 infected). If we assume that the percentage of the population that will ultimately catch the new virus is 30%, then the share of the world’s population that would be expected to die would be about [(1/3) x 2.3% = 0.76%].

The UN estimates that the world’s population can be expected to grow by about 1.05% in 2020. If this is the case, the effect of the Chinese virus would be to sharply dampen the population increase for the year. Instead of population rising by 1.05%, it would rise by only 0.29% (= 1.05% – 0.76%), assuming all of the deaths associated with the Chinese coronavirus take place within a year. While this would be a change, it would be a fairly small, temporary change.

All of these deaths would be tragic for the families involved but, in a way, they would be less of a problem than the deaths that took place back in 1918. At that time, mortality was high for healthy 20- to 40-year olds, making the flu particularly disruptive for families. The total percentage of the population that died was also much higher, about 3% instead of 0.76%.

[4] A major danger of the virus seems to be one of overreaction.

Today’s world economy is fragile. China, like other countries, has a large amount of debt. Debt defaults related to poor profits of companies closing their operations for a time and workers losing income could easily skyrocket.

Closing down transportation from China would risk pushing the world economy into a very bad recession. In fact, simply having a very large number of people out sick from work would be expected to have an adverse impact on the economy. Spending a large amount of money on hospitalizations and face masks cannot compensate for the loss of productivity of the rest of the economy. Thus, the tendency would be toward recession in China, even if no action toward cutting off travel were taken.

China is a huge supplier of goods to the rest of the world. In fact, in 2016, it used more energy in producing industrial output than the United States, India, Russia and Japan combined.

Figure 1. Chart by the International Energy Agency showing total fuel consumed (TFC) by industry, for the top five fuel consuming nations of the world.

China’s economy has been growing very rapidly since 1990. Figure 2 shows this one way, in GDP comparisons using inflation-adjusted US dollars.

Figure 2. GDP of China and the United States, computed as percentages of World GDP. All amounts in 2010 US dollars, as provided by the World Bank.

Figure 3 is similar to Figure 2, except the growth comparison is made in “2011 Purchasing Power Parity International Dollars.” This adjustment is made because typically the currencies of less developed nations float far below the dollar, in terms of what the local currency will buy. The inflation-adjusted PPP comparison compares output on a basis that is expected to be more consistent with what the local currency will really purchase.

Figure 3. Ratios of the GDP of China and the United States to the World GDP. All amounts in 2011 Purchasing Power Parity International Dollars, as provided by the World Bank.

On this PPP basis, China’s GDP surpassed the US’s GDP in 2014. Figure 3 also shows that the United States has slipped from about 20% of the world’s GDP to about 15% on this basis.

We cannot simply cut off trade with China, regardless of how bad the situation is. China is too big and too important now. The rest of the world desperately needs goods and services produced in China, in spite of what is going wrong from an illness perspective. China plays too key a role in supply chains of many kinds for the country to be left out.

Even cutting off tourism becomes a problem. The share of China’s revenue from tourism amounted to 11% in 2018. While not all of this would drop off, even a dip would lead to lower employment in this part of its economy. Jet fuel use would drop as well.

[5] A particular problem today is low prices for many commodities, including oil and other fossil fuels. These prices are likely to fall further, if China’s economy falters further. 

We used to hear that the world would “run out of” oil and that oil prices would rise very high. In fact, if the people who were concerned about the issue had studied history, they would have figured out that a far more likely outcome would be “collapse.” In such a situation, prices of many commodities might fall too low. Revelation 18:11-13 provides a list of a number of commodities, including humans sold as slaves, for which prices dropped very low at the time of the collapse of ancient Babylon.

The problem is a different squeeze than a high-price squeeze. It is more of a growing wage disparity problem, with fewer and fewer of the world’s workers being able to afford the goods and services made by the world economy. This problem feeds back to commodity prices that fall too low for producers of many types. The problem is an affordability issue, rather than one of running out. I have written about this issue many times.

Prices of fossil fuels have been low for a very long time–essentially since late 2014. OPEC has cut back its oil production because of low oil prices. Several US natural gas producers have taken big write offs on natural gas investments. China’s coal production has remained below its 2013 level, because of low prices.

Figure 1. China energy production by fuel, based on 2019 BP Statistical Review of World Energy data. “Other Ren” stands for “Renewables other than hydroelectric.” This category includes wind, solar, and other miscellaneous types, such as sawdust burned for electricity.

If China finds it necessary to cut back on production of goods and services for any reason (excessive sickness within China, visitors aren’t traveling to China, tariffs, customers around the world aren’t buying cars), this reduction in output would be likely to further lower the prices of commodities. More producers would go bankrupt. Countries exporting products as diverse as oil, iron ore, copper and lithium might have economic difficulties.

Lower fossil fuel prices may lead to a cutback in their output, but it is doubtful that this cutback would be offset by an increase in the production of renewables. Falling fossil fuel prices would make the price comparison of renewables to fossil fuels look even worse than it does today. China has cut back on its subsidies for solar panels, and this has led to decreasing Chinese solar installations in both 2018 and 2019.

[6] The best approach might just be to let the Chinese coronavirus run its course. Authorities might also discourage stories about how awful the illness is.

Today, we seem to think that we can fix all problems. Unfortunately, this medical problem doesn’t seem to be fixable in the near-term. We should probably do as governments through the ages have done, which is not very much. We should not publicize the disease as being a whole lot worse than flu viruses in general, for example.

We should certainly look for inexpensive treatments for the disease. For example, there seems to be an effort to examine the possibility of using existing antiviral drugs as a treatment. It seems like an effort could be made to look into ways of treating the disease at home, perhaps using supplemental oxygen for a period. In time, perhaps a vaccine can be developed.

Individuals around the world should be encouraged to get themselves in as good health as possible, so that their own immune systems can fight off pathogens of all types, not just this particular virus. Common sense should be used in washing hands and in avoiding being with sick people. I doubt that it makes sense to encourage the use of masks, goggles and other protective devices.

We, as individuals, cannot live forever on this earth. We also cannot spend an unlimited percentage of GDP on health care: It becomes too high-cost for most citizens. At some point, we need to call a halt to the expectation that we can fix all problems. We live in a world with limited resources. We need to start lowering our expectations, if we don’t want to make our problems worse.

About Gail Tverberg

My name is Gail Tverberg. I am an actuary interested in finite world issues - oil depletion, natural gas depletion, water shortages, and climate change. Oil limits look very different from what most expect, with high prices leading to recession, and low prices leading to financial problems for oil producers and for oil exporting countries. We are really dealing with a physics problem that affects many parts of the economy at once, including wages and the financial system. I try to look at the overall problem.
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1,772 Responses to It Is Easy to Overreact to the Chinese Coronavirus

  1. houtskool says:

    Viruses work well against overpopulation and too much economic activity. Our just in time global economy cannot cope with this, but that is of no concern to the little nasty bug. It’s just the way it works. Everything is attached and way too complicated, and so become possible solutions. Until hammertime that is.

    • I am afraid that epidemics have been a feature of economies for an awfully long time.

      Scientist today make models of the future, assuming that epidemics are long gone. The future is more uncertain than most people would assume.

      • It’s also the case that dealing with death and disease – with the utmost best of intentions – is largely what has caused our civilisation’s resources pressures. It’s not birth rates that have caused our numbers to grow to 8 billion strong, but reduction of death rates. Especially those diseases that killed off fertile people. Success in dealing with one of the last big people killers – malaria – is what everyone would be positive about, but which would add about another half billion to world population.

  2. Dennis L. says:

    Nicely done, well put. Reality is life, we are part of the ecosystem and what you describe is how it works.
    Ah, I assume you are not planning on running for a public office in the near future?

    Dennis L.

  3. Yoshua says:

    Airline companies are cancelling flights to China. It looks as if the world is imposing a quarantine on entire China. The world seems to behave as if this is a serious event.

    “The latest clinical report on 2019-nCoV: 99 patients from Wuhan Jinyintan Hospital. Important: a key group of patients progress rapidly to ARDS, septic shock, and multiple organ failure. 23% ITU admission, 17% ARDS, 11% mortality.”

    This is just a small sample in a hospital…but still.

    • I wonder what the “key group of patients” is. Is it elderly patients, or ones that have been referred to that hospital by another hospital?

      A person always wonders how many people have had the disease and never were sick enough to go to the hospital.

      We really don’t have very good statistics at this point in time. Also, China is not noted for reporting things the way that they really are.

      • Robert Firth says:

        Gail, I agree. A “key group of patients” tells us only that the associated data are worthless as a guide to the future course of events. Unfortunately, so are most of the other data. For example, say 4000 people are infected and 40 have died. That’s a 1% death rate, no? No. Suppose it takes a patient 5 days to die. Then the denominator is not the number infected now, but the number infected five days ago. Getting out the Fibonacci calculator, say that number was 1000. The better estimate for the death rate is therefore 4%. And as long as the spread is exponential, all estimates based on current data will be far too low.

        • Tim Groves says:

          Moreover, what about all the people who are infected who don’t show any symptoms and then shake off the bug without even being aware they had caught it? What about all those who exhibit mild or moderate symptoms but don’t go to hospital or to a doctor and are therefore not counted as infected?

          The fact is nobody knows how infectious this virus is or what percentage of those infected will develop symptoms, require medical attention, or die, because the number of people infected is an unknowable unknown.

          • I agree, I have 6 kids and I’m concerned not enough us being done to stop this spreading world wide. People are travel from country to country, forget china, we know of outbreaks starting and spreading almost everywhere now.

            • If the virus is as communicable as it seems to be, and if there is quite a bit of transmission by people who don’t even seem to be sick yet, there is simply nothing that can be done to keep the disease from spreading worldwide.

              All it seems to be possible to do is slow down the rate of spreading somewhat. The virus can be expected to spread especially rapidly in countries where people are closely packed together–riding in buses, planes or trains, for example, or riding in elevators together. Also going to meetings.

            • Yes, this is a concern since if we dont know someone has the virus they will be spreading it but no one will know where it came from. I dont see how this will die out and it just seems that more and more people will get it.

            • We would like to think that people build up immunity to the disease if they have had it, but we really don’t know the extent to which this is the case.

              If people build up immunity, then the virus will eventually run out of enough people to make sick and disappear for a while. It may come back later, for example, in a year or two, and find pockets of new people to affect, including children who have not had the virus.

              If the virus mutates too much from year to year, immunity from one year may not help in a later year. It may come back again, in a different form. In fact, it could be worse.

              We don’t know if we can ever find a vaccine. There is some hope that a vaccine will be available in 12 to 18 months, but the virus may have made its rounds by then. Or, as Duncan says, the coronavirus may be like MERS and SARS. No one has found a vaccine for them.

            • Hmm, I would think children would get some immunity through DNA ?
              I heard that people got re infected by the virus also.
              I wonder how super spreaders and people who are asymptomatic are that way? What causes them to not be as affected ? Blood type? Genetics ? Very odd.
              I also read that when a person is in the incubation period the virus isnt as dangerous as it is when they are in full blown infection

            • A lot of things we just don’t know about.

              Smoking history, old age, obesity, being male, high blood pressure and having diabetes all seem to contribute to the risk of dying from the disease.

              Young women tend to have stronger immune systems in general, and it helps here as well.

              A person wonders whether the reinfections are truly reinfections, or whether they are relapses. Did the infection truly 100% go away?

            • This is a good question. I’m tired of hearing the media say, what we know about coronavirus and clearly now they are eating their words each time and have resorted to showing alot of the ‘fear mongering’ clips people shared weeks ago.
              Unfortunately my husband suffers severe obstructive sleep apnea the worst case seen in uk according to the drs he saw when he had his sleep study. He is pre diabetic mostly due to his apnea as his diet isnt bad and blood pressure on the low end of being high.
              I suffer pneumonia almost every time I get the flu and we have 6 kids. One of whom is immune compromised as she was born at 31 weeks. She is generally healthy .
              This all put together in my mind knowing others have worse cases to worry about but, this is my family and I cant help but worry.
              My mother, isnt so concerned and thinks it’s just like the flu, should all be fine etc etc
              This is the biggest issue I’m having with the media. My mum wants to come visit and it will be 23 hour flight. I told her wait it out for now since we arent sure and i cant risk her bringing this into my home. Also my mothers age, its concerning

    • mrmhf says:

      Governments won’t disclose the reality on the ground to avoid panic. This is not an insignificant move on the part of the Chinese government to lockdown entire cities. I feel that this story and virus has a fair long way to go yet.

  4. We all know that an uncontrolled new disease could easily wipe out a huge slice of humanity. Some would say that’s good for the biospsphere. But it’s a monstrous negative reality for the species. How can we citizens know the risk in the case of coronavirus? We can’t. Not knowing this, we can’t know if this outbreak is being partly used to affect the China-versus-US trade war. Though we may suspect that it is the case.

    Being a flu like pathogen I suspect it will subside as the northern hemisphere warms up in Spring. Then we need to watch for it transferring to the Southern hemisphere, as pandemic flus tend to do.

    • I’m not sure that the new disease is a “monstrous negative reality” for the species. The world’s biggest problem is overpopulation. Epidemics have often been part of collapses from the beginning of civilization.

      A smaller population is left after the epidemic, but it is, on average, a healthier population than before the epidemic. There are more resources per capita after the epidemic. Young people have more job opportunities.

      The situation is a lot better than people starving to death or killing each other with weapons, because wages are too low for nearly everyone.

      • Yes, my terminology was in reference to the headspace of medical researchers whoa re freaked out by the fact that one day a ‘killer disease’ will break out before they have time to develop containment for it. I think such is on the cards.

      • Thinkstoomuch says:

        Starving to death is less of a concern due to wages. I recently saw this.

        For what it is worth.

        Now disruptions in transport is more of a concern. Even if it is getting fertilizer and fuel to producers. Not only the food to the people who need it.


        • Davidinamonthorayearoradecade says:

          world food supply increasing faster than population?

          = overshoot…

          how is that making a “better world”?

          of course, humans are already in overshoot…

          such a positive uplifting article…

        • I remember Brian Wang from my Oil Drum days. He was busy back then telling us how nuclear power plants would save the world. He was/is the eternal optimist.

          The title of the article, “World Food Supply is Increasing Faster Than Population Growth for a Better World” is one Brian would pick. Besides leading to overshoot, it leads to an overweight population.

        • Robert Firth says:

          T2M, I think you nailed it. World food supply > world population: happiness! But how far does that food have to travel? If from the farm to the town, all is well; if from another continent, food stranded at the other end of a 5000 mile supply line is no help to me. And that, as you say, is the problem.

          Too bad we didn’t start relocalising 15 years ago. Now it may be too late for a lot of people.

      • mrmhf says:

        Do you feel that this is our planet trying make a sustainability correction?

          • Xabier says:

            As the old Anglo-Saxon prayer put it:

            ‘Mother Earth, who makes all things to grow, and all things to rot….’

            A global, self-adjusting system of balances and checks, which pays no heed at all to the vanity of individuals and ascribes no absolute value to any species.

  5. Bill Gates thinks a coming disease could kill 30 million people within 6 months — and says we should prepare for it as we do for war

    Is This The Man Behind The Global Coronavirus Pandemic?

    Just 30 kilometres from where the coronavirus originated, there is a mystery lab one expert claims is part of a secret biological weapons program.
    /The Washington Times /quoted former Israeli intelligence officer Dany Shoham as claiming The Wuhan Institute of Virology is part of a secret biological weapons program.

    Coronavirus may have originated in lab linked to China’s biowarfare program
    Radio Free Asia last week rebroadcast a Wuhan television report from 2015 showing China’s most advanced virus research laboratory, known the Wuhan Institute of Virology. The laboratory is the only declared site in China capable of working with deadly viruses.

    Australia, which in the last 10 years has been turning into a Chinese immigration subservient to China to make money with commodity exports. The government in Canberra was so stupid to allow planes from Wuhan and the rest of China to land here.

    When looking at empty roads in Wuhan and other cities, this looks like a peak oil scenario.

    Low oil prices due to less oil imports by China will reduce available oil to the rest of the world

    Oil reserves and resources as function of oil price

    And by the way, OPEC’s oil production is on a bumpy plateau since 2005, IRRESPECTIVE of oil price. ME OPEC is making us believe – in a tricky public relations campaign – that they are voluntarily cutting production while actually they can’t produce more oil.

    In any case, if there were an oil glut, Iran would suffer most and we can expect more action in the Persian Gulf.

    • Article #1 Regarding Bill Gates, I would point out that 30 million is 0.3% of the world’s population. It would be far less than the expected natural increase of the world population over that period. Bill Gates needs to read and understand my article.

      Articles #2, #3 and #4. I have seen allegations before that the virus was engineered in China. I have also seen allegations that it was engineered in the US. Whether it was engineered or not is in a sense irrelevant. The world does not at this time have a huge amount of resources to spend trying to mitigate the problem. It is tempting to think that we can fix the problem, but I don’t really think we can.

      Iran has a lot of oil to sell. In a sense it has a glut of oil. But the US doesn’t want it to put the market, for fear it would drive the price lower. The big problem during the Great Depression of the 1930s was low oil prices and a glut of oil. The issue, then, as now, was affordability. Lack of affordability is what brings the system down.

    • Robert Firth says:

      Folks, if you believe anything an “Israeli intelligence officer” tells you, well, I have a Western Wall to sell you.

  6. Lloyd Morcom says:

    Absolutely right, Gail.

  7. Beyond everything else (as usual), Gail is absolutely right that by far the most viable – effective, efficient and affordable – way to counteract the spreading and deadly outcome of this alleged pandemic is to take care of one’s immune system.
    Besides the rather obvious (but seldom practiced) healthy diet and physical exercise, regular immersion in natural environments, especially forests in the great outdoors, seem to be particularly effective in this regard, even in the short term and with lasting effects (as well as feasible and affordable, as it would take only one’s free time)
    Much more complex issues aside, such as demographic trends, aging and urbanization, in this special circumstance regular immersion in forest areas could reveal decisive on an individual level, as well as could help alleviating the burden of healthcare costs (not only vs coronavirus).

    • You linked to an interesting academic article whose abstract says, “This study suggests that exposure to forest environments might enhance the immune response of NK cells and activating NK cells in humans.”

      The Atlanta area (where I live) is very spread out, so there so tend to be wooded areas everywhere. I know I saw a deer outside our kitchen window a few days ago. Garden shops feature products that are supposed to keep deer from eating people’s plants. So perhaps we have a little of the forested area, right around us.

  8. This is tricky territory, since such concepts are perceived as genocidal by average people. The author must be over 70 but that adds objectivity to her arguments.

    I think Peak Shale (the real Peak Oil) is the best hope for mass-downsizing and it could happen any year now. Few will be ready and the blame will fly, along with bullets in gas lines.

    • I see this is your blog you linked to.

      If the economy weren’t a self-organizing networked system, what you are saying would be right. As it is, there are two different limits (a) a high price limit caused by too many buyers relative to available oil and (b) a low price limit caused by an “affordability of end products” problem.

      Right now we have a problem of type (b) above. All of the people who waste energy are helping to keep the price from sinking farther than it has. We should thank them.

  9. Daniel says:

    Not to hijack this thread but the FED announced today that their goal is still to create inflation?! Can they do that ? Or do they end up just inflating the stock market and the housing market as they have done so far?

    • Davidinamonthorayearoradecade says:

      they haven’t been able so far to create a little more inflation, so why should their continuing feeble efforts to fight decreasing net (surplus) energy be any different going forward?

      housing markets will be crashing, but the stock markets will be kept inflated until the very end…

    • I am not convinced that the FED can really create inflation. It seems like wages would need to be growing more rapidly than the supply of finished goods and services, pulling prices up.

      If the number of people participating in the labor force is rising rapidly, as was case in late 1960s and early 1970s, and their wages were increasingly being leveraged by more fossil fuels, the conditions seemed to be right for inflation.

      This is one chart from my collection of old images. Rising after-tax per capita income seems to be associated with inflation:

      This is another chart:

      It seems to suggest that back before oil supplies became constrained, growth in non-financial debt (say, investments by companies and debt-based purchases by individuals) was associated with growth in wages (which in turn, might feed back into inflation). But after oil prices started bouncing high, this relationship disappeared. It just took more debt to do the same thing. It became very difficult to use debt to raise wages.

      I think that most “inflation” we have been seeing is inflation in asset prices, coming from lower and lower interest rates.

  10. The Magus says:

    British Airways has just announced ALL flights to All destinations to and from China are CANCELLED.

    The question is not one of are we overreacting rather it’s ‘What are we not being told’

    These draconian measures were not suggested even at the height of SARS.

    The impact of the virus along with the reactions, is starting to have grave implications and not only for China – see

    What is it that inspires so much fear that governments risk collapsing the economy to fight against it?

    Or is the big picture one of the end of civilization is at hand and this virus is somehow related to that upcoming event?

    Perhaps it is engineered to mutate and kill all who are infected allowing them to avoid the misery and suffering that is guaranteed when the oil age ends?

    That’s an ‘out there’ theory but it would not surprise me is connected.

    • Davidinamonthorayearoradecade says:

      “These draconian measures were not suggested even at the height of SARS.”

      yes, we can’t be certain that the response is an overreaction…

      but the feeble available data suggests that there is an overreaction…


      we may be seeing a lose-lose situation…

      there will be an economically devastating reaction AND the virus will still spread worldwide (in spite of the huge preventative efforts) as much as if there was no effort made to restrain it…

      that’s humans for you, making 180 degree wrong decisions…

      that’s also quite darkly entertaining…

      • Robert Firth says:

        Cancelling all airline flights from anywhere to anywhere might actually work, but nothing else will. The virus has already spread beyond China. So the next flight from Australia, or Thailand, or France, might carry a few billion of the little critters.

        Stable door; horse.

    • British Airways cancelling all flights to and from all destinations in China is a little over the top. This kind of action has to hurt the profitability of the British Airlines. Now, all of the planes are sitting around empty.

      I corresponded with a couple of my friends in Beijing, China. They seemed to be seeing the same numbers regarding illnesses and deaths that we are. Both of them said that they did not expect to be coming to America this summer. When relationships were less frosty, they might have attempted to come to the BioPhysical Economics conference here this summer.

      • The Magus says:

        One of the reasons they cancelled the flights is because the planes would be flying with very few passengers because no one in their right mind would want to go to China now. Lufthansa Swiss and Austrian are no longer flying in or out of China either.

        I suspect we are not getting the truth out of the CCP (as usual)

        • Our view now of ‘in their right mind’ is what is getting us into trouble.

          Illnesses have to be thought of as a part of nature. This one needs to be equated to the common flu. We have told ourselves that we have the ability to overcome all problems, but we don’t.

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