Lockdown updates

Yesterday at 4 pm Prime Minister Jacinda Arden announced that New Zealand would go one level down to level 3 from 11:59 pm on 28th April. We would further go down to level 2 from 11th May if the downtrend continues. It is so much relieving!

I am impressed with how this country managed the outbreak in the world where many other first and third world countries have had appalling results. I never took it granted, and I have always been grateful to be living in this country, but more so in the present testing times. I couldn’t have lived in a better place during this pandemic and I am very grateful for that!

Over the past few weeks, I have been reading and pondering a lot about the social and economic impacts of Covid -19, especially on thousands of small and local businesses. For about two years now, as a family, we have been thinking more and more about where the dollars we spend would be going. We have been spending locally as much as we can. I look forward to doing more of the same in the coming years. There has never been a better time to spend locally. I want as much of my money to go to the people and businesses in my community, and I will prioritize local spending for my dollars.

I had a feeling that the bailout money and financial packages governments all over the world are announcing is not free. But I did not quite know the answer until I read this post titled Who Pays For This?

You don’t pay it off. You grow your way out of it. This isn’t intuitive because it doesn’t apply to people. When a person takes out a mortgage or a car loan, there’s a repayment date. But that’s only because people have finite careers and lifespans, so there’s an “end date” where all debts have to be repaid.

Countries (and to some extent companies) are different. They have indefinite lives. So they can remain indebted indefinitely, even with rising debt.

As long as nominal GDP growth is higher than the annual budget deficit, debt to GDP goes down, and spending more than you take in leaves you with a lower debt burden.

This is so simple, but it’s easily overlooked because it doesn’t apply to people.

What matters for countries isn’t the amount of debt they hold. It’s how burdensome that debt is to maintain over time.

Here is another enlightening post I read lately on the Financial Times: Virus lays bare the frailty of the social contract

And the continued timeline…