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Comment by downerending | Hacker News Reader

I'm not an economist, but I actually am holding onto the cash (putting it in savings). Yes, I'll probably ultimately spend it on something else but not for decades.

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Unless you're literally buying government bonds (that are yielding very low and sometimes negative returns) your savings will still translate to increased spending elsewhere.

Well, maybe. There isn't a hard requirement that a bank will invest the money; excess reserves are currently over 3 trillion.

https://fred.stlouisfed.org/series/EXCSRESNS

The Fed even pays a small amount of interest. IOER is currently 0.1%

https://fred.stlouisfed.org/series/IOER

I googled for a bit and wasn't able to find a definition for "demand shortage" specifically, so I can only guess at what it means, versus the intuitive idea that "restaurants expected a certain level of demand, and those expectations have been dashed".

Does anyone understand the exact point being made?

I think the established terminology is more like "demand shortfall". In a general (non-sector-specific) economic context, this almost always refers to a fall in demand for all goods or services that introduces severe frictions into the workings of the market mechanism itself, and that can thus be "solved" in a comparatively straightforward way by addressing these frictions.

The "liquidity constraints" discussed in the abstract may be one such friction, but it's quite common for agents to be liquidity-constrained or unwilling to incur debt even irrespective of any negative supply-shock, so it's not quite clear to me what points the paper is trying to make.

Whelp, I guess that's why I call myself an amateur. Thank you for your attempt. :-)

How so?

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