Panic In Aisle Nine

Instead of depending on temporarily rare toilet paper why not use the now worthless Chinese currency? Warning, bleach before using as unlike Old Glory those colors may run.

We are seeing stories of WalMart shelves cleaned out to look like Venezuela and people fighting over Costco toilet paper like it was Black Friday in the toy department of JC Penny. What we have in the panic buying of toilet paper and other consumables is nothing less than a form of a bank run. This is a good thing in that we know about bank runs. At least we know at least as much about bank runs as we do about bathroom runs. With the gentle reader's permission I will now move on from that graphic analogy. The point is that there is a model for what causes a bank run and how the bureaucrats can respond to one. They are trained on this.

Money to an Economist is just another good, like food, clothing, shelter, gasoline or forgive me toilet paper. What is special about it is that it enables the trade in other products. That is not exclusive to money though. After all being well fed, protected from the elements, well rested, able to transport goods or the people who perform services, and being clean and healthy are all also important in completing transactions. Money just makes things easier.

Panics and bank runs periodically plagued capitalist societies, including in America. Major depressions, which were called Panics until 1929 when the term Depression was introduced as being less alarming, happened during the 19th century. The Federal Reserve (1913) was designed to reduce the risk of panics and bank runs. However they still can happen.

The subsequent Great Depression may have shown that the government's response to a panic was not perfected but they have since worked diligently on the problem. Economists study this and model how to use tools just as the military studies hypothetical crises and games out the application of the tools available.

Seriously what the government needs to do is approach the market disruptions revealed by panic buying and hoarding of some goods by using the Bank Run model. They can do this.

It's either that or distribute copies of Izvestia and Pravda, or Renminbi.