Ask HN: What is your process for validating startup ideas? - <AUTHOR> I'm curious as to what everyone's process is for validating their ideas. I've always just built a landing page, sent some traffic to it, and tested if it converts. If that test "passes" then I try to sell something. Only then does an idea have legs.
This seems to be what everyone's doing. But there's got to be other ways to validate an idea. Is anyone doing anything unique?
I provide free startup ideas at startupsfromthebottom.com, and everyone's next question is: "Did you validate this?" I need better/more ideas for how THEY can validate it.
So...what do you do to validate your ideas? <comment><USER2> From my experience, it's mostly about creating value or filling a need, most of the interviews I have read, they either did user interviews, built a simpler version of the product and iterate on it. In a nutshell I would say there's not a single way for all startups to validate their idea, it depends on the industry an what you are building as well as where the idea originated from.

[https://launchbasket.com/interview-with-laurent- pellegrino-t...](https://launchbasket.com/interview-with-laurent-pellegrino- the-founder-of-noticeable/) [https://launchbasket.com/building-a-30000-month- user-testing...](https://launchbasket.com/building-a-30000-month-user-testing- platform-an-interview-with-askable-co-founder-andreas-zhou/) [https://launchbasket.com/building-a-60k-month-online- lending...](https://launchbasket.com/building-a-60k-month-online-lending- business-an-interview-with-fig-loans-co-founder-ceo-jeff-zhou/) [https://launchbasket.com/the-details-of- building-a-15k-month...](https://launchbasket.com/the-details-of- building-a-15k-month-wordpress-plugin-business-an-interview-with-wp-fusion- founder-jack-arturo/) [https://launchbasket.com/building-a-1000-month-slack- bot-an-...](https://launchbasket.com/building-a-1000-month-slack-bot-an- interview-with-the-founder-of-pull-reminders-abi-noda/)

</comment><comment><USER3> Companies don't exist without customers. You can make zero profit, sell no useful products, but still be alive because you have customers.

Knowing that there is a potential market is a start. But your goal is customers.

My advice to validate a startup is to find your customers. Not your friends or peers, but push yourself to find customers everywhere. Start stalking linkedin profiles, get emails of potential clients. Tell them what you have. Will they pay for this? Just go out and amass a wealth of potential customers. People who are willing to onboard before you even launch.

Finding customers is like attending a career fair, you meet every recruiter (customer) and try to get them to hire you (buy your product). For every good match you hand a resume, and that's your landing page. But you can still get hired without a great resume, just meet as many of the recruiters and have great conversations. For those who you didn't get to talk to, your resume (landing page) speaks for itself. But your greatest chances are with those who you spoke with personally. Throw your landing page everywhere, but get out and find customers 1:1.

Startups fail because they can't find customers.

</comment><comment><USER4> Step 1. Get the idea in front of users as quickly as possible. Pre MVP.

Step 2. Get the partial MVP in front of users as quickly as possible. Mid MVP.

Step 3. Get the MVP in front of users as quickly as possible. Post MVP.

Really, I just care about getting things in front of users. I've launched and failed like 10-15 "startups" at this point. I tend to solve problems that don't exist, or that aren't correctly solved by my software.

I built out UserInsights.com exactly for this reason. And you better believe I had it in front of users at every step of the way. Probably why it's my only success to date.

Onward!

</comment><comment><USER5> Think about validation like an iterative series of steps.

The first step (even before you have an idea preferably) is to identify who you want to serve. What target market are you going after?

I think it's wisest not to go after beginners. More about that here: [https://justinjackson.ca/beginners](https://justinjackson.ca/beginners)

Next, you need to observe your target market. What do they struggle with, that they'd be willing to pay for? What evidence do you have of this?

<comment><AUTHOR> Thanks Justin. I've followed your blog for the past few years, and really appreciate the input. So ideally, you know the market and are part of it? That would make less work on the validation side of things. But if you don't think you know your customer perfectly, how can you find out what they struggle with and would be willing to pay for?

Surveys, landing pages, etc...? Got any more?

</comment></comment><comment><USER6> Agree with other comments here about the priority of getting user feedback. But one lesson we learned is that the best feedback comes from strangers, who have no reason to support your idea (ie. unlike your mom who will always love it). There is a graph about this in the Startup School courses. We used a service called Erlibird to get this feedback (there are plenty of others too) - reasonable cost, high-quality responses.

</comment><comment><USER7> startupsfromthebottom.com looks interesting! Do you come up with the ideas yourself, or what does your process look like?

What you describe (building a landing page or an MVP) is how most people do it. I would start even before that, since you should try to spend no more time than necessary on something that you don't even know is actually viable.

However, you obviously need to find out if potential customers are excited about your idea. In my experience, the following validation process works best:

* Write down a) the problem you're trying to solve and b) your solution. It's tempting to skip this step, but a lot of ideas may sound awesome while they're in your head, however that might change once you transform it from an abstract thought into 2–3 sentences. Try to be as succinct as possible while still capturing the core of your value proposition.

* Create a questionnaire based on your idea. Make sure to ask questions that are actually predictive of whether your idea might take off, such as "How often are you facing this problem" rather than "Have you ever faced this problem". Use a tool like SurveyMonkey or Typeform to put your survey online.

* Identify people in your target audience. This is hard. Don't simply email the survey link to your friends - because of something called "Interviewer bias", your friends & family will rate your ideas more favorably than an idea coming from some other anonymous source. Also, it's highly likely that your friends aren't actually in your target audience.

I run IdeaCheck.io[0], where we generate a questionnaire based on your idea and use a panel of respondents to gather direct feedback from your actual target audience. You can read more about IdeaCheck in my Indie Hackers interview[1].

[0] [https://ideacheck.io](https://ideacheck.io)

[1] [https://www.indiehackers.com/businesses/ideacheck- io](https://www.indiehackers.com/businesses/ideacheck-io)

<comment><AUTHOR> Thanks for the insights. I've actually never created a questionnaire before, but that sounds like a good idea.

Right now, we base our ideas off of problems that we or others find. But who's to say our ideas are the right solution? Obviously they still need validated.

Also, I like you're idea. Very interesting concept.

</comment></comment><comment><USER8> Validation is backwards: [https://stackingthebricks.com/validation-is- backwards/](https://stackingthebricks.com/validation-is-backwards/)</comment>


China's State Press Calls for 'Building a de-Americanized World' - <AUTHOR> http://www.businessweek.com/articles/2013-10-14/chinas-state-press-calls-for-building-a-de-americanized-world

<comment><USER2> The Chinese are making incendiary comments because the U.S.-centric world order has done well for them. The U.S. Navy patrols the world's seas and so protects global marine trade routes. The U.S. military provides security guarantees which liberate a large chunk of global demand, e.g. Japan, Korea, Singapore, and the EU, for consumption. And the U.S. financial system lubricates the global flow of capital, goods, and services.

I agree that the global economy has put too much faith in the U.S. political and financial system. Diversification would encourage competition as well as increase systemic resilience. The present situation, where a U.S. default literally means the implosion of the current world order, is encouraging previously taboo debate to come out into the open.

A collapse of the U.S. dollar today shakes up a world in which China is ascending. I'd get mad if someone threatened to flip the game board just as I started getting ahead, too.

<comment><USER3> I would like to see Obama start to feel out the possible response in the international financial community to unilaterally raising the debt ceiling so this idiocy could be done for good. Just knowing he was doing it would probably cause Republicans to cave so they don't have to admit not authorizing their own expenditures is devoid of all logic.

I hate politics.

<comment><USER4> Of all of the unconstitutional things Obama has been alleged of doing, blatantly disregarding the Constitution's allocation of the power of the purse to the House and unilaterally raising the debt ceiling to placate the "international financial community" would undoubtedly be the most egregious. It would effectively be a coup d'état and the right's hand-waving about Obama being a dictator will have become a self-fulfilling prophecy.

<comment><USER5> So you're a lawyer, right? Politically I get what you're saying but legally, with the 14th amendment and all, he has to either illegally prioritize or illegally ignore the debt limit. Maybe ignoring the debt limit has more constitutional standing than reprioritizing the congressional budget. No idea on my end.

Personally, if we're prioritizing, I think he should do some math where they pay all treasury bonds, on time and 100%, and then just cut every other expenditure in half (or whichever % works out), across the board. Social security checks, contractor payments, gov't worker payments, etc. Anybody refuses to do work, send the half-paid national guard after them and order them, since we're in crazytown anyways. And tell them to write their congressman.

That's possibly the "least illegal" option, and certainly the most politically palatable, as far as respecting congress's self-contradictory legal orders in this mess.

<comment><USER6> Believe it or not, lawyers deal with conflicting laws all the time. There's a few general principles, the most important "rule of thumb" is :

Constitution trumps amendments (but only in certain high-up courts), which trumps normal law, which trumps contracts (written "generally" before oral ones), which trumps common sense ("what a good house father would do"). The sum total of all these things form "the law" as viewed from the perspective of a person (so yes, you are legally obligated to "generally be good" even when the law doesn't explicitly require it (e.g. help people involved in accidents))

Basically since the government debt obligations are contracts, while the debt ceiling is a law, Obama has no choice in the matter : any lawful payments (like medicare, ...) have to be fulfilled before any contract is paid. So barring a new law (the "agreement" the news talks about), on Okt 17, the US should default. Maybe Obama can delay it a few days, but certainly no more.

Please note that congress is doing exactly what it was designed to do. Congress, whether you agree with it or not, represents the will of the people of the united states and Obama is ignoring it, refusing to do so much as negotiate (or so claims congress, and I see no reason to doubt their claims). He knew years in advance that this was coming and gambled. Every executive who has fought congress on this has failed, again something Obama is perfectly aware of (it featured prominently in his education for one thing, hell, it's one of the main forces that brought us democracy in the first place).

In case someone doesn't know this : Obama's a lawyer. Lawyers tend to be lawyers first, people second. And he has a history of this sort of thing : expect him to follow the law over common sense.

<comment><USER7> Congress is not doing what it was 'designed' to do. The Hastert Rule ([http://en.wikipedia.org/wiki/Hastert_Rule](http://en.wikipedia.org/wiki/Hastert_Rule)) was only introduced in the last 30 years or so, and has never been followed as dogmatically as Boehner is following it now.

By refusing to bring a bill to a vote unless a majority of his party openly supports it, Boehner is explicitly preventing compromise.

<comment><USER6> That's not what I mean. Congress is refusing to finance a government whose actions it doesn't support. Which is exactly what it's supposed to do, and is in fact one of it's core functions.

The power of the purse is allocated to the house.

<comment><USER8> Boehner is refusing to allow Congress a vote to finance the government. This is not the same as Congress refusing to finance the government.

<comment> mkr-hn Days later, congress voted to finance the government. They collectively decided it would be easier to build a better government on an economy that isn't in a nosedive.

</comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER9> Kind of interesting to think about his comment about the goal being to "create an international reserve currency that is disconnected from individual nations and is able to remain stable in the long run." Hmm...I wonder if there are any currencies which currently exist which fit the bill...

And then think about pg's point #3 about why a government would have created Bitcoin: "because they felt their currency would never become the standard reserve currency, and they felt it was better that no one's be if theirs couldn't be" ([https://news.ycombinator.com/item?id=5547423](https://news.ycombinator.com/item?id=5547423)).

It won't be proof that BTC came from China if China suggests using BTC as the reserve currency, but pg's point will be proven to me, at least.

<comment><USER10> "...is able to remain stable in the long run."

How sure are you that there won't be any significant breakthroughs in bitcoin- mining math/tech over the next 30 years? 100 years?

<comment><USER11> Also, bitcoin is deflationary by design. It will effectively run out at some point, if I understand the situation. I believe its proponents consider this a feature, but I suspect it will prove to be a liability.

<comment><USER12> SO what? You can have tons of fractions of bitcoins, and that covers the needs of any micro-payment even if a single bitcoin becomes worth a million of dollars.

<comment><USER11> The issue is subtle. It has to do with the need for a currency supply to expand to match overall increases in production in absolute terms. I don't understand the matter in any detail, but I trust economists in their general aversion to deflation.

<comment><USER12> There have been tons of economies which worked before on the Gold standard, which has been the model for the bitcoin "mining" model. I know nowadays you have lots of Keynesian economists who tell you that going in debt to the death and inflating the money supply is a good thing, but you have to look at how things worked before and why it made sense to have a limited supply currency.

<comment><USER13> the difference being that they kept discovering gold. bitcoin will effectively eventually run out.

<comment><USER12> Nope, the new discoveries of gold were usually marginal vs the actual worldwide gold reserves. Bitcoin is following the exact same model. Mining will become marginal over time.

<comment><USER14> >>the new discoveries of gold were usually marginal vs the actual worldwide gold reserves

I think 17th century Portugal and others would have something to say about how "stable" commodity monetary systems are over long periods of time.

<comment><USER12> Because you think fiat currencies based systems are way better? How stable is your system going to be when you expand your credit line to the infinite just because you can print/create money which has no intrinsic physical value ? Fiat currencies hurt the future generations and not just the present ones.

<comment><USER13> you think gold has "intrinsic, physical value"? you think _bitcoin_ has "intrinsic, physical value"?!

why have almost all currencies used throughout history had a significant fiduciary element? why has the world constantly cycled between bullion and fiat currencies? why do you think bullion currencies are more common during times of warfare?

when are countries incentivized to "expand their credit line to the infinite"?

would you rather have a currency that can modify its inflation/deflation rate based on any number of relevant factors, or a currency whose inflation/deflation rate is tied to the rate of mining of some rocks in the ground?

<comment><USER12> Gold has physical value, yes, because it is relatively rare on Earth and has interesting chemical and physical properties that can be used in several ways. And on top of that, it's dense, can be melted, and does not corrode over time. Therefore making is a good tool to represent "money".

> why do you think bullion currencies are more common during times of warfare? > Because inflation runs crazy during warfare and therefore people trying to > save their earnings go for gold, silver and others in order to avoid losing > the face value of their fiat currencies. And by the way, the Gold standard > was abandoned in History mainly to fund the war in Europe during the 1st > world war, and then later in the 20th century because of the expenses of the > US military policy during the Cold war.

> when are countries incentivized to "expand their credit line to the > infinite"? Look at the current situation in the US. Everyone knows they will > never pay their debt, yet it keeps growing. You can expect things to crash > hard down the road.

> would you rather have a currency that can modify its inflation/deflation > rate based on any number of relevant factors, or a currency whose > inflation/deflation rate is tied to the rate of mining of some rocks in the > ground?

The later, obviously, because Gold is neutral and does not belong to any government. The US Dollar, the Euro and other fiat currencies are all controlled by different central banks with different agendas. I have no control over what they can do in the future. But Gold is tangible, and there's not much Gold being extracted nowadays to change the face value of it.

Why do you think China is building a huge Gold reserve currently, and buying Gold as much as they can from all over the world? Do you think they are just plain stupid ?

</comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment></comment><comment><USER15> You see how easy it is to make fun of Americans? :-)

It is like Putin deciding to give Snowden asylum. Free poke at the gorilla, look he can't reach over here and hit back.

Of course a more open dialog is good, but nobody, especially the Russians or Chinese actually _want_ a world government. That would take all the fun out of being a dictator.

<comment><USER16> World government and world currency are not the same. The Chinese government wouldn't really want either though, given the games they play with the Renminbi.

<comment><USER15> They kind of are, the same that is. A reserve currency (such as the one called out here in the article) is a sort of 'place holder' currency. But to be a valid place holder it has to have some structure against which to balance, a connected monetary policy if you will.

Look no further than the Euro to see how challenging it is to manage a currency. And note that the countries in the EU are _co-operating_. Imagine how hard it would be if Greece or Spain was actively trying to siphon money out of Germany because of treaty obligations. If a recipe can be figured out for managing the Euro, then there will be a call for doing the same thing world wide, but until then its just a free poke at the US for being stupid.

</comment></comment></comment><comment><USER17> Here's the actual Xinhua (official Chinese journal) article: [http://news.xinhuanet.com/english/indepth/2013-10/13/c_13279...](http://news.xinhuanet.com/english/indepth/2013-10/13/c_132794246.htm)

</comment><comment><USER18> * The US also provides safe assets in the form of US Securities.. by going into debt.

* Treasury notes and bills are widely used as collateral and upon maturity they turn into reserve currency cash.

* China, the oil producers run budget and trade surpluses and don't have a history of providing safe assets, like the US, Japan and some EU countries.

* Having a reserve currency causes your currency to appreciate, which isn't good for exporters.

* On the flip side too much spending will cause inflation, which plagues developing countries, but not the developed.

* So they cannot afford to spend as much, without their CB raising interest rates to fend-off inflation, which causes.. currency appreciation and trade deficits.

Which country will provide reserves AND safe assets? And what will China do to back this organization in these circumstances?

</comment><comment><USER19> Of course, I'm sure any military actions regarding Taiwan, the Spratly islands, etc, isn't going to need any kind of UN approval since they're already Chinese territory that has been unjustly annexed by foreign powers.

</comment><comment><USER20> I can understand why two political parties arguing might be difficult for China to understand.

And the UN has no moral authority at all.

</comment><comment><USER21> It would be interesting to see how the Chinese envision an international currency. Essentially fiat currencies regard tax payers as asset-backed securities, and create value by issuing government backed bonds. With no tax payers and no central body (or a joint venture with unconstructive bickering) you'd run into some fundamental issues. You could: 1) peg existing currencies to it (good luck getting buy in)

2) peg the currency to physical goods (gold, oil, etc). Fiat currencies have distinct advantages which make it optimal for modern trade.

3) use treaties to regulate government sovereign bonds with the global currency

</comment><comment><USER22> Something which occurred to me - a bit without precedent but possibly legal...

Congress has the power, with a 2/3 vote, to expel a member. How about, instead of playing chicken with the world economy and _our_ jobs, they put their _own_ jobs on the line: scrap the existing debt limit and replace it with a rule of procedure in both houses that says if the House and Senate can't prevent breach of the debt ceiling (moved as they feel is necessary) they're _all_ expelled.

Obviously it'd need to be worded such that a veto couldn't force out congress, but that sounds doable.

<comment><USER23> They'd all be expelled, we'd hold elections and elect a new congress that does the exact same thing.

The problem isn't the people in congress, its the people they represent.

<comment><USER22> I don't think they'd wind up being expelled. The mainstream republicans are supporting this because they fear primary challengers. If the choice is "possibly lose your job vs. definitely lose your job", one obviously dominates.

</comment></comment></comment><comment><USER24> Chinese got the balls. I hope the rest of the world will join the effort.

</comment><comment><USER25> I guess congress can now say Mission Accomplished!

</comment><comment><USER26> Bitcoin to the rescue! :)

<comment><USER27> No. Deflation is even worse for economy than inflation is. That's why gold was abandoned. In fact, ancient China had a long history of struggling in awful situations caused by lacking copper/silver/gold for producing enough coins to feed the booming economy system, while the coins were either smuggled to neighbor countries or remelted by domestic speculators.

I propose a new digital currency be created according to certain eigenvectors[1] and allometry[2] features of trading network flows or simply the internet traffic flows.

The progress of Complex Network[3] theory may tell us more about how to build a solid algorithm for this kind of "evolving coins" to make them decentralized and evolve along with real economic activities.

I've been investigating the theory in part time and I dare say somebody with sufficient knowledge is able to figure out a model eventually.

IMO, bitcoin is the start of inventing a better currency, not the end.

[1][http://en.wikipedia.org/wiki/Centrality](http://en.wikipedia.org/wiki/Centrality) [2][http://www.nature.com/scitable/knowledge/library/allometry-t...](http://www.nature.com/scitable/knowledge/library/allometry- the-study-of-biological-scaling-13228439) [3][http://en.wikipedia.org/wiki/Complex_network](http://en.wikipedia.org/wiki/Complex_network)

</comment></comment><comment><USER28> I wonder how much of this is scripted by the globalist bankers.

<comment><USER29> "Globalist banker" is a euphemism for the same old tired "Jews control the world" trope peddled by the John Birch society.

<comment><USER30> Facebook, Google, Microsoft... What would Birch say?</comment></comment></comment>


National Security Agency plans major reorganization, combine offense+defense - <AUTHOR> https://www.washingtonpost.com/world/national-security/national-security-agency-plans-major-reorganization/2016/02/02/2a66555e-c960-11e5-a7b2-5a2f824b02c9_story.html <comment><USER2> This seems bad on a few levels. From an internal security standpoint, the organization is more vulnerable. From a software vulnerability standpoint, what good can come of this? Who wins when signit says "don't you dare close that hole!"? As a company, why would you want to be mixed up in that?</comment>


$5000 per violation of price-gouging in CA - <AUTHOR> https://www.caloes.ca.gov/cal-oes-divisions/legal-affairs/price-gouging <comment><USER2> A lot of people in this thread are willfully ignoring some basic facts here. These products _are_ being made in sufficient quantity for everyone. There is _not_ a significant decrease in production. There _is_ a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product.

This is not a case of toilet paper suddenly costing more to produce. The price gouging law is not bringing toilet paper to levels where the _producer_ of the product is taking some kind of operating loss or even reduction in profit of any kind. This is a case of consumers attempting to create small niches of artificial scarcity so that they can profit.

The free market arguments being made here are baffling, and willfully ignoring the aforementioned truths of this specific set of circumstances that have driven these specific laws. Have we lost all sense of humanity for the sake of our ideology?

We would be doing our entire society a severe disservice if our solution to this problem is simply "create so much toilet paper that people can't hoard it." The fuck are we going to do with that much toilet paper.

<comment><USER3> "There is a significant increase in hoarding, and in many cases it is for the explicit purpose of creating artificial scarcity to increase the price of a product."

People hoarding aren't trying to _create_ artificial scarcity. They are buying because they _anticipate_ scarcity, and want to either (i) be prepared, or (ii) profit from resale.

Hoarding has caused shortages which, in turn, justify the original hoarding. This is a sad situation, but capping prices isn't a solution. If anything, I would expect higher prices would discourage hoarding, resulting in a more even allocation of TP/whatever between people.

<comment><USER4> > People hoarding aren't trying to create artificial scarcity. They are buying > because they anticipate scarcity, and want to either (i) be prepared, or > (ii) profit from resale

How would (ii) be a profitable activity if buying in bulk wasn't creating artificial scarcity? I mean, I guess you could argue that the scarcity isn't "artificial", but like, when someone is literally buying more hand sanitizer than they could possibly want to actual use themselves, that seems pretty artificial to me.

<comment><USER3> It's a profitable activity if there is scarcity in the future, regardless of whether I can influence that scarcity.

smallnamespace's made the same point as I made in the portion you quoted, but made it much more clearly:

"To a very good approximation, the marginal impact of any hoarders on the scarcity of a product is zero. Hoarders are not trying to drive scarcity themselves, they are trying to buy a product now because they think the price will rise, but they're not trying to make the price rise by buying it. The distinction is important!"

<comment><USER5> Both you and smallnamespace are using the same strawman. Who cares about the marginal impact of an individual's actions?

The situation in practice is dead simple: widespread hoarding is creating ongoing shortages of various products, and some of these hoarders are using that temporary scarcity to profit from other peoples' desperation. This is entirely predictable and uncomplicated, and it's both ridiculous and irrelevant to quibble over whether the profiteers are "trying to drive" the artificial scarcity to which they're contributing. I honestly don't even know what you're arguing about.

<comment><USER3> 'Who cares about the marginal impact of an individual's actions?'

Someone who is trying to understand their motivation (what they're trying to do).

'it's both ridiculous and irrelevant to quibble over whether the profiteers are "trying to drive" the artificial scarcity to which they're contributing'

It's not irrelevant. I responded directly to a claim in the comment to which I replied. No tangent.

'I honestly don't even know what you're arguing about.'

I'm really interested to know why some folks (not you) are so insistent that the hoarders/profiteers are trying to create a situation (rig the game) rather than just being players in it. I thought the logic of my original point was pretty obvious and, as you say, it's not even that interesting compared with the wider point about the collective effects of the individual actions. So why are people so interested in this small point?

</comment></comment></comment></comment></comment></comment><comment><USER6> Price isn't just the cost of buying something, it's the reward for producing it. If we see too many price gouging laws, then you can expect shortages as companies find themselves unable to justify extreme measures that would otherwise increase production (at great expense). Secondly, I would expect that localities with price gouging laws will discover that their goods are being re-routed to other places without those laws, exacerbating shortages further.

<comment><USER7> This isn't the companies being punished - it's the opportunists. These vultures are driving to every small pharmacy and clearing out all the masks and sanitizer. Now that Amazon & EBay have cracked down on reseller gouging, some are sitting on stockpiles through the midst of a pandemic.

* [https://www.nytimes.com./2020/03/14/technology/coronavirus-p...](https://www.nytimes.com./2020/03/14/technology/coronavirus-purell-wipes-amazon-sellers.html?action=click&module=Spotlight&pgtype=Homepage)

<comment><USER8> Yes, for some reason people complaining about the supply-demand economics of price gouging laws seem to think Clorox, Charmin, Kleenex, etc are the ones jacking up the prices of supplies...

Manufacturers producing enough quantities to sell is not the issue. The assholes that swoop in and buy out all the stock in a store temporarily to quickly turn around and sell the items for much more are doing the gouging. It's like going to the gas station right after a refill with a big-rig tanker during a time of high demand, filling up all the gas from the station, and then sitting next to the now-empty gas station all day and charging people 500% more for gas.

That is why stores are now implementing quantity limits for certain supplies, so people don't just hoard them for profit and to deny everyone else access to buying the supplies.

<comment><USER9> > Clorox, Charmin, Kleenex, etc are the ones jacking up the prices of > supplies...

In a shortage situation, I suspect they dial-up the production of the higher- margin product lines.

The house-brand manufacturing line won't be the one that gets the extra shifts or equipment installed.

<comment><USER10> Well, I'd much rather buy a particular brand vs store brand than paying some dick $50 on ebay or amazon.

</comment></comment></comment></comment></comment><comment><USER11> Prices being elastic is good for people, in a vast majority of cases. It makes sure things get distributed more or less proportional to need, as opposed to just random or worse than random.

Case in point: I luckily found some hand gel still for sale online. Probably the very last one around here. So I stocked up - not resale quantities (thought it would have been trivial) but definitely more than I needed - something like 10 pieces. Why? Because the price was low and I'm doubtful I'll get to see any more this year.

If the price had been even slightly elastic, I wouldn't have bought 10 pcs for $10 each. I would have probably spent about the same, and gotten 2 or 3. Even better, I would probably still be able to get it from the groceries store, without any shortage - and buy just one as needed.

So we have two scenario: if the prices stay the same some people stock up early, and most are left without. If the prices go up proportionally, we end up spending a trivial amount more (let's be honest, spending an extra $7 on hand gel is not a tragedy) but we have no supply problems. First because there is much less stocking up, and then because everybody is incentivised to produce and sell more.

<comment><USER12> "I'm doubtful I'll get to see any more this year." \- I'll take that action. All of the consumable that people have been panic buying - toilet paper, hand gel, etc... have experienced absolutely _zero_ supply shock, and, indeed, most of the manufacturers are going to be delighted to draw down their inventory and get a boost this quarter. I'll be extraordinarily surprised if shelves aren't completely full of those consumable within 7-10 days.

People are strange - the fact that there was a global pandemic coming at us was pretty obvious as of early march, but it was _this_ weekend that everyone decided to panic? It's not as though this were a hurricane that just landed on us by surprise.

I fully support the price gouging laws - it discourages these yahoo's from buying up all of the supplies and sticking it in their garage and depriving people over the weekend who might need a container.

<comment><USER13> > _I 'll be extraordinarily surprised if shelves aren't completely full of > those consumable within 7-10 days._

Then why do we need any price-gouging laws? Who is harmed without them, if the supply remains intact?

<comment><USER14> People with short term need?

7-10 days is a long time to go without some things like food, cleaning supplies (particularly in time of pandemic), masks for those who actually need them like healthcare workers on the front lines, etc.

<comment><USER15> Have you noticed that the shelves are empty? The price gouging laws don't help that situation they _create_ that situation. How are empty shelves better than the items available for 2x, 3x or even 5x the regular price for a short period of time?

<comment><USER12> People who price gouge are highly incentivized to go buy all the stock in a community and resell it on the internet. That guy in the NYT article essentially drove to all these out of the way places and cleaned out their stock.

Allowing price gouging would not result in more of that stock being available on the shelves - responsible retailers and distributors know better, and behave better than that - they make all of their available stock, and when they run out - they run their factories at 100% to try and catch up.

Note - I have _zero_ issue with ticket scalping - love the fact that there is a free market where people can buy and sell tickets at the price the market can bear. Also have zero issue with a free market in general - it encourages new suppliers to come in when prices go up, and consumers to find relative substitutes - things find an equilibrium.

What I have a problem with is people taking advantage of an emergency or shortage, in such a way that _further increases_ the shortage of items that are critical to people's health and well being, people who may not be able to afford to go out an pay 10x prices on amazon for something like a mask or hand cleaner.

</comment></comment></comment></comment></comment></comment><comment><USER16> The crazy thing here is that they go after these gougers so aggressively for just selling a 20$ bottle of soap. And yet, predatory hospitals in the US can do x1000 times worse and not even get a slap on the hand. Hospitals are the #1 cause of bankrupcy in the US.

<comment><USER17> they aren't gouging. gouging is a reaction to a disaster or event of some sort. hospitals always charge the absurd prices.

<comment><USER18> So if Arnold Arbitrage changes his name to Henry Hospital and always charges a high markup, that's A-Ok with you? This point of view seems inconsistent.

</comment></comment></comment><comment><USER19> From an economics stand point, I don't understand why the government should ban price-gouging. Doesn't this place an artificial price ceiling that will ensure a shortage of goods? I would personally rather stores have items such as food/water at marked-up prices than not at all.

<comment><USER20> From a political standpoint, I see the point. Price gouging makes people extremely mad, and it redirects goods from poor people to wealthy people. When tempers are already fraying and maintaining social order is already difficult because of an emergency, the last thing a government needs is a nucleus for lots of pissed-off people to rally around.

Remember that the first priority of any government is to keep itself in power. Governments that don't accomplish this are no longer governments. Efficiently allocating goods is a secondary consideration that helps them achieve this, but if doing so means they end up with a revolution or rebellion anyway, it wasn't very effective.

<comment><USER21> Pictures of empty shelves on social media is causing panic and driving more shortages. This is a lose-lose situation for gov interference. This sort of punitive response will always be far too late or too little to be effective anyway.

The markets will respond far faster with supply than setting price ceilings and fining random opportunists will.

So few people question whether it will actually work in the real world before asking if in an ideal scenario it is an effective idea.

I mean what's going to happen next time? Are they going to lock up all the TP and ration it out on first signs of any sort of epidemic or other causes or panic? Because that's when the hoarders and grey market guys were already stocking up.

<comment><USER20> The point is to serve as a disincentive to ordinary people thinking "Oh, I can make a lot of money doing that."

It crossed my mind, when news of the coronavirus first broke, that I could make a lot of money speculating in toilet paper, canned goods, rice, and beans in the near future. (I did all my prep shopping 3 weeks ago, but didn't buy more than we personally needed as a family.) I didn't because a.) a little voice in my head said "Do you really want to be that asshole?" and b.) it occurred to me that it was very likely that powers that be (governments and market platforms like Amazon) were going to crack down very hard on scalpers, and it was not worth going to jail for. Turns out I was right about that - people are not going to jail (in the U.S. at least, I heard they may be in Europe), but they're facing $5000 fines per item or eating the cost of buying & disposing of the items because Amazon revoked their seller license.

The point of highlighting laws like this is so that people aren't tempted _next_ time there's emergency to do the same thing.

</comment></comment></comment></comment><comment><USER22> Reading this thread is the official confirmation that Americans are out of their mind.

<comment><USER23> Absolutely, I cannot fathom how people are so anti-government that they cannot see the forest from the tree.

These types of situations are textbook explanations for WAR PROFITEERING (except we are in a crisis instead of war).

<comment><USER24> It's because the default mindset is that everyone is horrible and motivated solely by profit.

<comment><USER25> That's a bit of and extreme characterization of "tend to look out for the well being of your family/people you care about"

So who's model accounts for hoarding behaviors like this?

</comment></comment></comment></comment><comment><USER26> For basic goods like toilet paper, production hasn't fallen, and consumption hasn't risen. Distribution is still adequate for the amount of production and distribution, so it's not directly the problem, either.

The problem is buffering. Normally, buffering happens within the supply chain -- the back rooms of stores, loaded in trucks, warehouses, distribution centers, and the factories themselves. Now, we are telling everyone "buffer at home so you don't need to go out so much". But the problem is, buffering is much less efficient at the end of the chain, so you need to buffer a lot more. That's causing a short-term strain on production and distribution.

Blaming selfishness or gouging probably doesn't do much to help this problem. My guess is that the biggest problem is the discrepancy between how much stuff would be needed to buffer within the supply chain versus how much stuff is needed to buffer at the end of the supply chain (i.e. at home).

Worse, because it's a temporary buffering problem and there's no real increase in consumption, there's little incentive for production to increase now to alleviate it. Any increased production/distribution now just means less demand later when people start to work through their caches at home (and stop buying for a while).

So the only way to alleviate this is to allow the prices (that manufacturers charge) to rise, which will give manufacturers a cushion against the inevitable slump in the future. That's not very popular and not worth the brand damage, so it won't happen.

The good news is that I don't think this will last more than another few weeks. Gougers will stop buying at some point because they don't want to get stuck with a huge supply of toilet paper and no channels to sell it. And the home caches will fill up.

EDIT: this analysis has nothing to do with things like facemasks, where consumption has dramatically risen.

</comment><comment><USER27> This would seem more fair if they said the price couldn't be raised by more than 50% or 100% during an emergency. So toilet paper that was $10 would become $20. Not a major problem, and yet it gives producers the margins to keep staff working longer hours to produce more goods.

But no increase over 10%? That gives producers very little margin to work with. (10% is the rate set in the law. See the link.)

</comment><comment><USER28> Price-gouging would correct the toilet paper hoarding problem.

<comment><USER29> Allowing prices to directly track available inventory seems like an excellent approach. The problem will self-correct very quickly as 4-packs of toilet paper begin to exceed $20. As inventory is replenished, prices could begin to drop again.

Yes - this sucks for someone who really wanted toilet paper that day, but at the same time it ensures more conscientious spending where absolutely required. I usually don't check prices when I shop for groceries, but if TP was $20 per roll id probably actively decide to not buy any that day. Having this kind of damping from a price-demand perspective could really help to stabilize the availability of goods in retail environments. I can understand how customers might not like this, but if situations are dire, I think we should consider at least being able to throw some sort of switch to enable this mode of operation during emergencies.

<comment><USER30> "actively decide not to buy any that day" and not wipe your rear end after using the toilet? If you're out of paper towels or soap and the cost is 50x the usual you're just gonna not wash your hands? Think through the consequences here. Not everyone can afford to stockpile stuff like this in advance, some people live paycheck-to-paycheck. I've got a couple weeks of paper products in reserve typically, not 2 months worth - and if the timing is bad I might be down to a week's supply. Thankfully in this case I restocked just before things got bad but if this lasts I'll have to deal with shortages just like everyone else. I'm actually out of hand soap refills...

<comment><USER31> Are you familiar with marginal analysis from economics? This is how markets work for everything. You are considering the one person with no TP, paper towels, or soap -- that is the person who will not be dissuaded from buying at any price. But there is always one person right on the edge of buying at the current price -- one who has a single roll left and can stretch it, or one who can just poop at work, or one who grew up wiping with corncobs and always thought of TP as a luxury anyway.

As the price goes up, those people drop out one by one. It is those marginal consumers, not the one who needs TP the most, who are price sensitive. This ensures that the person with no TP, paper towels, or soap is always able to get the TP that they need _now_. Even if there's only one roll left. The price may have to rise to $100 a roll to distinguish between them and the next-most- marginal consumer (who also has no TP, paper towels, or soap, but is willing to hold their poop for a day to save $100). That's the most efficient outcome and markets are great at finding it.

</comment></comment></comment></comment><comment><USER32> I highly recommend listening to Duke professor Mike Munger discuss price gouging on this episode of Econ Talk:

[https://www.econtalk.org/munger-on-price- gouging/](https://www.econtalk.org/munger-on-price-gouging/)

It's very entertaining and enlightening.

</comment><comment><USER33> I've looked into this (I'm returning to California in two weeks) and you don't have to had to buy something to have standing to sue. If you see someone advertising $1.50 masks for $40 apiece on Amazon, for example, you can sue them in small claims court in CA (if you can find them) and, most likely win, according to my attorney who helped us with a similar case two years ago:

There's a similar law in California that allows individuals to sue businesses who offer you a contract that forbids leaving negative feedback on review sites. We had a garage door company offer us a contract that included such a provision. We didn't sign it, went to court, and quickly got a judgement for $2,500, which they paid.

(Here's information on that law:)

[https://racohenlawfirm.com/fines-for-trying-to-stop-bad- onli...](https://racohenlawfirm.com/fines-for-trying-to-stop-bad-online- reviews-californias-new-yelp-law/)

</comment><comment><USER34> I'm noticing with Amazon/eBay shut down people have moved to craigslist and alternative resell markets. I see some listings where people are genuinely trying to help (4oz hand sanitizer, two 2oz bottles, alcohol pads, moist wipes) for $20, but these will probably be quickly bought and resold at a premium.

</comment><comment><USER35> In a free-market, sellers and buyers will find an equilibrium price at which goods can be exchanged for money. When an outsider such as a government artificially sets the price (or forces the price to stay constant), there will be shortages or overproduction.

<comment><USER36> Stores and manufacturers aren't actually charging increased prices in the majority of cases here. It's people buying out those stores and selling. If manufacturers don't see the increased prices the Econ 101 logic breaks down.

<comment><USER15> They should be charging increased prices. They should have charged increased prices the moment demand went up (like Uber surge pricing). That would have snuffed out the speculators right quick.

One reason they don't do this is because of the attitudes illustrated in the comments here. People irrationally believe that surge pricing in this case is wrong and the negative response by their customers outweighs the benefits of surge pricing. I believe that _attitude_ about surge pricing is wrong and it is one reason why we end up with shortages. It is a terribly self-defeating attitude that exacerbates the situation.

<comment><USER37> They should absolutely not have raised prices.

The issue isn't manufacturers, and only retailers in that they failed to implement a purchase limit per customer given news of a pandemic.

You want the maximum number of people with enough supply to get by. Not to have large swathes of the population to go without because someone decided to usurp the logistics network in search of price gouging opportunities.

<comment><USER15> Purchase limit per customer? So a single person and a family of four and a family of six are subject to the same limit?

Much easier to raise the price then ask people to prove their need for a product.

And how are you going to prevent people from just having mom, dad, and each child purchase the items separately?

<comment><USER37> Good!

In order to do that, people will have to get cash. Cash has a far more tangible effect in terms of inspiring frugal spending, and it may not be a bad idea to get cash out of "the system" anyway.

If not, simply vet the card making the purchase. This isn't novel or groundbreaking. Way back when, you'd have a Government issued ration card I believe. Though I'd think a voluntary program implemented by The practice of private ledger keeping, while out of vogue, is still quite practicable. All you have to do is talk to people. Of course, if you went balls to the wall laying off cashier's, you may be in for a bit of a bad time, but hey, shareholder haircuts happen. Price of doing business.

This is not even the slightest bit untread territory.

</comment></comment></comment></comment></comment></comment><comment><USER38> Is there any evidence consumers are stocking up to profit rather than just have enough so as to be able to avoid stores for some time ?

<comment><USER14> Yes, there is evidence, because some of the people engaged in this are dumb enough to give interviews to major press:

[https://www.nytimes.com/2020/03/14/technology/coronavirus- pu...](https://www.nytimes.com/2020/03/14/technology/coronavirus-purell-wipes- amazon-sellers.html)

I'm sure in terms of overall numbers the vast majority of people who are panic buying aren't doing it to profit, but it only takes a couple of jackasses like the ones described in the article operating at the scale they did to cause real problems.

<comment><USER39> The thing is, once people are hoarding for any reason, profit or not, and that leads to signs of potential supply problems, everyone else has a strong incentive to stock up defensively, not for profit or defense against the original disaster, but to prevent being adversely effected by the supply shortages caused by hoarding. Which then creates a positive feedback loop of incentives unless external controls (rationing) are imposed.

</comment></comment></comment><comment><USER40> From the law:

"However, a greater price increase is not unlawful if that person can prove that the increase in price was directly attributable to additional costs imposed on it by the supplier of the goods, or directly attributable to additional costs for labor or materials used to provide the services, during the state of emergency or local emergency, and the price is no more than 10 percent greater than the total of the cost to the seller plus the markup customarily applied by the seller for that good or service in the usual course of business immediately prior to the onset of the state of emergency or local emergency."

I am glad they included this language, even though it is a bit sloppy. What I am referring to is that yes, costs can increase dramatically during an emergency, however, the "markup customarily applied" could also change in dramatic ways.

One of the aspects of the theory of pricing is to include in the equation variables to address support, business continuity, expansion, disruptions and other "nonlinear" factors.

In an emergency what might have been simple could become complex. This means it might be impossible for a vendor to maintain an ongoing supply or continue to offer services. And, given the current reality, if the consequence of providing the goods or services could be loosing your entire staff to a quarantine, your ability to maintain a supply might require a very different approach to pricing.

Given the severe consequences, this language could cause vendors to avoid exposure for fear of being destroyed by an uninformed claim. Which means supply would contract and prices would explode.

That said, the guy buying water at Walmart for $1 to then sell it for $5 should get nailed to the wall with rusty nails.

</comment><comment><USER41> How often does anyone get charged for this other than a few token made to be an example for the most egregious behavior? Price gouging laws seems to be mostly a threat rather than an actual attempt at regulating pricing. It's similar to how the police will arrest huge numbers of people during a protest and then drop the charges against almost all of them the next day. The backbone of the protest had been broken so it no longer mattered if they swept up a bunch of bystanders with protestors and rioters as they're all let go. I wonder how well any of these gouging laws would stand up in court if the state didn't quickly drop charges when challenged.

<comment><USER31> Yes, this law would make more sense as a norm to shame people from hoarding than as a strictly enforced market restriction.

</comment></comment><comment><USER42> Come on, guys. Hoarding a commodity in order to corner a market and thereby profiteer is immoral, (often) illegal, and a distortion of the free market. It's bad behavior. Please stop.

<comment><USER43> I agree that it's immoral, but I do have to wonder if there's much difference between what these people are doing vs Nike making a pair of shoes for $2 then selling them for $400, or hospitals in America marking stuff up 500 or 1000%.

By definition capitalism is about making a profit. Sell things for as much as you can, and win.

I find it fascinating how where there isn't a "crisis" then maximizing profit is just what we're all supposed to be doing, and we accept it but somehow in a "crisis" it's suddenly evil and horrible.

Suddenly capitalism itself starts to feel mighty immoral, doesn't it?

<comment><USER42> Or selling software with 0 marginal cost for $40k? :-)

As with all moral issues, it is difficult to come up with an objective distinction between wrong and right. I tend to rely on Kant's categorical imperative: Would society be harmed if everyone behaved in this way? In our situation where hoarders are attempting to profit from a crisis, I believe the answer is clear: It's immoral.

<comment><USER43> > _I tend to rely on Kant's categorical imperative: Would society be harmed if > everyone behaved in this way?_

Hospitals in the USA marking stuff up 500 or 1000% ARE harming society already.

If all shoe companies charged $400 for a $2 shoe, I believe society would be harmed, yes.

If every company hired people as part time only so they didn't have to pay benefits, again, society would be harmed.

The list goes on. Capitalism is already harming society badly.

<comment><USER42> > Hospitals in the USA marking stuff up 500 or 1000% ARE harming society > already.

Agreed, that needs to be fixed.

> If all shoe companies charged $400 for a $2 shoe, I believe society would be > harmed, yes.

A competitor would step in, charge less, and win the business. It would only be immoral if competition was quashed or impossible, such as in a hoarding situation.

> If every company hired people as part time only so they didn't have to pay > benefits, again, society would be harmed.

I don't see why this is true. The only benefit of moral significance is medical, and there's no law of the universe that states that must be paid by an employer.

<comment><USER43> > _I don't see why this is true. The only benefit of moral significance is > medical, and there's no law of the universe that states that must be paid by > an employer._

Most developed countries consider maternity leave, sick leave and compassionate leave (carer's leave) basic rights.

</comment></comment></comment></comment></comment></comment><comment><USER16> So, on the one hand, people react with aghast to find out that a bottle of Purrel soap costs 20$, when it actually should cost 2$ to produce.

But, here in CA, on the other hand, when a House (something far more crucial to people's lives), costs 800,000$ instead of 200,000$, that's okay (at least with the vast majority of voters).

I should mention the reason for 1 and the other are completely different. The soap, is merely due to the seller, wehreas the housing shortage is a political choice voters agreed to.

</comment><comment><USER44> So what will this do to Uber surge pricing?

</comment><comment><USER45> The current hoarding issues are being addressed in Australia by all supermarkets, they are rationing key goods ( 1 pack toilet paper, pasta, handwipes etc per day) but keeping prices low. You can deal with rapid demand increases for essential goods this way.

</comment><comment><USER46> I see some commenters saying that preventing price gouging will take away the incentive to produce more of a certain good when the demand increases. This doesn't make sense to me.

If, under normal market conditions, producers already make X amount (of , say, toilet paper) due to Y demand at price Z, when the demand spikes to 2Y, if you can produce and sell 2X goods at the same unit cost, you can double your profit without raising the price at all.

One might argue that in order to rapidly increase production capacity, the unit cost will rise as well. But that doesn't necessarily mean that you have to allow prices to rise. As long as the extra investment allows you to produce and sell enough units so that the extra profit is greater than your cost, the incentive is still there. And that's ignoring the fact that a price cap doesn't have to fix the price at current levels - it can limit the increase to a reasonable amount.

<comment><USER47> Most suppliers cannot simply produce 2Y the goods at the same price. Switching lines involves retooling and, risk, and/or overtime, all of which are expensive.

If that switch can be done for under the price cap, then the price should remain under the price cap anyway due to competition. If it cannot, then shortages will result.

</comment></comment><comment><USER48> What is everyone experiencing for price gouging / shortages on the west coast?

Even though I stocked up myself, I feel like shortages of food and general supplies are going to be temporary. The immediate goal is to avoid having to go back to stores before everybody else figures out the new normal (eg don't fucking stand there coughing in the middle of the store).

Hand sanitizer/IPA seems easy to produce in industrial quantities, and it feels like that will sort itself out in a week or two.

Respirators/masks seem the only thing that are and will continue to be in short supply. But it feels like government (including health providers) is going to have to get them into everybody's hands eventually. But maybe that's overly optimistic.

</comment><comment><USER49> If I buy all the toilet paper in a store and resell it for 5% more is that considered price gouging?

What if I sell it to another middle man who also distributes and sells for 5% more?

</comment><comment><USER50> It's amazing that it takes a pandemic for people to realize that "free market" isn't the solution to every problem in the world.

<comment><USER51> Reading this thread would indicate that some people still don't realize it now.

</comment></comment><comment><USER52> I wish we could apply price-gouging laws to medical care. But I guess it just seems like normal practice at this point.

</comment><comment><USER53> Suddenly in UK groceries became very expensive. Same exact shopping two weeks ago £50, today £80 :/

</comment><comment><USER54> An argument supporting gouging: [https://reason.com/2019/01/31/price-gouging- is-supply-and-de...](https://reason.com/2019/01/31/price-gouging-is-supply- and-demand-at-wo/)

<comment><USER55> You'll find a similar argument in any basic econ textbook. Put a cap on prices, then when demand rises for something (which normally leads to an increase in price, all other things being equal), the lack of an accompanying rise in price means there is no incentive to produce more of the good (no incentive for more producers to enter the market), so there isn't a corresponding increase in supply.

Might work okay in China, where the government can e.g. command factories to switch to producing masks, but it means American factory owners won't have any incentive to switch over to producing them.

<comment><USER56> And like most things, basic econ is not the be all and end all of how the world works otherwise we wouldn't have those all-important second year econ classes.

Price gouging is _not_ an efficient market result for anyone - the goods aren't actually, in real terms, worth the temporary price (the costs of manufacturer's switching over production is going to wind up much higher then any profit they can make once they're tooled up) nor does their value represent efficient allocation of resources - the guy with 11,000 bottles of hand sanitizer has no use for them, outside of the extremely limited window of people panicking due to uncertainty.

But really, whether anyone believes this can be viewed through a very different lens: multiple times in the past week, US exchanges have ceased trading due to automatic circuit breakers from 7% drops in the market. Surely if the market is all knowing we shouldn't trigger these mechanisms and instead just let the invisible perfect hand let people sell stocks freely. After all, if we don't allow sudden plunges, what incentive will there be for investors to properly allocate their risk in the future?

But, no one's making that argument. Nor is anyone questioning why it was suddenly urgent that the government put $USD1.5 _trillion_ of liquidity into the market.

<comment><USER18> > But really, whether anyone believes this can be viewed through a very > different lens: multiple times in the past week, US exchanges have ceased > trading due to automatic circuit breakers from 7% drops in the market. > Surely if the market is all knowing we shouldn't trigger these mechanisms > and instead just let the invisible perfect hand let people sell stocks > freely.

Yes, you're basically right despite intending to be sarcastic. The circuit breakers are stupid and there's no real good reason for them to exist. Levine:

> The basic idea of stock-market circuit breakers is, like, some news happens, > and the market reacts precipitously, and stocks fall 7%, and the market gets > turned off for 15 minutes so that everyone can have some time to think and > digest the news and see if they want to buy. On an average Tuesday > afternoon, not everyone who might want to buy stocks is watching the market > every minute. The computers are, sure, but some long-term investors are busy > doing other things, reading 10-Ks or meeting with executives or whatever. > Someone needs to call them up and say "hey not sure if you noticed but > stocks are cheap now, you should buy some."

> But you generally want to do this sort of thing through mechanical bright- > line rules, and occasionally those rules get applied in kind of weird > circumstances. The market did not fall 7% by 9:34 a.m. today because of > shocking news that came out at 9:32! Investors had all weekend to ponder > coronavirus news, and all of Sunday to ponder oil-price news, and they > pondered it at their leisure, and futures traded limit-down, and then the > stock market opened and investors applied their weekend's worth of pondering > to the market, with the result that the market shut down four minutes later. > A weekend of pondering, four minutes of trading, 15 more minutes of > pondering. I am not sure what you learned in the 15 minutes that you didn't > learn over the weekend.

Back to you:

> Nor is anyone questioning why it was suddenly urgent that the government put > $USD1.5 trillion of liquidity into the market.

The government didn't do that. It _loaned_ $1.5T over a very short term to banks. It was not targeted at the stock market and had no impact there.

<comment><USER56> > The government didn't do that. It loaned $1.5T over a very short term to > banks. It was not targeted at the stock market and had no impact there.

But if the free market should be allowed to run unimpeded, why did the government need to intervene here, when apparently in the provision of basic necessities you are arguing this is going _too far_?

<comment><USER18> Banks are some of the most highly regulated businesses that participate in markets. One should not draw general conclusions from government intervention in regulated banking programs.

> when apparently in the provision of basic necessities you are arguing this > is going too far?

I made no such argument.

</comment></comment></comment></comment></comment></comment><comment><USER57> Taxes working as intended?

</comment><comment><USER58> And that eBay btch az couple that is buying up Lyso wipes and reselling them on eBay for 3x

</comment><comment><USER59> Better to get on with closing nearly every store and introduce rationing. This is stalling.

</comment><comment><USER60> We should be applying a much hefty fine for stock investors or other kinds of investors if this $5k price-gouging is reasonable.</comment>