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It’s mostly a demand shock, not a supply shock, and it’s everywhere

389 点作者 knasmai超过 3 年前

43 条评论

arthur5005超过 3 年前
What this doesn’t really address is the why?<p>Yeah there’s more money floating around, so perhaps more people want to spend it, but why? Most people aren’t getting materially more stuff or even need that much more stuff, consumption’s already god damn conspicuous.<p>Maybe everyone can afford a jet ski all of a sudden? No, the stims didn’t really do &#x2F;that&#x2F; kind of wealth expansion.<p>To me, this still looks like the bullwhip effect, which is expected to have an outsized effect on demand over at least a year or two.<p>Buyers, who got used to “just in time” shipping, got spooked by shipping delays and shortages from their suppliers, because of supply demand imbalances during shutdowns, and as a response they all put in orders for 2 to 3 times the amount they usually buy from their suppliers with the intent of rebuilding domestic stock so they don’t miss out on sales.<p>All of a sudden, aggregate demand explodes.<p>Shocking.
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throwaway2331超过 3 年前
For anyone scratching their head on what &quot;MP3&quot; is: monetary policy 3, i.e. &quot;helicopter money,&quot; i.e. &quot;the government be handin out them stimmies,&quot; i.e. the government injected COVID-19 relief funds into the economy, giving an across-the-board increase in demand for goods &amp; services, but there aren&#x27;t enough &quot;goods &amp; services&quot; to keep up with this demand.
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jolux超过 3 年前
Just a warning that this is an article by a hedge fund expressing a view of our current inflationary period that I would argue is heterodox among the economic mainstream. I suggest reading Paul Krugman and Claudia Sahm for dovish views, or Adam Ozimek for a more critical view. In particular, the idea that “inflation expectations” can perpetuate inflation via a self-fulfilling prophecy effect has been called into question lately: <a href="https:&#x2F;&#x2F;www.federalreserve.gov&#x2F;econres&#x2F;feds&#x2F;files&#x2F;2021062pap.pdf" rel="nofollow">https:&#x2F;&#x2F;www.federalreserve.gov&#x2F;econres&#x2F;feds&#x2F;files&#x2F;2021062pap...</a>
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surrealize超过 3 年前
Demand growth is what we want. Our economy has been largely demand-limited for a while. Demand growth boosts GDP growth.<p>Corporations are sitting on huge piles of cash, so they&#x27;re not investment-limited. Any labor market tightness raises wages, which have been mostly stagnant for a long time (until very recently). Wage growth is also good.<p>If wage growth squeezes profits, then that&#x27;s also good from a wealth inequality point of view.
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l33tbro超过 3 年前
The more I read about this subject, the only thing that becomes reinforced is that nobody really knows what the hell is going on with the markets. The inflation &#x2F; deflation debate has been raging on for years now, and it&#x27;s still not clear what we are experiencing in this virualised economy of ours.<p>Gun to head? I think it seems that &#x27;inflation&#x27; is not really inflation - but a kind of profit tax that seems to be being priced in to charge more for things because everyone else is doing it. A lot of debt was paid down with the stimulus, rents&#x2F;real estate are frickin skyrocketing, so it&#x27;s difficult for me to believe that there is a huge surge of demand because everyone is suddenly flush.<p>As for the the supply chain issues &#x2F; trade war &#x2F; materials shortage - again, that doesn&#x27;t seem to be inflationary or a demand shock, but a temporal supply-side issue not being able to keep up with regular demand as things reboot.
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skybrian超过 3 年前
It seems like there isn’t enough data backing up these claims, or at least not in convenient form. Where are the graphs of things like container throughput at major ports? Compare with the pandemic where it’s much easier to understand whether things are getting better or worse.<p>Also, economic growth depends on the ability to remove bottlenecks and improve productivity. Yes, there is always another bottleneck. But idea that removing one bottleneck is pointless because there will be another one seems like giving up on growth?<p>In particular, it seems unlikely that there is no way to build more housing.
airstrike超过 3 年前
For anyone else thrown off by the use of &quot;MP3&quot; to refer to anything other than the file format, here&#x27;s <a href="https:&#x2F;&#x2F;medium.com&#x2F;alpha-beta-blog&#x2F;the-three-stages-of-monetary-policy-cce4fa116a59" rel="nofollow">https:&#x2F;&#x2F;medium.com&#x2F;alpha-beta-blog&#x2F;the-three-stages-of-monet...</a>
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hogFeast超过 3 年前
First really thorough analysis of this situation that I have seen. It is surprising that this observation isn&#x27;t more common, it is very obvious from looking at sectoral balance sheets...but, I suppose, not many people do this (it is odd to me that what was done during the pandemic had literally never been tried before, there was no economic logic for doing so, and no economist said: hold on, is this a good idea? And still, just a crowd of nodding dogs...you can only rely on an economist for a convincing explanation of what was happened, never the future, never creativity, never analysis).<p>One point that I don&#x27;t think is made clear. Because this problem is totally artificial, it isn&#x27;t clear how you solve it. Clearly, prices are going to have to increase substantially to choke off demand. But even once you do that, there is a question in some industries of whether supply can increase at all. Some big industrials are trading on mid-single digit P&#x2F;E ratios, they just can&#x27;t get money (most are actually being incentivized to return this, repeat that: shortage of almost everything, the market is telling them...reduce supply urgently). There is a flood of money for &quot;risk-free&quot; investments and tech (read: unprofitable, never going to be profitable but has value because you might be able to convince someone that you will be profitable...eventually), everyone else is being starved to death. It is quite terrifying because the govt has managed to debauch almost every price in the economy. Nothing is working.
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P00RL3N0超过 3 年前
I&#x27;m honestly surprised inflation hasn&#x27;t been worse than what we&#x27;ve already seen. 10-year treasury yields are still well below their 2019 levels and are currently below their levels from Q2 of this year.
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lisper超过 3 年前
It&#x27;s a plausible theory, but it doesn&#x27;t explain the long queues of container ships waiting to be unloaded.
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EdwardDiego超过 3 年前
&gt; Further, those who left the labor force during COVID don’t seem particularly likely to come back, as most say they don’t want a job, and many are over 65 and are likely permanently retired<p>Who was asked, and who did the asking to arrive at &quot;most say&quot;?
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locallost超过 3 年前
I did not read too deeply into the article, but there are some things that don&#x27;t add up.<p>1) if it&#x27;s only a demand shock and production of goods is sky high, why are all the goods missing? Apple missed its projections and blamed it on supply issues. Did e.g. TSMC crank the production up, but failed to deliver for Apple? Hard to imagine. So if there&#x27;s enough goods it implies that e.g. Apple didn&#x27;t sell as much as expected, but this goes against the argument that there is so much stimulus money.<p>2) speaking of stimulus, despite the claim that it&#x27;s a demand shock, the article makes this claim early on: The MP3 response we saw in response to the pandemic more than made up for the incomes lost to widespread shutdowns without making up for the supply that those incomes had been producing.<p>so which is it? supply or demand shock?
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sicromoft超过 3 年前
Here&#x27;s the content without the obnoxious modal:<p><a href="https:&#x2F;&#x2F;archive.md&#x2F;OTsRH" rel="nofollow">https:&#x2F;&#x2F;archive.md&#x2F;OTsRH</a>
stuaxo超过 3 年前
&quot;governments transferred a massive amount of money to households&quot;.<p>This isn&#x27;t true in the UK, yet the article mentions a lack of truck drivers here - that&#x27;s more likely to be due to Brexit and then not wanting to come back after being treated badly last winter.
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drunkpotato超过 3 年前
WARNING: This site has an <i>obscenely</i> obnoxious terms &amp; conditions blocking modal. I would prefer this link to be removed, it is so egregious.<p>Post something, or don&#x27;t. Don&#x27;t put up a blocking modal to force me to read some terms &amp; conditions before reading the actual content.
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paul7986超过 3 年前
Seems like all that free money and no one working has definitely caused a supply issue ... yet everyone has tons of money furthering pushing up demand yet supply to meet the demand has shrunk.<p>For those who push for a universal basic income where large groups of people do not work ... do not help produce the supply only push up the demand. Why do you think UBI is still a good idea and you are perfectly fine with how things are now vs. how they were?<p>*Please note i want workers to be paid more then fairly and when i go out i tip up to 30%, as well happily pay $60 to $100 for dinner at Applebees (or similar places) for a friend and or a date and myself.
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austincheney超过 3 年前
The LA port issue is mentioned in the article and seems to be severely misunderstood. I work with one of the senior attorneys of the Port of Los Angeles in my side job. The primary problem there, and Long Beach and many other ports, isn&#x27;t anything economically driven at all. It is lost space. Even more specifically it is vendors not retrieving their containers because its cheaper to leave the container on the dock and store it in their own warehouse.<p>So the moment a graduated price hike was introduced for container parking (just very recently) one of the major US vendors conveniently found warehouse space for 5000 of their containers sitting empty on the LA docks. Think about this like using airport parking for your car as opposed to metered parking on a street in front of your house (everyone&#x27;s house) and until recently the airport parking was substantially less per day.<p>---<p>I would have loved for the article to focus more on housing, because I see that topic frequently come up on HN from people on the west specific, especially San Fransisco, and they always get this subject incredibly wrong to fit their localized price&#x2F;inventory dynamics in way that falsely equates to buying candy bars or fuel.<p>Here is a deeper exploration of housing using data: <a href="https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=28974793" rel="nofollow">https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=28974793</a><p>In short, supply trails demand. In high growth markets, which is not San Fransisco, the frequency of demand for a fixed asset versus the speed of supply is almost solely responsible for shaping the product definition.
zz865超过 3 年前
I can remember when a year ago everyone agreed they were happy with consuming less and spending time with the family. Looks like that didn&#x27;t last long, everyone is out shopping again.
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monksy超过 3 年前
Warning: The site withholds the content unless you agree to terms.
cm2187超过 3 年前
It sorts of make sense. The big mystery was how we created so little inflation with previous QE. In fact we probably did, but because it was injected in the financial system, it created an inflation of financial assets.<p>But the minute the government distributes this newly printed money directly to the general public (through covid subsidies), inflation in ordinary goods follows.<p>I know the Fed pretends it doesn’t finance directly the budget deficit but in practice it does, and the amount of QE pretty much tracks the deficits during covid.
exogeny超过 3 年前
Addressing a few different comments because it may not be known: Bridgewater is a hedge fund. One of the bigger ones, and most successful. Kind of old school. But because of this, any content that they disseminate must be very clearly be labeled at opinion&#x2F;research and not investment advice. This is the reason for the obnoxious modal. This one can&#x27;t be avoided.<p>The email newsletter upsell, however...
pengaru超过 3 年前
Isn&#x27;t a big part of the current problem that transport&#x2F;delivery&#x2F;shipping vessels and&#x2F;or their portable containers have been forced to become part of the storage capacity?<p>Does it really require much more than that to break the whole system down? You could have what was once a highly parallel system with tons of transport bandwidth brought to its knees and effectively serialized if not completely deadlocked by just overflowing your storage capacity enough to fill all the transport stuck in queues and other forms of holding patterns.<p>Thought exercise:<p>You have two warehouses surrounded with tons of loading&#x2F;unloading docks, plenty of bandwidth capacity, but they&#x27;re both full inside. You have 20 trucks available, and they too are all full of goods, 10 parked at the docks of one warehouse, the other 10 parked at the other warehouse. But nothing is happening, because all the trucks are full and waiting to unload, and all the warehouses are full.<p>So you introduce a 21st truck that&#x27;s empty, and it shows up at one warehouse, loads up, and moves the stuff to the other where it needs to go. What happens? Did you fix the problem? Barely; you&#x27;ve opened up 1 truck worth of transport capacity. Despite having all this potential parallelism and idling trucks at concurrent docks, you will still be stuck with just a single truck moving around making glacial progress at any given moment. At least until enough goods exit this closed system where only the warehouses are storing and the trucks are all transporting again, which requires preserving sufficient headroom at the warehouses to ensure any docked, fully loaded truck can unload immediately.<p>It&#x27;s a vastly simplified example, but I wouldn&#x27;t be surprised if something along those lines has occurred where the transport has become storage because there&#x27;s been too much stuff pumped into the system for the available holding capacity.<p>It&#x27;s like trying to rearrange your overfull apartment when there&#x27;s zero floor space available, you can&#x27;t move the bed because it&#x27;s wedged between the couch and the table. You need to take stuff out of the space so you can actually move things around.
dustintrex超过 3 年前
The article doesn&#x27;t answer the obvious question though: what next? The various pandemic subsidy packages are by and large being wound down, which implies that demand should start dropping quite soon as well.
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baryphonic超过 3 年前
Never have I seen so many words used to describe inflation without using the word inflation.<p>Tight labor market; demand for goods outstripping supply, driving up prices; too much money chasing too few goods: it&#x27;s all there.
fnord77超过 3 年前
Krugman thinks it is a combination of supply chain issues, shift in demand and out of control energy prices:<p><a href="https:&#x2F;&#x2F;archive.md&#x2F;fjwyl" rel="nofollow">https:&#x2F;&#x2F;archive.md&#x2F;fjwyl</a>
throw0101a超过 3 年前
The &quot;shock&quot; is actually a bit more subtle than that:<p>&gt; Here&#x27;s 10 years of the relationship between our consumption of goods and our consumption of services. It explains a lot about why we&#x27;re experiencing bottlenecks and disruptions. We were simply not prepared for the massive uptick in goods consumption.<p>* <a href="https:&#x2F;&#x2F;twitter.com&#x2F;TBPInvictus&#x2F;status&#x2F;1456683999657615364" rel="nofollow">https:&#x2F;&#x2F;twitter.com&#x2F;TBPInvictus&#x2F;status&#x2F;1456683999657615364</a><p>When people couldn&#x27;t go out and do stuff (services) they started buying stuff (goods), and the supply chain couldn&#x27;t handle the sudden surge… so now we have supply problems.<p>The supply problems are often &#x27;subtle&#x27; as well. For example, a few months ago softwood lumber in the US hit a peak of $1733&#x2F;lot, and now it&#x27;s down to &#x27;only&#x27; about $600—which is still 50% higher than it historically ever was before.<p>However there is a &#x27;glut&#x27; in the supply chain because current inventories can&#x27;t be shipped because… there is a shortage of truss plates:<p>* <a href="https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Truss_connector_plate" rel="nofollow">https:&#x2F;&#x2F;en.wikipedia.org&#x2F;wiki&#x2F;Truss_connector_plate</a><p>Floor trusses can&#x27;t be built, so even though you&#x27;ve built the first floor walls you can&#x27;t go to the second because the floor framing—built using trusses—can&#x27;t be laid down, so houses can&#x27;t be finished. Further details about the current (Nov 2021) lumber situation on the most recent <i>Odd Lots</i> podcast:<p>* <a href="https:&#x2F;&#x2F;player.fm&#x2F;series&#x2F;series-1504378&#x2F;stinson-dean-on-the-lumber-crash-that-followed-the-boom" rel="nofollow">https:&#x2F;&#x2F;player.fm&#x2F;series&#x2F;series-1504378&#x2F;stinson-dean-on-the-...</a><p>* <a href="https:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2021-11-08&#x2F;transcript-stinson-dean-on-the-lumber-crash-that-followed-the-boom?srnd=oddlots" rel="nofollow">https:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2021-11-08&#x2F;transcrip...</a><p>* <a href="https:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2021-11-08&#x2F;how-a-2-metal-plate-defeated-the-laws-of-supply-and-demand?srnd=oddlots" rel="nofollow">https:&#x2F;&#x2F;www.bloomberg.com&#x2F;news&#x2F;articles&#x2F;2021-11-08&#x2F;how-a-2-m...</a><p>Similarly even if you built <i>most</i> of the house, you can&#x27;t legally occupy it unless there&#x27;s running water—and there&#x27;s a shortage of faucets:<p>* <a href="https:&#x2F;&#x2F;player.fm&#x2F;series&#x2F;series-1504378&#x2F;the-bathtub-episode-how-the-pandemic-disrupted-plumbing" rel="nofollow">https:&#x2F;&#x2F;player.fm&#x2F;series&#x2F;series-1504378&#x2F;the-bathtub-episode-...</a><p>So the demand and supply shocks dovetail &#x27;nicely&#x27;.<p>Worth checking out Bloomberg&#x27;s <i>Odd Lots</i> podcast as they&#x27;ve done a number of episodes on the supply chain over the last year. There are ones specifically focusing on (US) ports, rail roads, and trucking.
mhalle超过 3 年前
It would be great if we could somehow turn the growth in discretionary income made possible by these economic policies into greater giving to public serving institutions (libraries, parks, etc) and other charitable contributions.<p>COVID&#x27;s impacts have not been proportional across the socio-economic spectrum, nor has the benefit of the economic stimulus.
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throwaway4good超过 3 年前
We are doing double or triple ordering of goods not because of end-customer demand but because we fear our suppliers are not able to deliver.<p>Our competitors are doing the same.<p>At aggregate it may look like a “demand shock” due to too loose monetary policies but maybe it is not really what is going on.
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dr_dshiv超过 3 年前
The call for a massive increase in investment in productivity. What might that look like?
ny2ko超过 3 年前
This post really should have defined MP3 earlier! If you are like me and spent way too long scratching your head, googling to no avail until you got to the second half of and it was defined, MP3 stands for Monetary Policy 3
iJohnDoe超过 3 年前
Are there any pre-COVID models predicting this occurrence? Do you think China started predicting an increase in demand before anyone else or do you they were surprised too?
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dctoedt超过 3 年前
I won&#x27;t take the time read, and I certainly won&#x27;t click on, a long &quot;disclaimer and agreement&quot; before being allowed to read the article - eff that.
RNCTX超过 3 年前
Popup modal redirects to the home page. Wtf can these guys possible give advice about when they can&#x27;t accomplish HTML and javascript?
WhisperingShiba超过 3 年前
This just in, investment firm thinks there should be more investment into the economy. More on this story and other, at 6PM pacific time.
ArtDev超过 3 年前
&quot;Household balance sheets are now in a materially better state than they were pre-pandemic&quot;.<p>I think this is completely of touch with the realities faced by different slices of society.<p>I am a web developer who was working from home for many years before the pandemic. My experience is not even remotely similar to most people in the US.<p>Edit: this article is written by a hedge fund. So they definitely live in their own little world too.
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jstx1超过 3 年前
I stil don&#x27;t get it - what is different now compared to 2019 that we have a labour shortage?
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paulmendoza超过 3 年前
Boomers are retiring and their spending drops off a cliff. That’s why the velocity of money has been dropping.
guscost超过 3 年前
It’s a “people don’t like paranoid hypochondriac fascism” shock, and you know it.
randomsearch超过 3 年前
Find it bizarre that people need to come up with new explanations (in other comments) for something that is straightforward, well understood, and has been so for a century.<p>Money supply goes up. Provided that gets into consumer’s hands, demand goes up. Depending on the velocity of money, the slack in the economy is quickly eaten up. In a recession there’s more slack. Slack is things like unemployed workers, warehouse stocks, easily accessible resources.<p>Once the slack is gone, this causes prices to rise.<p>None of this requires consumers to change their habits. It’s just a slight marginal increase in spending by _a vast number of people_, which has transitive spending effects. This is Keynesian economics 101. The only thing that is surprising is the speed at which this has happened.<p>The proximate cause is printing money. A more interesting point: during the Obama administration there was a collective feeling that they had not printed enough cash during the 2008 crisis. I think what we’re seeing is an over-correction for that now in the size of stimulus packages. Very much a product of Biden being there in 2008 and now. It’s well intentioned but the mistake is to equate the two events; there was little risk in 2008 of over stimulating the economy, because the recession damped velocity and capital accounts and liquidity requirements ate up the new money supply.<p>World leaders have made a basic error and high inflation is the inevitable consequence. I’m not knowledgable enough to know what the level of inflation we can expect will be, but 5% feels nowhere near the peak. The real danger now is that we get into a wage-price inflationary spiral, which we’re beginning to see signs of. That spiral is incredibly difficult to stop, as the U.K. discovered in the 80s when Thatcher and Lawson threw the kitchen sink at it and it still took years to have any effect.
m0zg超过 3 年前
I smell BS. I&#x27;m buying a lot less stuff now even though I&#x27;m financially very comfortable. Not to mention I rarely go out, as well. People who are struggling financially are now buying a lot less in real terms because of inflation and pandemic-related unemployment and under-employment. We&#x27;re looking at 75 dollar turkeys this Thanksgiving, folks. A lot of people will not be able to afford the whole thing and gasoline at the same time.<p>This to me sounds like DNC talking points aimed at absolving the administration from the clusterfuck it single handedly created. _And_ they&#x27;re thinking of shutting down _another_ pipeline [1]. Guess what that will do to cost of goods, consumer confidence, and purchase volume, and who will absorb the increased costs?<p>The situation with ports is what happens when you appoint a mayor of a town nobody ever heard of with no experience as a transportation secretary.<p>[1] <a href="https:&#x2F;&#x2F;nypost.com&#x2F;2021&#x2F;11&#x2F;08&#x2F;biden-might-close-michigan-pipeline-white-house-admits&#x2F;" rel="nofollow">https:&#x2F;&#x2F;nypost.com&#x2F;2021&#x2F;11&#x2F;08&#x2F;biden-might-close-michigan-pip...</a>
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redis_mlc超过 3 年前
I&#x27;ve heard it expressed as, &quot;This is not a supply chain, it&#x27;s a supply line.&quot; meaning the US is not receiving components to build with or assemble, but finished goods to consume.<p>It&#x27;s a sign of weakness.
josh_today超过 3 年前
This is 100% a supply shock. I have colleagues in the import business and containers are impossible to get and when they do you’re looking at 2x pre covid prices.
noduerme超过 3 年前
So here&#x27;s a thing. Covid can cause neurological damage to the brain&#x27;s frontal lobe, beyond that implicated by the loss of taste and smell.<p>Damage to the frontal lobe causes what Neal Stephenson referred to as &quot;poor impulse control&quot;. I think the rise in violent incidents on airplanes is linked to this.<p>Additionally, poor impulse control leads to impulsive spending and purchasing behavior. Compounded by lockdowns and government checks, the situation is that consumers have upped their consumption way beyond their means; but some of this I suspect is neurological as opposed to psychological.<p>I think wild consumer demand just happens to be right now the most visible part of an iceberg of long lasting brain damage caused by covid, that our society is about to crash into.