Is governmental COVID support causing Inflation?

 My Comments (in Red) on NotaYesman'sEconomics Post of 22 Jan 2021 

I find Shaun Richard's blogposts on the economy invaluable, but also immensely frustrating. He is well informed and keeps a close eye on the market and the operations of the Bank of England and other central banks. But his command of written English is appalling. 

I believe his latest blog-piece (that of 2021-01-22) concludes that massive governmental injection of money in response to the COVID-19 pandemic is causing signs of inflation in the December 2020 figures for UK retail sales. 

Retail sales may be up 2.9% this December compared with 2019 (see below), but the official (CPI) measure of inflation is only up 0.65% on December 2019.  (Is the CPI therefore wrong?)  However, it has been a funny old year. I am buying far more more books this year than last, but I am spending far less on petrol and air travel. I do not think I have been influenced by interventional government spending schemes. I would take with a cautious "pinch of salt" the conclusion that deficit-funded Government spending has caused appreciable monetary expansion, as yet. (But maybe I have missed Richard's point.)

&%&%&%&

Thus, Shaun Richard writes: 

The main (interventional) schemes are listed below.

§  COVID-19 Corporate Financing Facility

§  Coronavirus Job Retention Scheme (CJRS)

§  Self-employment Income Support Scheme (SEISS)

§  Eat Out to Help Out

§  Miscellaneous subsidies paid out to businesses

"Of these the first does not involve the public finances at this stage as the Bank of England has lent some £12.3 billion in the CFF. It may appear if there are losses on the scheme but as we stand we see simply some implicit support for retail sales. " (Or: Of these the first does not appear as a debt in the public finances at this stage, as the Bank of England has merely "lent" some £12.3 billion into the CFF. It may appear as a debt if the loan is not repaid; but at present we see simply some implicit support for retail sales.).

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"Sadly the Office for National Statistics has turned its blind eye to this issue (of swings) and never produced (does he mean 'published'?) the research which was done (please punctuate) which leads me to conclude it favoured the Retail Price Index. (Over what? The CPI?) But the inflation issue is for another day except (to remark that) we have an area where out (our?) official statistics office has a disappointing track record."

(Comments are welcome direct to the me at cawstein@gmail.com)

 SARS-CoV-2: Variants of Concern

            The definitive reference sequence of the SARS-CoV-2 RNA is that of the Wuhan strain, isolated from a patient admitted to Hospital in Wuhan on 26th December 2019, published in Nature [5]. It is no more important than any of the other closely related sequences. Currently it is not established that this sequence has a seminal status, from which other human strains were in fact derived, but because it is the arbitrarily chosen reference strain, it will seem to be seminal. 

            Single-stranded RNA is notoriously susceptible to mutation (which may be why 'higher' forms of life settled on double-stranded DNA to carry genetic information).

            As early as January 2020 a variant was sequenced in Germany in which the amino acid at position 614 of the Spike protein was not Aspartate (D) as in the Wuhan strain but was Glycine (G); thus described as a D614G mutation [4]. This form spread rapidly among humans and by the summer was found in 97.5% of isolates world-wide. In December this mutation was shown to cause tighter binding to the ACE-2 receptor and higher infectivity [3] than the Wuhan reference strain. However, it is now essentially ubiquitous in humans, to whom it seem advantageously adapted (in the Darwinian sense). Further adaptations to humans are to be expected in the human population. No doubt 'cat' variants are arising and spreading in cat populations, but cat travel is limited in comparison with human.

            The GISAID repository, set up in 2008 as a place where flu virus sequences could be housed and shared, now (2020-12-20) contains some 270,000 SARS-CoV-2 sequences, of which 120,000 were contributed by the UK consortium "Covid-19 Genomics UK (COG-UK)".  There are currently some 4,000 mutations in the spike gene alone [7]. Many are 'silent'; not every mutation in the RNA shows in the protein as most amino acids have several alternative codons, so giving 'synonymous' mutations. Many are trivial, in that an amino acid may be replaced by a similar one; so 'conservative' mutations. 

            Two publications from the European Centre for Disease Control (ECDC) are useful [1,6].  There are now two "variants of concern" (VOC): the rapid-spreader that saw Britain cut off from Europe on 21 December, named VOC 202012/01; and a rapid-spreading variant in South African called 501.V2.

            The British rapid-spreading variant was first sequenced in October [1,7], but may have occurred earlier. As of 2020-12-26 there have been 3000 cases of VOC 202012/01 identified in UK by sequencing. Throughout December the UK has been sequencing some  3000 – 7000 COVID genomes a week. From being a rarity (<0.1%) the variant has grown exponentially  to become 11% of the genomes sequenced by the end of November, roughly doubling its market share each week [1]. In Norfolk it accounts for 20% of COVID cases [7]

            VOC 202012/01 is defined by nine spike protein mutations (deletion 69-70, deletion 144, N501Y, A570D, D614G, P681H, T716I, S982A, D1118H), and 8 mutations in other genomic regions [1,7]. The D614G  substitution (see above) is present. The P681H  replacement is in the binding domain [8]. N501Y replacement probable affects binding also, as it is near the binding site. It is also found in the South African rapid-spreader; but by a different change in the RNA, so it arose there indepencently. 

            There are 5 other substitutions in Spike, and two small deletions. The deletion 69-70 causes one of the PCR diagnostic probes for covid-19 (ThermoFisher TaqPath probe) to come up negative [2], though other primer pairs can still identify the presence of  SARS-CoV-2 RNA. The group of Volz et al.[2] tentatively use the failure to detect covid with that probe as a surrogate identifier for the VOC 202012/01, saving them the need to sequence the genome. Using that assumption they conclude that VOC is over-represented in the younger (0-20 yrs) cohorts of COVID-positive patients. 

            Till now (2021-01-02), no one has found any evidence of a more aggressive disease with the variant viruses. 

            It is estimated that VOC 202012/01 is 56% more transmissible than preexisting SARS-CoV-2 [9]. Under a regime where the R₀ was 1.0, it might rise to 1.56.  There is as yet little evidence as to why the variant seems to have a higher reproduction rate; possibilities include (a) tighter binding of mutant spike to human ACE-2 receptor requiring lower titre for infection, (b) shorter lag between infection and shedding, (c) longer survival of infective RNA in the air or on surfaces, (d) evasion of RNA hydrolysis inside cells.  And doubtless others.

References

[1]  https://www.ecdc.europa.eu/sites/default/files/documents/SARS-CoV-2-variant-multiple-spike-protein-mutations-United-Kingdom.pdf

[2]  https://www.imperial.ac.uk/media/imperial-college/medicine/mrc-gida/2020-12-31-COVID19-Report-42-Preprint-VOC.pdf

[3] Science  18 Dec 2020:Vol. 370, Issue 6523, pp. 1464-1468 DOI: 10.1126/science.abe8499

[4] Cell. 2020 Oct 29;183(3):739-751.e8. doi: 10.1016/j.cell.2020.09.032. Epub 2020 Sep 15

[5] Nature 2020 Mar;579(7798):265-269. doi: 10.1038/s41586-020-2008-3. Epub 2020 Feb 3. https://pubmed.ncbi.nlm.nih.gov/32015508/

[6] https://www.ecdc.europa.eu/en/publications-data/covid-19-risk-assessment-spread-new-sars-cov-2-variants-eueea

[7] https://www.bmj.com/content/371/bmj.m4857

[8] https://www.who.int/csr/don/21-december-2020-sars-cov2-variant-united-kingdom/en/

[9] https://doi.org/10.1101/2020.12.24.20248822

 

 

 

 

COVID Pandemic and the New Variant

29th December 2020

Exponential Growth of the Pandemic in Britain

     For the last 30 days (from the 28th November) there has been a steady 'monotonic' rise in the number of daily new cases of COVID reported on the Government site. On a semi-logarithmic plot this looks like a straight line, signifying exponential growth. Throughout December there has been a more-or-less steady doubling time of 17 days. If no change is made to the way we behave, or the virus behaves, this means that the predicted number of new cases in mid-January would be 82,000 per day. 

     In the Figure below, the horizontal axis shows the day (counting from 1st Jan 2020), the vertical axis show the Log(10) of the number of new cases on that day. The Blue points roughly correspond to October, Green to November and Red to December. The y parameter indicates the slope, and R(squared) indicates the extent to which the data follow the modelled line.

     Of course, as every viron has a chance of mutating, and of replicating, twice the viral load by mid-January will mean twice the mutation rate (for good or ill), and twice the growth rate.  (It is perhaps worth noting that the increased rate of propagation noticeable since 1st December is not reflected yet in an increase in the daily number of deaths. Though, of course, COVID deaths will always lag COVID infections by two or three weeks.)

     The Government has made clear their policy on schools: that scholars 'stagger' back and get tested by the 50% efficient 'flow-test'. I would advocate rethinking that, till we can bend the curve back into a falling trajectory. Or at least make non-attendance be an option.

     The Government has also made clear that the vaccine will go first to NHS staff and the over-eighties. I would think the over-eighties are not spreaders.  I would suggest that priority should go to (in order): 

• NHS front-liners (nurses and doctors),
• Other front-liners on whom we depend (shop staff, bus-drivers, postal and delivery staff)
• Others forced by Government into harm's way (scholars, military)
• Spreaders (compulsive talkers, and social drinkers, and thoughtless people generally)
• The mobile vulnerable (a sheltered vulnerable is surely at less risk).

     I am aware that the general public have no clue as to who the spreaders are, nor how effective the light mask, and the 'full-kit'. I wonder who has compiled this information and whether it would not be worth publishing. (Please!!)

Steve Baker & Mark Carney

Steve Baker & Mark Carney

After Mark Carney’s 3rd Reith lecture of 2020, Steve Baker  asked:  “So there is such a thing as a ‘free lunch’?”  Carney was not given space to answer, for Anita Anand spoke over him, asked Steve Baker to repeat his point and then moved on to another questioner. 

I am sure Steve Baker knows this perfectly well. But, no; there is no such thing as a ‘free lunch’, nor a ‘magic money tree’. Writing new money into the British money supply will cause inflation in the long run, unless it is written out again at some stage (ideally before the inflation is noticeable). 

It is better that the ability to turn credit into pounds sterling lies with the Central Bank rather than the government. Government operates in the short term and is highly sensitive to the public clamour. It is too tempting for the executive to buy an election and create problems for the future. 

The Bank of England moves in (deliberately?) mysterious ways. But it is answerable to Parliament and is given the task of maintaining inflation at 2%. If it fails, its governor can be reprimanded or removed, or the entire Bank liquidated. 

A crisis like the COVID-19 pandemic is exactly the sort of crisis that justifies Quantitative Easing. If each citizen spent 1% of their total cash in buying a government bond, Steve Baker would not object. The effect is the same as 1% inflation, except that there might be some who neglected to buy the bond, but furtively pocketed the money. QE is fairer, as it hits all equally. Surely no-one objects to having 1% of their cash wealth taken (albeit without their consent) to support furlough, buy masks, build hospitals, etc. If any object, they should consider living elsewhere. 

The unfairness of QE is that it taxes (fairly) only cash; while land, houses, jewels, old-masters, etc are exempt. That is why we still need Death Duties and a Wealth tax.  I do not think this is what Steve Baker is clamouring for. But perhaps I am wrong.

One of the greatest threats to democracy in Britain is that few people understand money. The ones that do understand it own property, grow rich, and smile. 

Paying Taxes -- both a virtue and a necessity

 Why pay tax? 

    It is amazing how many people in Britain think taxes are wrong and should be avoided where possible. 

    Nevertheless, I was slightly surprised the other Sunday when the subject cropped up over a pre-prandial pint in the Greatworth Inn. My friend 'the accountant' said he thought that death duties were wrong; that they amounted to double taxation and little different from plain theft. 

    "Maybe", I said, "but still necessary", for I saw an opportunity to lay out my favourite recent aperçu.

    (Apparently it takes a certain sort of intelligence to realise that there are benefits that accrue from taxation: railways, roads, bridges, medicines, the disposal of waste, safety from violence, etc. Some rare citizens even wince at the sight of poverty in the streets. Many can be cajoled into paying taxes by ensuring that all people pay them in some sort of 'fair proportion'. But defining and ensuring fairness is far more easily said than done.  A few years back I crossed swords with a 5th Viscount over the existence of 'altruism' in human populations, which he pooh-poohed . 

    "What about in the paying of taxes?" I had said. 

    "But we do not pay taxes willingly" he objected. 

    "Of course we pay them willingly", I expostulated. "That is to say, a majority of MPs in the house of Commons voted through all the relevant legislation."  The Viscount turned then to other questions, and I was left with the distinct feeling I had routed him.)

    "Have you noticed," I said, returning to my accountant friend and my recent aperçu, "how money continuously flows from poor people to rich people, steadily and inevitably; taxes are needed to return money to the poor so the process can continue." 

    This is a novel idea, for even quite poor people think of  tax as a net loss rather than a net gain, which to them it clearly is. 

    "But, but, but !!! " he protested; "The large incomes of the rich are the result of market forces; it is earned income; the money belongs to the rich by right; they are paid well because they are worth it."

    "All that may be true", I replied; "but it still has to be returned to the poor. It is the accumulation in the hands of the rich that has to be prevented. If the rich spent their income properly, that is to say fully, the inequality might be better tolerated. But they hoard their wealth. And so it must be prised out of their clenched fists." 

    Silence fell.

    "Who is for another beer?"  I offered, for I realised my companions were not up for radically rethinking taxation, and I could see another aperçu coming towards me: "What is a fair tax regime?  It must clearly be a tax regime that prevents the rich from getting richer, and the poor from getting poorer."

    Rather neat, do n't you think, for a Sunday morning?  Death duties are obviously the best way of collecting what must be collected; for only then is it clear how much is involved. (See also: https://occidentis.blogspot.com/2016/09/estate-tax-and-limits-to-wealth.html)

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RNA Vaccines

Currently (12 Nov. 2020), the World Health Organisation (WHO) is aware of 

48 different teams around the world who are working on the production of vaccines against the SARS-Cov2 virus that have already got to the stage of clinical evaluation. The Pfizer/BioNTech/FosunPharma team, known to all since 9th November when it announced a degree of success, is one of these 48. (There are in addition 160 other vaccine-production teams that are in pre-clinical stages of development.)

A number of different vaccine technologies are being tried in the 48 different vaccine-teams that are already at the stage of clinical trials, listed by WHO [1].  I summarise these below. 

Type 1. Inactivated virus (in this case inactivated SARS-Cov2). This is the approach used in the Salk polio vaccine, which used formaldehyde to ‘kill’ the virus. Formaldehyde can modify the shape of proteins, and the antibodies produced may only react with formaldehyde-treated virus. The virus must be really, really, dead, and safety is a perpetual concern.

Type 2. Replicating viral vectors. Thus, the SARS-Cov2 spike protein gene can be inserted into the genome of a mild virus (e.g. the measles virus or adenovirus). These viruses have their own way of getting into cells and replicating, but introduces a SARS-Cov2 antigen, against which the host can raise antibodies. (See [2]) 

Type 3. Non-replicating viral vectors. Adenoviruses often used.These can get into cells but will not spread in the host. Higher doses are therefore needed. (This is the strategy used by the Oxford/Astra Zeneca team.) 

Type 4. DNA vaccines. The mRNA for a viral gene is copied (using reverse transcriptase) into a double-stranded DNA plasmid that grows happily in bacteria. Large quantities of the plasmid are grown up, purified on columns and used as vaccine. Once inside a cell they should direct the synthesis of e.g. Spike protein (amongst several others.)

Type 5. Protein subunit vaccines. These are a more recent development, and becoming popular, as no virus is involved in the manufacture. The gene for a viral protein can be used to produce large quantities of the protein in vitro. However, the isolated and purified protein may not have the right shape to trigger formation of antibodies effective against native virus. 

Type 6. Virus-like Particles (VLPs) can be prepared by growing cultured cells that produce only sufficient of the viral proteins to form a particle, but are not able to reproduce whole virus. If RNA is needed to form a particle, small bits of irrelevant RNA can be added. These particles, purified from cell cultures, can be used as vaccines, and are often more potent antigens than the isolated soluble protein or protein subunits of type 5. Again, no virus is involved in the process of manufacture.

Type 7. RNA vaccines. In this strategy single-stranded mRNA that codes only one viral protein (e.g. the Spike protein) is encapsulated in a Lipid Nano Particle (LNP) some 70-100 nm in diameter [3] (1million nm = 1 mm). Human cells have an inherent tendency to engulf particles of a particular size and attempt to digest them (a hangover, no doubt, from our amoeboid ancestry). The released mRNA directs the synthesis of spike protein (or its Receptor Binding Domain) in the cell. This technology has been developed over the last 20 years for experimentally silencing genes; and since 2012 for producing vaccines against single-strand RNA viruses such as influenza. It was first used in humans in 2017 [4]. The advantage is that an equipped factory can turn to producing a novel vaccine within a week. All it needs is to know the sequence of the mRNA. (This is the strategy use by the Pfizer/ BioNTech/ FosunPharma team, and a team at Imperial College, London.) RNA is far more susceptible to hydrolysis than either protein or DNA (because of the -OH, group missing in 2' desoxyribose). Vaccines are conventionally kept at 5-8ºC, but RNA vaccines must be kept at –78ºC or lower. That is not a problem. A 6 litre dry-ice or liquid nitrogen Dewar, twice the size of a pressure cooker, will hold its temperature for 200 days.

We see that the different vaccine strategies have their own advantages and disadvantages. The RNA technology has the advantage of speed; and relative safety. 

References

[1]    https://www.who.int/publications/m/item/draft-landscape-of-covid-19-candidate-vaccines

[2]    https://doi.org/10.1016/j.virol.2014.01.002 

[3]    https://www.liebertpub.com/doi/full/10.1089/nat.2018.0721

[4]    https://pubmed.ncbi.nlm.nih.gov/28457665/

Open letter to the PM

Dear Boris Johnson,

I am by no means your greatest fan, but I thought you ought to know that the R0 number is now (3rd November 2020) below 1. That is to say, your 3-tier system has, to some extent, worked. Though it may well be best to stick with the 4 week lockdown-2, already announced. We still have much to learn about hygiene.

In the attached picture I have plotted the logarithms (base 10) of the daily new cases as reported on https://coronavirus.data.gov.uk. The horizontal axis shows the days of the year (day 279 is 5 Oct,, day 294 is 20 Oct., day 308 is 3 Nov.). 

It is clear that the rising line in blue (data from the first 3 weeks of October) cannot be extended through the most recent data (20 Oct - 3 Nov), shown in red.

The rising blue data show a doubling time of 24 days. The least-squares line of best fit is objective, but is not a close fit because of chance vagaries of the data (R-squared=0.62). The falling red data show a halving time of 200 days. (The line is again the least-squares line of best fit). That is to say, in late May 2021 we would still have 10,000 new cases a day (and c. 70 deaths a day) unless we improve our personal hygiene, (or we have a vaccine).  

So the 4 weeks of lockdown-2 should help. In June and July we had 40 times less virus buzzing around, but most people were foolishly unaware that the R0 number was already above 1. (See: https://occidentis.blogspot.com/2020/09/covid-19-case-data-uk.html ). Personal hygiene deteriorated further in early September. 

Yours sincerely, Ian West

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Ian West
9 Thenford Road, Middleton Cheney,
BANBURY, OX17 2NB,
Tel: 01295 713 889; (Mobile: 07474 572 588)

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