When you get down to it, the domestic economy is made up of three things: household consumption, private sector investment and government spending.

When things are going well, households spend and private sector investment grows; when things go bad, it is the private sector that goes bad, and the public sector needs to step in.

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This happened during the GFC. The government gave money to households to get them spending (which worked) and they massively increased investment (the building the education revolution) to replace private sector investment that shrank.

And that also worked.

The coronavirus impact will be the same, only more dramatic.

Some changes will be so large they will destroy the normal scale and also highlight how little some data matters at such times.

Mostly we look at economic data to discover the strengths and weaknesses of the economy.

But this time is different because it is not economically driven. This time restaurants won’t close because they overestimated how many people wanted to eat a certain cuisine at a certain price in a particular location. They will close because in effect people have been ordered not to eat out.

The economy in this instance is stopping because someone has decreed that it stop.

This is why another stimulus-style payment to people currently in work (even of low income) is rather pointless. People are not stopping to go out shopping because they have no money, but because they have been told to stop going out.

It is why, as the Melbourne University economist Roger Wilkins has noted, monetary stimulus really needs to go to those who are losing jobs, not those who have kept them.

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Is it even really a “recession”? The decline in production and employment will not represent the health of the economy, it will represent the health (and the associated worries) of people.

This crisis also reveals that many things that people told us mattered, don’t. The exception proves the rule, and this exceptional time has shown some rules are not proven.

Government debt? Budget deficits? Sorry, they don’t matter – and definitely not to the extent some attempted to tell us they did. No one cares right now about the size of a government’s deficit or surplus, they care about the size of the stimulus.

Saying we needed fiscal buffers for such a time is like suggesting when your house is on fire, a hose isn’t useful if someone had to take out a loan to buy it. All you care about is if the hose is long enough and the water supply keeps going.

Credit ratings agencies? Sorry, nope. Any agency saying a stimulus package may affect our AAA rating, can just go away – you are irrelevant.

A low Newstart encourages people to work? We need work for the dole? We need mutual obligation? Sorry: wrong, wrong, wrong.

The government’s likely decision to offer an unemployment benefit well above the Newstart rate and with no mutual obligation requirements for workers who have lost work due to the virus highlights just how little Newstart is about encouraging work and more about punishing those deemed unworthy.

Climate change? Sorry, that does matter. It is still urgent and it is still a crisis. The good thing is renewable energy is a prime area for government investment.

Privatisation is best? Sorry, nope. What we are seeing once again is that our “capitalism” is based on privatising gains and socialising losses.

Even those more of the libertarian bent now suggest any bailout of companies should involve the government taking an equity stake, and for the banking system, tighter lending regulations so they don’t need a bailout every time things turn ugly.

This week the Reserve Bank cut the cash rate to 0.25% and signalled it expects to keep it there for at least three years. It also offered $90bn in cheap loans to banks, which has enabled them to defer small business loan repayments for six months.

The hope is this will keep the private sector going – or at the very least lessen its fall.

But this crisis will also require a huge amount of government investment. Trying to keep the private sector going will not be enough.

The need for small government? Sorry, that’s another thing that is wrong.

• Greg Jericho writes on economics for Guardian Australia