Saturday, May 9, 2020
Attentive readers of the RC will be aware that I was an early reporter of the CCP- evil Chinese commie-Wuhan virus story. I warned that it looked to be a pandemic and a serious disease and that you all should get ready. I provided plenty of links to youtube sites like Peak Prosperity to authenticate the coming storm. Lo the virus came and it was a right disaster. But the biggest aspect of this disaster has not been the illness and death, as bad as that is, however, but rather our collective response to it, or so it seems to me. Here in the US, our response has been China-lite. No one has been welded into their apartment buildings and left to starve but our economy has been comprehensively shut down with the entirely predictable result of unemployment reaching a reported rate of 14 percent, with the actual unemployment rate of probably significantly higher. I don't think we have ever seen unemployment so high in this country. Peak unemployment during the Great Depression was just under 25 percent, and the actual US employment rate is almost certainly higher than that now.
These hygienic lock downs have been compared to putting a patient in a medically induced coma. That's a bad analogy. It's much more like turning off the water to your garden to kill the weeds. That may work. but you will also kill a lot of the healthy growth. Experts as legitimate as we have are now predicting enormous and unprecedented reductions, a better term would be die-offs, in our GDP of anywhere from 30 to 50 percent on an annual basis. This is also completely unprecedented. We have never in my 62 year life span experienced anything like this before.
So why don't things seem worse? Simple. Because we haven't run out of money, food, shelter and all the other stuff we need yet. Yet. That's how it works, you know. It's fine while it's all theoretical, but sooner than you think, we will run out, if the predictions hold true. This is why we have to get back to work. I listen with baffled disbelief to the pundits, such as Larry Summers, who say we have to stay at home until the virus is good and if not dead, at least thoroughly slapped down. The video I saw of him was from what I deduce was his lovely home on Cape Cod. Most people don't have luxurious second homes they can retreat to. If the common figure is to be believed, most people don't even have more than $400 in savings. If the official figures are to be believed, we are on the very precipice of an economic catastrophe of quite literally unimaginable dimensions--I must confess, even as I write this, I don't really believe it myself, but if you believe the unemployment and GDP predictions, you have no choice but to believe it. Believing what the most reliable numbers told me is why I predicted the virus would get here to the US when it did and that we would soon be closing schools and the rest of it.
There may very well be another flare up of the virus in the fall. I don't know but some experts predict that. The virus may mutate into a more malignant form, though that seems to be unlikely, maybe. But one thing for sure is, people are going to run out of money if they haven't already, and they are going to get desperate and then take desperate measures. The federal government can provide them with money for a while but sooner than you think, it will run out of money and presumably will just then have empty fiat to spin out of its figurative printing presses. This may happen anyway. I don't know about you, but scenarios the like of which I have never seriously considered, I now feel I have to consider. Is hyperinflation a real possibility? First a crippling deflation? Is civil disorder likely? I know I may sound like a nut to some, but I also sounded like a nut when I told people they should be worried about a coming pandemic. I didn't tell my colleagues at my small but undeniably cute university about the coming pandemic--they think I'm nutty enough as it is-- but I did tell my students. They thought I was a nut until they didn't.
So consider this my dire warning, for what it's worth. Many people share my fears, I'm sure. Like me, they probably figure they will do what they can and hope for the best, which is, after all, all we can do. But the first thing we have to do, must do, is get back to work ASAP. Those of us who have jobs to go back to. That means some people will get the virus and die, no doubt. But the alternative is worse. We really can't even imagine how bad a really major depression, a deep, decade long or more depression would be, in terms of all the health effects, the psychological effects, the cultural effects. We may be facing one already, but it can be worse, trust me. To use our dear leade'rs immortal words, the cure of the lock down would be worse than the disease of the virus. Hate Trump all you like but he has a point, or had one before he changed his mind, before he changed it back, if he did. There will be a lot of inconveniences and worse with coming out of this lock down, but it has to end, the sooner the better. Even the Chinese communists figured that out.