The Flu and the Stimulus
Thursday, 10/29/2020 09:01
1968 this isn't...
PEOPLE look up at the sky. They crane their necks and strain their eyes,
writes Bill Bonner in his Diary of a Rogue Economist.
But, what ho! Where are the helicopters? Where is the bailout money...the filthy lucre...the counterfeit cash...the handout?
Alas, Bloomberg reports that the party will have to wait:
"Stimulus Hopes Put On Hold Until After Election as Senate Leaves"
The free money seems to have gotten held up in partisan politics.
Donald Trump said he is willing to go along with any bailout boondoggle...no matter how ridiculous.
But the Democrats seem to be running down the clock, hoping voters are in a sour mood when they decide whether or not to leave The Donald in office for another four years.
And investors are beginning to connect the dots. Not only is the money – unearned and undeserved – not fluttering down from helicopters...neither is it rising up from the ground.
In a healthy economy, that's where it comes from – from the ground up...from working, saving, and investing...from self-discipline, innovation, sweat, and toil.
Real money is earned, in other words. It represents real increases to the nation's wealth.
But making real money has become more and more difficult.
As we pointed out yesterday, neither the coronavirus nor the lockdown recession show any signs of going away.
As for the former, the media is reporting a "record" number of cases in the US. Here's The Washington Post:
"More than 42,000 people were hospitalized nationally with the virus Monday, a figure that is steadily climbing toward the midsummer peak caused by massive outbreaks in the Sun Belt. In the places hit the hardest, this is nudging hospitals toward the nightmare scenario of rationing care."The country is not there yet, but the recent rise in confirmed coronavirus infections – which set a single-day record Saturday of more than 83,000 – is an ominous leading indicator of an imminent surge of patients into hospitals. The pattern of this pandemic has been clear: Infections go up, hospitalization rates follow in a few weeks, and then deaths spike."
In years past – 1968, to be precise – a major new virus came and went. Nobody paid much attention.
The Hong Kong flu killed about the same proportion of the US population – less than 0.1% – as the coronavirus. But life went on mostly as normal.
Your editor had the ailment. He was only 20 years old. He recovered quickly, as did most people who had it.
Just like the coronavirus.
But that was then. This is now.
And now, every breeze threatens to bring a fatal affliction. Every pain is an early sign of impending death. And every case of coronavirus is a tragedy...and a failure.
We live in a secular society. We have our doubts about promises of everlasting life from God Himself; but we're damned sure the feds should protect us from the coronavirus.
Which is why one of Joe Biden's key campaign themes is that Donald Trump failed to do so.
Would fewer have died from the virus in a Biden presidency? There's no reason to think so.
Governments – whether run by Democrats or Republicans, the French or the Germans, in North America or in South America – can't really protect you from tropical storms, personal bankruptcy, love affairs gone bad...or the coronavirus.
(The media delights in telling us how many lies and misleading facts come from the mouth of the president. But we have not seen one single report mentioning that Biden's claim – that Donald Trump "let 200,000 Americans die" – is claptrap.)
The other big change since 1968 is that the people who shrugged off the Hong Kong flu, like your editor, are now half a century older. Were it not for medical advances over the last 50 years, many of them would already be in their graves (including your editor).
And now, these people – who were so "La, la, la, live for today" 50 years ago – want the feds to make sure they live for tomorrow...
...even if it means putting the whole country under house arrest.
Yes, we are all beginning to see how these puzzle pieces fit together.
The old and the rich are afraid to go out and spend money. Young people have fewer jobs and less income. We saw yesterday that long-term unemployment is rising.
It's not hard to see why...
Small businesses are giving up. Restaurants are closing – permanently. Air traffic...and the whole cluster of travel, hostelry, hospitality, and entertainment...is down 30% to 50%, with no revival in sight.
Business profits fall. Jobs become scarce.
The rich (who are not spending...while still enjoying stock market gains) get richer. The poor get even poorer.
The feds fly to the rescue with jackass programs. The number of zombie workers...and zombie businesses – all supported by zombie money – increases, making it even harder for genuine, real economic growth.
Tax revenues fall as expenditures rise. What can the feds do but "print" even more of the zombie money?
This formula – wreck the real economy with wars, lockdowns, controls, excess spending, and pernicious incentives...and then try to shore up what is left with "printing press" money – is a classic.
It's been used for centuries to ruin great empires...as well as small sh*thole countries. Rich countries as well as poor ones. European nations as well as African and Latin American ones. It never fails.
We doubt it will let us down this time.
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