The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Taking Our Medicine Now?

08/10/2020

It will be a long time before we get meaningful estimates of the total monetary cost of the pandemic, but I’m confident TEN TRILLION DOLLARS will be low.

If you measure only the 6% GDP drop in Q1 and the 33% drop in Q2, you get about $3 trillion.  Now, let’s assume that was the cost of the lockdown, which politicians swear we will never do again.

Neel Kashkari has been credited with successful management of the TARP program during global financial crisis of 2008/9.  He is now president of the Federal Reserve Bank of Minneapolis, and he believes we should lockdown the economy again.

Separately, the CDC predicts total dead would almost double from 160K to 300K by the first of December.  Let’s assume the total monetary cost also doubles to $20 trillion, which is a $10 trillion increase.

So, should we take the $3 trillion cost of another lockdown now — to avoid another $10 trillion in total costs later?

Of course, it is easy to quibble with numbers and assumptions, but the cost/benefit question must be asked — Is there some reduction of total costs resulting from another lockdown?  I think there is!

With schools opening, with people spending more time indoors with winter, and with too-few people wearing masks, total costs will not be decreasing.  Another lockdown must be considered now!

We are a fee-only advisor providing best interest fiduciary services to clients
in Chesapeake, Newport News, Norfolk, Suffolk, Virginia Beach, Williamsburg, and the surrounding areas of Hampton Roads.

CONTACT BAY CAPITAL ADVISORSWe Will Respond Promptly

Contact Us Bottom