Could the COVID-19 panic lead to a generational shift in culture comparable to those resulting from the Great Depression or the advent of the personal computer?

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In a famous passage of The Wealth of Nations. Adam Smith says:

Four weeks ago I participated in a debate moderated by Bernardo Ferrero with Walter Block on the coronavirus quarantine. It is in English, but with the option of Spanish subtitles. (Which is why it took a while to upload.)

Over the years, one of the most common trump cards used to justify government treating people differently, rather than equally, has been the word need. And when used to override individuals’ ownership of themselves and what they produce, its usage has created confusion rather than clarity. In public discussion, “need” has increasingly morphed into one of its synonyms—essential, as in “essential jobs.” But it still suffers from many of the same analytical problems.

Humanity has been asking what is happiness and how to achieve it since the dawn of time, but still without a definitive resolution. The divergence of views on this subject is enormous, although it may be a good thing, because each individual can pursue happiness in their own way, which—according to the Declaration of Independence—is an inalienable right.

[This article is part of the Understanding Money Mechanics series, by Robert P. Murphy. The series will be published as a book in 2021.]

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While some of America’s most demagogic politicians try to exploit the COVID-19 outbreak, some Americans are trying to make the most of their de facto state of house arrest.

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How bad is it?

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Although state lockdowns have served governors well as a heavy-handed show of force, the policies are a patent neglect of the many nuances inherent in human action. They have led to a host of unintended consequences, including the emergence of a new health crisis—a dangerously sharp rise in mental illness.

After eleven years of nearly uninterrupted advancement, the record-long, QE-spawned bull market is on life support, facing the effects of pandemic lockdown and a massively leveraged global financial system. The sheer scale of the equities super-rally (larger than the dotcom and housing bubbles combined) is dwarfed by the magnitude of the monetary policy experimentation that was its foundation (Figure 1).

Figure 1: S&P 500 and Fed Balance Sheet, January 1995–April 2020