The Fed Announces Another Flood of Easy Money

The Fed Announces Another Flood of Easy Money

03/12/2020Ryan McMaken

The Federal Reserve announced today that it will aggressively begin injecting liquidity into the market again. From the New York Fed's website:

Beginning Thursday, March 12, 2020 and continuing through Monday, April 13, 2020, the Desk will offer at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period. In addition, the Desk will also offer three one-month term repo operations, with the first operation occurring on Thursday, March 12, 2020. The amount offered for each of these three operations will be at least $50 billion.

Consistent with the FOMC directive to the Desk, these operations are intended to ensure that the supply of reserves remains ample and to mitigate the risk of money market pressures that could adversely affect policy implementation. They should help support smooth functioning of funding markets as market participants implement business resiliency plans in response to the coronavirus. The Desk will continue to adjust repo operations as needed to foster efficient and effective policy implementation consistent with the FOMC directive.

As Danielle DiMartino Booth put it, this is the money "bazooka reloaded."

This new surge in pumping puts the Fed back on track to reach new highs in its total portfolio.

In other words, the Fed is now back in the business—although, in truth, it never really stopped—of buying up assets with newly created money to "stabilize" markets.

Following its days of aggressive QE, Fed assets reached over $4.5 trillion. But then the Fed started scaling back assets ever so slowly, pulling about $740 billion from that $4.5 trillion total. That all stopped late last year, though, as the Fed started injecting money into the repo market. (For more, see here.)

Since then, the Fed has readded $481 billion to its assets. And now the Fed tells us it will add "at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period."

So, the Fed will soon be back to peak asset levels.


But what difference does it make? The Fed has been sitting on these assets for years, and so far so good, right?

Well, those with long memories will remember that the Fed said for years that it would "unwind" all its asset purchases and remove all that money it created from the real economy. But now it's pretty clear that's not going to happen for a few reasons:

1. These assets—such as old mortgage-based assets and other garbage from the last housing bubble—never recovered enough value to be sold off by the Fed.

2. Because those old assets never recovered, the Fed doesn't want to sell them and thus put pressure on organizations—like banks—that still hold similar assets. In other words, if the Fed were to let those assets go, they'd likely pop various bubbles.

3. It's basically policy now that the Fed exists to bailout banks and the financial sector forever, no matter how much it costs other sectors of the economy.

4. This has massively inflated asset prices such as stocks and real estate. That's bad for affordability for regular people. But it's great for billionaires.

So, this is just the latest continuation of that policy. It's more bailing out of banks and hedge funds at the expense of those who hold dollars or compete for resources with the bailout firms and industries. By constantly favoring and bailing out bankers and other parts of the financial sector, the Fed has put all other sectors and industries at a disadvantage. As a nonfinancial enterprise, it's hard to compete for investors and capital when the Fed has guaranteed that the financial sector will be bailed out no matter what.

This is monetary policy that was built by bankers and exists for the benefit of bankers. Every solution involves helping bankers. The Fed has no other ideas.

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Lebanon Debt Crisis Has Destroyed the Nation's Economy

1 hour agoMario Keyrouz

On October 17, 2019, civil protest erupted in Lebanon. The reason for the eruption was a proposed tax on the popular WhatsApp app.1 The tax served as only a spark to ignite the uprising. Over the years the economy of Lebanon has been steadily worsening. Of course, the usual suspect is the state, and the preferred method is interventionism.

Economic Conditions

Although there is no reliable data to track the unemployment rate in Lebanon, at a certain point in 2018 the President himself stated that the unemployment rate was about 46%. He attributed this high number to the grave economic situation and to Syrian refugees.2 According to the IMF, the debt to GDP ratio is projected to grow to about 185% in 2024.3 The official conversion rate of the US dollar to the Lebanese pound is about 1 dollar for 1512.5 Lebanese Pounds, but in reality, as of March, the rate at which people are exchanging is 1 dollar for 2700 Lebanese pounds.

During the first days of the civil protests, banks shut down and blocked depositors' access to their deposits. They then moved to set some sever withdrawal limits on dollar accounts. Some banks have set a limit of 600$ a month. While there have been no severe limitations on accounts in Lebanese Pounds within Lebanon, as of March 1, I am no longer allowed to use more than 15 dollars per month for international transactions on my debit card. Yes, you read that correctly! 15 dollars per month. And to top it all, the first sovereign default in Lebanon’s history took place on March 9. Much can be said regarding the current Lebanese economic conditions. But It is self-evident that Lebanon is currently undergoing the worst financial crisis since its independence. Not even during the civil war did people witness such a financial crisis. It could be that during the civil war the state was much more powerless than now and wasn’t able to intervene in the economy as much as they are now.

Public Debt

From the year 1993 till 2018, Lebanon’s public debt increased from 4.2 to 85 billion dollars.4 A debt that has been forced on the Lebanese people, and for years Lebanese citizens have been dealing with its burden. To put things into perspective, and this is from the IMF report:

Because of the large public debt, interest payments exceeded 9 percent of GDP. Tax revenues in 2018 were lower than forecast, with all tax revenue categories disappointing in the slow economy except taxes on income and profits.5

Consequences of the State’s Actions

I could go on discussing the awful policies and actions of the Lebanese state. I could give a very accurate description of the anatomy of the Lebanese state, which is an abomination. But rather, what I would like to shed the light on is the forgotten youth of Lebanon. How long is it going to take before the economy recovers? Is it still possible for a young Lebanese to build a better future for himself? Can all the young Lebanese who immigrated Lebanon ever hope of coming back? Existential crises are already as bad as they are for young individuals, the Lebanese government made it much worse. Future generations of Lebanon will inherit a debt that cannot be repaid. The state has robbed us of our prosperity.

Hope Remains

Despite everything that happened, there’s still some hope for the youth of Lebanon. Lebanese have learned a lot from the past few months. It has become self-evident that the government of Lebanon holds too much power and is too centralized. Traditional political parties in charge of the government have had their popularity diminish dramatically. And the best thing is that some Lebanese have been resorting to cryptocurrencies as a way to bypass the bank and transfer money. Above all, I truly hope that in the future Lebanese will aim to reduce the concentration of power that the state holds.

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Quarantine Chronicles, No. 2: Praxeology

04/01/2020Tho Bishop

With many of our readers having more time on their hands while practicing social distancing, the Mises Institute is exploring our online archives and offering topic-specific collections of curated content. This series, we are calling it the "Quarantine Chronicles: A Shelter-at-Home-Series," will highlight essays, articles, and clips that may not be as widely known, but will provide a deep understanding of important concepts and history.

On the topic of praxeology, we recommend some of the following selections:

Long Reads:



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Will Coronavirus End the Fed?

03/31/2020Ron Paul

September 17, 2019 was a significant day in American economic history. On that day, the New York Federal Reserve began emergency cash infusions into the repurchasing (repo) market. This is the market banks use to make short-term loans to each other. The New York Fed acted after interest rates in the repo market rose to almost 10 percent, well above the Fed’s target rate.

The New York Fed claimed its intervention was a temporary measure, but it has not stopped pumping money into the repo market since September. Also, the Federal Reserve has been expanding its balance sheet since September. Investment advisor Michael Pento called the balance sheet expansion quantitative easing (QE) “on steroids.”

I mention these interventions to show that the Fed was taking extraordinary measures to prop up the economy months before anyone in China showed the first symptoms of coronavirus.

Now the Fed is using the historic stock market downturn and the (hopefully) temporary closure of businesses in the coronavirus panic to dramatically increase its interventions in the economy. Not only has the Fed increased the amount it is pumping into the repo market, it is purchasing unlimited amounts of Treasury securities and mortgage-backed securities. This was welcome news to Congress and the president, as it came as they were working on setting up trillions of dollars in spending in coronavirus aid/economic stimulus bills.

This month the Fed announced it would start purchasing municipal bonds, thus ensuring that the state and local government debt bubble will keep growing for a few more months.

The Fed has also created three new loan facilities to provide hundreds of billions of dollars in credit to businesses. Federal Reserve chairman Jerome Powell has stated that the Fed will lend out as much as it takes to revive the economy.

The Fed is also reducing interest rates to zero. We likely already have negative real interest rates because of inflation. Negative real interest rates are a tax on savings and thus lead to a lack of private funds available for investment, giving the Fed another excuse to expand its lending activities.

The Fed’s actions may appear to mitigate some of the damage of the coronavirus panic. However, by flooding the economy with new money, expanding asset purchases, and facilitating Congress and the president’s spending sprees, the Fed is exacerbating America’s long-term economic problems.

The Federal Reserve is unlikely to end these emergency measures after the government declares it safe to resume normal life. Consumers, businesses, and (especially) the federal government are so addicted to low interest rates, quantitative easing, and other Federal Reserve interventions that any effort by the Fed to allow rates to rise or to stop creating new money will cause a severe recession.

Eventually the Federal Reserve–created consumer, business, and government debt bubbles will explode, leading to a major crisis that will dwarf the current coronavirus shutdown. The silver lining is that this next crisis could finally demolish the Keynesian welfare-warfare state and the fiat money system.

The Federal Reserve’s unprecedented interventions in the marketplace make it more urgent than ever that Congress pass, and President Trump sign, the Audit the Fed bill. This would finally allow the American people to learn the truth about the Fed’s conduct of monetary policy. Audit the Fed is a step toward restoring health to our economic system by ending the fiat money pandemic that facilitates the welfare-warfare state and the unstable, debt-based economy.

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Spain Reports More Than Five Times as Many COVID-19 Deaths per Cap as US

03/31/2020Ryan McMaken

It's been a couple of days since my post on deaths per 100,000 in the USA and several other countries.

I'm very much a cautious "measure twice, cut once" type of person, so I went back and updated some of my calculations using more recent numbers.

Specifically, I've updated the third graph in the original post which is the number of deaths per 100,000 at the same point in the timeline since at least 1 case per million population was reported.

In the US, the first day to show more than one case per million population was March 7. So, counting up twenty days we arrive at March 26. On that day, there were 1,295 total deaths in the US. That works out to 0.391 COVID-19 deaths per 100,000. Meanwhile, in Italy, the first day with at least one case per million was Feb 22. Twenty days later, there were 1,106 deaths. That works out to 1.572 COVID-19 deaths per 100,000.

And so on:


And here's how things looked five days earlier, on day 15:


The gap between the US and Spain and the US and Italy became larger over these five days. At day 15, Italy's total for deaths per 100,000 was 3.9 times larger than the US rate. At Day 20, Italy's rate was up slightly at 4 times larger. At Day 15, Spain's death rate was 4.6 times larger than that in the US. At day 20, Spain's rate had grown to 5.6 times larger than the US rate.

As I noted earlier, there are many reasons why the deaths per 100,000 could be higher in Spain and Italy than in the US, Germany, and Switzerland. One may be the quality of healthcare. While the US, Germany, and Switzerland all have health systems with sizable government sectors, they have multi-payer systems that are more competitive and modern than the systems found in Spain and Italy (and the UK, for that matter). Switzerland has a system similar to Obamacare.

Another major factor is demographics. Both Spain and Italy have some of the lowest birth rates in the world, and these relatively elderly populations are lopsidedly affected by COVID-19. These demographic trends can be seen a bit in their population growth:


Note how few people Spain and Italy add each day on average. Spain barely adds anyone at all each day. And Italy is declining in population. (These are historical averages, so this doesn't include deaths from COVID-19.) Italy is simply a country with a very old population and very low birth rate. In fact, Italy's population is projected to fall more than 10 percent over the next thirty years. The US's population growth, while not high by global standards, is certainly more robust than we're seeing in Spain and Italy. This is true both in total numbers and proportional to the population overall. With the exception of Iran and Switzerland, the US is growing faster percentagewise than all these countries.

These trends aren't carved in stone. It's entirely possible that something will happen in which the US's death rate accelerates so fast that it overtakes Spain and Italy in this regard. At this time, however, that is not the trend.

(Net population change data, COVID-19 deaths, and total population data are from Worldometer.)

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Beware a Government of Fear

“Those who would give up essential Liberty, to purchase a little temporary Safety, deserve neither Liberty nor Safety.” — Benjamin Franklin (1706–90)

One of my Fox colleagues recently sent me an email attachment of a painting of the framers signing the Constitution of the United States. Except in this version, George Washington—who presided at the Constitutional Convention—looks at James Madison—who was the scrivener at the Convention—and says, “None of this counts if people get sick, right?”

In these days of state governors issuing daily decrees purporting to criminalize the exercise of our personal freedoms, the words put into Washington’s mouth are only mildly amusing. Had Washington actually asked such a question, Madison, of all people, would likely have responded: “No. This document protects our natural rights at all times and under all circumstances.”

It is easy, 233 years later, to offer that hypothetical response, particularly since the Supreme Court has done so already when, as readers of this column will recall, Abraham Lincoln suspended the constitutionally guaranteed writ of habeas corpus—the right to be brought before a judge upon arrest—only to be rebuked by the Supreme Court.  

The famous line by Benjamin Franklin above, though uttered in a 1755 dispute between the Pennsylvania legislature and the state’s governor over taxes, nevertheless provokes a truism.

Namely that since our rights come from our humanity, not from the government, foolish people can only sacrifice their own freedoms, not the freedoms of others.

Thus, freedom can only be taken away when the government proves fault at a jury trial. This protection is called procedural due process, and it, too, is guaranteed in the Constitution.

Of what value is a constitutional guarantee if it can be violated when people get sick? If it can, it is not a guarantee; it is a fraud. Stated differently, a constitutional guarantee is only as valuable and reliable as is the fidelity to the Constitution of those in whose hands we have reposed it for safekeeping.

Because the folks in government, with very few exceptions, suffer from what St. Augustine called libido dominandi—the lust to dominate—when they are confronted with the age-old clash of personal liberty versus government force, they will nearly always come down on the side of force.

How do they get away with this? By scaring the daylights out of us. I never thought I’d see this in my lifetime, though our ancestors saw this in every generation. In America today, we have a government of fear. Machiavelli offered that men obey better when they fear you than when they love you. Sadly, he was right, and the government of America knows this.

But Madison knew this as well when he wrote the Constitution. And he knew it four years later when he wrote the Bill of Rights. He intentionally employed language to warn those who lust to dominate that, however they employ governmental powers, the Constitution is “the Supreme Law of the Land” and all government behavior in America is subject to it.

Even if the legislature of the state of New York ordered, as my friend Governor Andrew Cuomo—who as the governor, cannot write laws that incur criminal punishment—has ordered, it would be invalid as prohibited by the Constitution.

This is not a novel or an arcane argument. This is fundamental American law. Yet it is being violated right before our eyes by the very human beings we have elected to uphold it. And each of them—every governor interfering with the freedom to make one’s own choices—has taken an express oath to comply with the Constitution.

You want to bring the family to visit grandma? You want to engage in a mutually beneficial, totally voluntary commercial transaction? You want to go to work? You want to celebrate Mass? These are all now prohibited in one-third of the United States.

I tried and failed to find Mass last Sunday. When did the Catholic Church become an agent of the state? How about an outdoor Mass?

What is the nature of freedom? It is an unassailable natural claim against all others, including the government. Stated differently, it is your unconditional right to think as you wish, to say what you think, to publish what you say, to associate with whomever wishes to be with you no matter their number, to worship or not, to defend yourself, to own and use property as you see fit, to travel where you wish, to purchase from a willing seller, to be left alone. And to do all this without a government permission slip.  

What is the nature of government? It is the negation of freedom. It is a monopoly of force in a designated geographic area. When elected officials fear that their base is slipping, they will feel the need to do something—anything—that will let them claim to be enhancing safety. Trampling liberty works for that odious purpose. Hence a decree commanding obedience, promising safety, and threatening punishment.

These decrees—issued by those who have no legal authority to issue them, enforced by cops who hate what they are being made to do, destructive of the freedoms that our forbears shed oceans of blood to preserve, and crushing economic prosperity by violating the laws of supply and demand—should all be rejected by an outraged populace, and challenged in court.

These challenges are best filed in federal courts, where those who have trampled our liberties will get no special quarter. I can tell you from my prior life as a judge that most state governors fear nothing more than an intellectually honest, personally courageous, constitutionally faithful federal judge.

Fight fear with fear.

Reprinted from

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How Government Price Controls Are Keeping Toilet Paper off the Market

03/31/2020Ryan McMaken

A reader, A.B. Sterner, writes:

Toilet paper, for reasons I still can’t grasp, is experiencing a severe (in store) shortage in a lot of areas of the country. Yet in some areas price ceilings—in the form of "anti-gouging" laws—have been put in place to keep those prices artificially low, despite the unprecedented increase in demand.

Our family is one who gets a predetermined order of paper and other products delivered by Amazon monthly, through their subscribe and save feature. One of the items we receive monthly is toilet paper. This last delivery, Amazon was unable to fill the order. Thanks to our overestimation and failure to adjust our previous orders, we have been unintentionally hoarding toilet paper for years. When set up initially, we assumed we would use a package equivalent to 56 “regular” rolls of toilet paper each month. As it turns out, we have used an estimated average of 38 regular rolls of toilet paper per month. So even as we did not receive our shipment this month, we still had plenty of stock on hand, the equivalent of nearly 500 rolls, or enough to easily supply our family for at least a year.

We are now faced with a far larger than needed inventory of toilet paper. Our first thought is we should hold onto it, given the uncertainty of when we will be able to purchase more. Given we have more than a year’s supply, there isn’t a likely scenario where this would be necessary. It's a sunk cost, we have the room to store it without sacrificing the storage of other items. The do-nothing approach is the most appealing option right now. But what if we were to try and sell it? We paid roughly $0.30 for each regular roll. It’s $150.00 worth of inventory we are currently carrying. Our subjective value of this toilet paper is at least what our costs were, as of now. As laws to prevent price gouging are in effect, and if we were to try to sell any of our inventory for more than $0.30 per roll would be considered illegal, there is no incentive to let go of our current inventory.

As of now, our subjective value of each roll is probably $0.50, a 67% premium over what we paid for them. If we could receive more than $0.50 per roll, instead of hoarding them, we would put at least a couple of cases up for sale. If we could get $1.00 [per] roll, we would likely put most of my inventory up for sale. If we could get $5.00 per roll, we would sell every last roll and either purchase a bidet or two, or maybe even use warm wash cloths and do quite a bit of unpleasant laundry every day.

I’m sure plenty are thinking that we should do the “right” thing and just donate them to others less fortunate. The problem with this is prices have remained unchanged, thanks to price ceilings put into place by the government. You may not think this would have any effect on our willingness to donate our inventory, but it has a large impact. Donations to a qualified non-profit carry tax benefits. Our $150.00 inventory, if donated, would generate a tax deduction of no more than $150.00, since this is the current artificial price. The actual tax savings to us would be less than $50.00, well below what we paid and far below our subjective value per roll. The incentive isn’t there. If we could deduct $500.00 or $1,000.00 worth of income by donating our excess inventory, because prices were not artificially restricted, there would be an incentive to donate our extra to those in need.

If the price system were allowed to work, even though we would gain more profit from selling them outright, we would more likely donate our excess, because the monetary benefit would be equal to or more than our subjective value. In addition, we would also profit from the psychic benefits we would get, from knowing we were helping those who are in need during this time. So even if we had the opportunity to be selfish, uncaring capitalist dogs, we wouldn’t.We are not the only ones in this situation. Others are have inadvertently overordered their supply of toilet paper and have inventories such as ours. Even more have purchased well more than they need in the short term and have subjectively valued theirs at more than they have paid. If prices were allowed to work, ask yourself, how many of just these rolls of personal inventory would be put back out into the market? The answer is an easy one. It would be more than enough to satisfy the current needs of every American. As we established, there is no shortage of toilet paper out there, just a shortage of toilet paper in the marketplace because of the price ceilings put in place by our philosopher kings. 

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Two Distinctly Different Approaches to Crisis Resolution

03/31/2020Patrick Barron

There are two very distinct approaches to crisis resolution. One is the socialist approach, adopted by most governments of the world in the latest coronavirus crisis. The other is the individualistic approach, used by few if any of the world's major nations.

The Socialist Approach

Here are some of the main elements of the socialist approach:

  • Centralized decision making to which all must comply
  • Temporary loss of civil liberties
  • Suspension of property rights
  • Large, perhaps even totalitarian, government
  • Reliance on data and statistical models
  • Reliance on expert opinions and recommendations

The Decentralized/Individualistic Approach

Here are some of the main elements of the individualistic approach:

  • Radical decentralized decision making even to the individual level
  • Defense of all civil liberties
  • Defense of property rights
  • Limited government
  • Skepticism of data and statistical models, especially early in the crisis
  • Skepticism of experts, especially early in the crisis

The Look of the Two Different Approaches

We know what the socialist approach looks like, since it has been adopted by all the world's major nations during what is called the coronavirus crisis. The president closed our borders to international travelers (but not goods). Many state governors have restricted the people's right to assemble, the right to work, the right to open their businesses as normal, and even the right to leave their own homes except for "permitted purposes". The financial and personal cost of these measures is beyond calculation. Government justifies these measures by reliance on expert advice that to allow citizens to go about their lives as they see fit will cause a medical catastrophe. These experts rely upon data and statistical models to justify their recommendations. One of the problems with reliance upon experts who, in turn, rely upon data and models, is that the data and the models constantly change and may even become suspect. For example, the Foundation for Economic Education (FEE) reported on March 25, 2020 that the Oxford-based Our World in Data had stopped using World Health Organization data for the coronavirus reporting, citing errors. Another problem is assessing when the data and expert advice should trigger the suspension of civil and property rights, if ever. Is it not interesting that the Center for Disease Control and Prevention (CDC) predicts that 12,000 will die of the "normal" flu this year in the US and that 61,000 died in the 2017/2018 flu season? Yet the US has taken draconian action only this year in reaction to the 804 who have died with the coronavirus as of March 25, 2020. (Note the qualifying preposition "with".) What changed to warrant such action and are we to expect similar draconian responses in the future?

The individualistic approach is well known. It is the approach taken heretofore following other major flu-type outbreaks in the fairly recent past. But let us pursue a thought experiment somewhat. What action might individuals and businesses take on their own in response to this media hyperbole? We know that some people with medical conditions or those who simply don't want to take a chance are self-quarantining themselves or venturing out in public much less than normal. Furthermore, some stores are open and people seem to be taking precautions. They are maintaining a safe distance from one another in public. Hand sanitizers are being used in some stores to clean public shopping baskets and for customer use. Some stores are asking customers not to use cash. My local Ace Hardware Store has blocked off a six foot distance between the customer and checkout clerks. These are just some common sense actions taken by a self reliant people. But what might be the response if businesses who were forcibly shutdown were allowed to open? I'll use my local dental office for a thought experiment.

My dental office has been forced to close, but what if it were not? It could close voluntarily anyway, of course. That would be my dentist's decision. But if she closed and others remained open, she might lose many customers permanently. Or she could remain open. Then customers could decide whether to see her for their regular checkups, etc. or not. If some did go, they might assess what steps the dentist was taking to protect herself and her patients. If they were not comfortable with her measures, they might try another dentist, in which case my dentist would risk losing a customer permanently if the other dentist adopted better protective measures. We could go on and on about the choices that both my dentist and her customers might take, but the point is that there are lots of options available to both my dentist and her customers. Individuals and businesses may rely on data somewhat, but the data is just one input to guide their action.


The Austrian school of economics explains that humans are guided by preferences, and preferences are NOT quantifiable. They are subjective. They differ from one person to another and change often within the same person. It is impossible for government to draft rules and restrictions that can satisfy the subjective preferences of ALL people all the time on how to respond to a crisis. Pretending that it knows what's good for over three hundred million people is ludicrous. Better to adopt the individualistic approach and let each of us decide for himself.

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Pandemic: The Shortcut to Serfdom

03/31/2020Tomas Forgac

Let me make one thing clear—I’m not downplaying the importance of a strong response to this virus. I believe there is a good reason to be overcautious in the short term before we understand the disease better and are able to apply a more surgical approach to its management and eradication.

Social distancing, working from home, avoiding travel, all of those things help us to avoid the overwhelming and potential collapse of the healthcare systems such as we are witnessing in Italy and Spain.

However, all of that comes at a cost. Many people will lose their incomes. Lack of social contact will only worsen the impact of the continuous flow of bad news. Anxiety and depression will spike and have real consequences to people's health and lives.

There is a point beyond which to many people these tradeoffs become unacceptable. People, especially the young ones will rather risk getting the disease than losing their income or even missing out on their gym or their flat white fix. The elderly, who are aware of their limited lifespan even under normal circumstances, might be willing at some point to accept the risk for a chance to hold their grandchildren, to travel, or to socialize with their peers.

And although some of those decisions from some angles will look reckless, they have to be made at the individual or community level so that the people who make them for themselves and their loved ones are the ones with the most information about their personal situations, their risk appetites, and their time preference.

Because. in the end, every individual has the means to protect himself or herself against the virus, but when states get involved and introduce top-down measures across the society at large, there will necessarily be massive unintended consequences that hit everyone, many of the most vulnerable especially.

Currently, US governors and European governments are outbidding each other in the strength of the measures they impose, throwing all principles that the Western society was built on out the window for the sake of political showmanship. Curfews and lockdowns have shown no correlation with success in fighting the disease, yet some governments ban people from even going out in nature or to their own backyards. The surveillance state is growing rapidly, using this rare opportunity to a maximum.

Although all of those things are wrong in principle and create a very dangerous precedent, they also potentially introduce unintended consequences that will make the situation worse in the long and perhaps even short run.

Where it is forbidden to freely move around outside. even where it is not only completely safe but beneficial, some people will congregate in hidden places, which are necessarily much more confined. The Swiss government forced ski centers to close down even though it is very easy to avoid contact with others and by doing that sent everyone home at the same time overnight, potentially increasing what would otherwise have been lower, more natural public transport occupancy. Miami and other places did the same thing with their beaches and hotels, sending everyone onto planes in much more concentrated numbers.

The perfect storm of central banking induced an everything bubble, the economy brought to a screeching halt by overzealous governments. The unprecedented fiscal and monetary interventions keeping it on life support while the measures last will be felt not for months, but probably years. Given the dependency of health and life expectancy on economic prosperity, this impact might end up costing more life years than the disease itself.

And finally, the massive infringements of our privacy, our basic human and property rights, might not fully scale back for years, if ever, because of how convenient they will be for the states. Imagine the next time Catalonians so much as utter a thought about independence—how long will it take for the central government to diagnose a person in Barcelona with something and lock the city down?

We have a long battle for our liberty and prosperity ahead of us. As Philip Bagus wrote earlier in this space, there is a shortcut to serfdom. It’s called fear. When we have good reasons to stop being afraid of the virus, we will have to constantly remind those around us of the freedoms they gave up in fear. Otherwise we will not get anywhere close to the imperfect state of affairs before this crisis. It will become this generation’s 9/11, and those under the age of ten will not even believe the levels of freedom we had before it started.

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Why I Love Price Gouging—and Why You Should Too

Yesterday I went looking to buy hand soap—not hand sanitizer, but regular old hand soap—in 7.5 ounce pump dispensers.  As you can see from the photo below, I found the shelves at my local Winn-Dixie supermarket completely bare. In lieu of the soap, I encountered a large sign that read, in part: “Please BE KIND to one another and limit yourself only to what you really need at this time.”  Alas, the sign did not work and never really had a chance.  For it was in direct conflict with the more powerful smaller signs advertising the prices of the different brands of hand soap for $1.29 and $1.99 per dispenser.  These signs did work—to encourage people to buy and hoard large quantities of the item. Had the smaller signs displayed much higher prices, say $10.29 and $10.99 or tenfold the actual prices, there would have been enough soap on the shelves to permit me and anyone else to purchase hand soap to our heart’s content. Of course at those prices I would have been content with one or two bottles rather than the fifteen or twenty I was planning to buy and hoard. Furthermore, not only would higher prices have spared me the time and energy of going elsewhere in my search for soap, but it would also have spared me the irritation of reading that absurd sign. 

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Back to Work: America Has No Choice if It Is to Avoid Total Disaster

03/30/2020Robert L. Luddy

China and Russia are open for business and working at close to capacity as America shutters most all business and industry in states such as Pennsylvania, New York, California, New Jersey, and Connecticut. In many cases only select manufacturing companies are allowed to operate, which means that most manufacturers will be short of parts and services necessary to produce goods.

Our leaders are creating an economic crisis and a major national security risk with limited data. The cure is far worse than any perceived impact from COVID-19. Our economy is both fragile and interdependent, an economic reality not understood by our leaders as they order mass closings of many states’ business and industry.

Thomas Sowell wrote, “There are no solutions. There are only tradeoffs.” Sowell was informing us that wise and sound judgments are imperative during any crisis.

An opinion piece by John P.A. Ioannidis, professor of medicine, epidemiology, and population health at Stanford University, is headlined, “A Fiasco In the Making? As the Coronavirus Pandemic Takes Hold, We Are Making Decisions Without Reliable Data.”

This season the flu has killed 22,000 Americans versus 388 dead from COVID-19. This the hard data available. There has been no national discussion about the flu but complete panic on the coronavirus.

The restaurant industry, which is the largest employer in America, is closed in most states. Now we will begin to witness the industries that support restaurants and hotels begin to shutter.

Marriott Corporate in Bethesda, Maryland, has furloughed 66 percent of its employees and cut the pay of the remaining employees by 20 percent. Such actions by major employers will have a devastating impact on the US economy.

The Big Three automakers and their suppliers are closed, which means hundreds of thousands of workers are laid off and at home. This will quickly lead to more layoffs and many small business failures. There is no amount of government money that can make up for an economy closed and workers staying home.

We all know that food and supplies are critical to families. Most individuals assume these products and services will be available. But as we have witnessed, when demand exceeds supply and businesses are shuttered, supply runs out.

Supply of goods and services is quickly becoming a more important national issue than the COVID-19 panic. The virus will not adversely impact most Americans, but they will sustain substantial financial losses, and at some point supplies will run out.

Schools can shut down, and sick people should stay home, along with older or at-risk individuals, until the panic subsides, but the healthy must be allowed to work.

Every family, state, city, and business can make the best decisions during this crisis, but we cannot have simplistic top-down mandates.

We are quickly moving toward a supply problem. Just-in-time inventory means we make products as needed. If the producers are closed, we run out of goods quickly.

Wiring $3,000 to most Americans may seem like a solution, but unless we have a supply of the goods families need, the money will not help. The best way for families to have income is for America to be open for business and not risk shortages and civil unrest. It is noteworthy that liquor, ammo, and guns sales are robust.

The federal government has no money and is $23 trillion in debt. Now Congress contemplates a $2 trillion economic bailout, which is pushing the limits of how much Congress can borrow and will eventually create a major financial meltdown. The solution is a robust economy producing goods, services, and financial stability.

All healthy Americans who want to work must be allowed to return to work no later than March 30. This commonsense approach will allow new production and for the healthy to support those in need.

I urge President Trump to speak to Americans from a Midwest manufacturing plant, away from the Swamp, and appeal to all governors and Americans to overcome their fears and take reasonable precautions, but allow America to open for business by March 30.

Originally published by American Spectator.

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