Power & Market

I write this on March 18, now having watched a 180-degree reversal of how we think about contagious disease.

John Calhoun, among the most influential of America’s nineteenth-century statesmen, was born on March 18.

Notwithstanding the fear of disease contagion, the states and feds may only quarantine those who are actively contagious and will infect others imminently. And it must present evidence of both at a trial at which it bears the burden of proof.

For years there have been warning signs that a recession could light the fuse on a massive corporate debt bomb, and it’s possible that the coronavirus may be the match.

Toilet paper producers haven't stopped making it. But anti-gouging laws in many places have ensured that prices can't rise to ensure that your neighbor doesn't buy three hundred rolls at the regular price while others in greater need can't find any at all.

Thanks to relentless intervention by governments and central banks, the financial system now looks to government policy as the solution to every problem.

Although authoritarian states can indeed act swiftly, they always act on the wrong information—and the wrong objectives.

Printing up paper money and giving it or lending it to domestic businesses or to India will not bring about a miraculous replacement of the lost goods and services or repair broken supply chains.

The new powers acquired by the CDC and other agencies will likely be retained and put to use long after this crisis has abated. And further government intervention in the biomedical and healthcare sectors is virtually guaranteed.
 

The Fed created the economic crisis with its more than a decade-long campaign of ultralow interest rates and quantitative easing policy that injected massive liquidity into financial markets. The coronavirus is simply the match that lit the fuse.