Fed’s Bullard Calls For ‘Organized Shutdown’ Of US Economy Until July 1
By James Bullard, President and CEO, Federal Reserve Bank of St. Louis, March 23, 2020
Introduction
The coronavirus has the potential to create catastrophic health outcomes in the U.S.2 In order to mitigate this, public health officials have recommended a variety of social-distancing policies to slow the spread of the virus. In addition, social interaction has declined dramatically due to voluntary withdrawal by individuals, corporate work-from-home policies and government restrictions.
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Financial markets and money are abstractions, you cant just shut down 50% of material goods and services production and “make everybody whole” like nothing happened. Bullard has officially gone off the deep end.
“You cant just shut down 50% of material goods and services production and ‘make everybody whole’ like nothing happened”.
Yes you can. You can commandeer material goods production by government decree in order to ensure what needs to get made gets made, and you keep necessary services provision online (like we’re already doing). And then you can just mail everybody checks.
If this was a war, and another country had bombed us into a recession, we wouldn’t even be having this discussion. We would have instructed industries to make what needs to get made to go to war, and those whose livelihoods were destroyed by the initial bombing runs would be made whole with free money. And yet, somehow we don’t apply the same logic when it’s a virus. (“Somehow” = because most people lack the ability to extrapolate and don’t understand how money actually works)
Taking your war analogy, in what war was everyone “made whole” there is always redistribution under the surface, no matter how many checks you mail. In WII we had price controls and inflation, the morons who bought the war bonds lost out big time. If being made whole is redistributing from creditors to lenders then yes everybody can be “made whole” but to me it sounds like the broken window fallacy.
What is the share of workforce which is physically engaged into the goods production in the US? 5% of the total workforce maybe.
I guess at least 50% of workforce can be successively removed without any material damage to goods or services production. This will decrease overall density at the working places and hence decrease probability of infections
Probability of infection can be reduced even for essential businesses. R&D can be postponed, project management, finances and planning sent home, manufacturing work in several shifts do minimize personal contacts at the working places.
He’s completely lost his mind. This will kill more people than the virus.
That’s my viewpoint having both an MD and MBA.
In an unconstrained scenario, 300MM population x 50% infection rate x 1% fatality rate = 1.5MM deaths, also say 15MM in ICU treatment, since that exceeds ICU capacity by many ten-folds, fatality rate will be higher. 2MM? 3MM?
A NPAP (weird acronym) with the appropriate government action (involving $3-4TR) will not kill 1.5MM or even 0.15MM.
The numbers I’ve seen from smart Epidemiologist friends is a death rate of 8% once medical care is over run. These same people say 1% is the probable morality rate with proper hospital care.
Rather than starting with the consumer “economy and cutting it down by some stupid arbitrary number, the necessary economy should be built up from zero. We need power generation. All of it. Less than full will kill people. We need food. Much of that is not easily sent in the mail. Keep the food coming. We need as much health care as we can get. Look at what we have to have and build from there. Don’t take half of everything. That’s the kind of advice you get from a stupid economist. Enough of these guys.
LOL. Somehow, Jim Bullard’s blog posts always end up being extremely controversial. This one is inherently controversial, of course, but I swear, Jim could write a blog post about why he likes vanilla ice cream and suddenly, 99% of people would be staunch chocolate supporters.
I find a lot of people feel like fact based reality is a personal attack on their character.
This is what leadership looks like. One could be forgiven for forgetting. We are indeed in a war and we should treat it that way with serious planning. Good on him!
Well said. Bullard is clear and direct. Extraordinary times require extraordinary thinking.