April 1, 2020
The President is calling for another $2 trillion relief bill, this time targeting jobs and infrastructure.
Hopefully the infrastructure will be of the 21st century variety like a national high speed wi-fi system. The move to working from home has been slowly building for years, and infrastructure needs to support it.
Building 19th century era roads and rail lines to 20th century urban centers makes no sense in the face of fundamental changes to the way we live.
The COVID-19 crisis is ushering in lifestyle changes already.
Men’s grooming is being affected…
Long hair and beards are back in style. It seems that intolerance for being near others extends to being near barbers. Gallup is reporting that barbers aren’t the only occupations affected by change in social distancing norms.
People are increasingly avoiding restaurants, public transportation and air travel.
Those changes won’t suddenly disappear with the COVID-19 virus in a few weeks or months.
The same report shows that increasing numbers of Americans expect long term economic consequences and the emergence of new social norms around gatherings.
Joel Kotkin a noted regional economist, predicts a movement of people out of cities and into rural areas. The devastation we now see in New York and Seattle makes people rethink the attraction to dense urban centers.
The Class of 2020 is facing a disheartening entry into early adulthood. The New York Times is reporting suspensions of internships and job offers as companies like Macy’s go into suspended animation.
But that’s not all.
Previous research shows that people graduating from high school or college during economic downturns endure diminished careers and a life time of lower earnings. (References available. Just ask.)
The Federal Reserve’s research center at the St. Louis Fed has posted a spate of articles about the future of economy. Big Changes pretty much describes it. Knowledge is power. Click the link and get prepared.
The Federal Reserve is now buying securities from foreign governments, pumping money into the global economy. It has become central banker to the global banking system, propping up banks on other countries that lack reserves to meet their debts.
That’s because every nation in the world trusts the dollar to keep its value over every other currency. Currency trading in US dollars is something keeping us wealthy for the last century.
But that trust in the dollar may be under threat from China, according to respected economic researcher John Authers. His very interesting article waiting for your read at Bloomberg.
Goldman Sachs is refining its predictions and now predicts even worse outcomes for the immediate future. It predicts US GDP dropping 34% and unemployment topping 15%.
Without cash because of stay at home orders, vulnerable industries like restaurants are turning to trade instead of cash exchanges. Bloomberg is reporting that a barter economy is expanding not just among friends and neighbors, but also industries.
The world was already on the verge of a recession just before the COVID-19 pandemic. International banker Satyajit Das does a good job of explaining how central bankers insulated well-heeled financiers from consequences of bad trades in order to stabilize markets.
This isn’t a new insight.
Yesterday I posted links to books written several years ago warning of this practice. If you are at home with nothing to do this is a good time to get up to speed on basic economics. The knowledge will come in handy very soon.
Here’s a paragraph from yesterday’s Musing:
Federal Reserve “cushioning” of economic ups and downs since the 2008 catastrophe has been questioned by notable economists like Mohamed A. El-Erian, Kwasi Kwarteng and Rana Foroohar.
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