Economic Recovery?

From: Tanner Goodman

Sent: Wednesday, March 11, 2020 6:11 PM

To: wblock@loyno.edu

Subject: Loyola student wondering about the impact of coronavirus

Dr. Block,

With lots of schools closing and resorting to online, plane ticket prices as low as almost $20, interest rates nearing 0, the economy as a whole slowing down and not spending money, where do you think the economy is headed? Do you think we are a little too far gone to fix it or can something actually be done to readjust the United States and also the world?

Thank you for your time, be safe and I hope your family is safe.

Thank you,

Tanner Goodman

Here is my reply to Tanner that I wrote on 3/11/20:

Dear Tanner:

The corona virus is having a heavy negative impact not only on our lives, but also on the economy. As soon as they come up with a cure, a vaccine, I think the economy will rebound. Lives too.

Here are my present thoughts:

First, what I should have said then, is that economists predict to show they have a sense of humor. If they knew what they were talking about, they’d be far richer than they are now.

Particularly, Austrian economists never predict, other than under ceteris paribus conditions, which never, ever, prevail.

So here are my present thoughts on the matter. Will our recovery be a “U” shaped one, staying in the doldrums for a long time, or, will we have a quick “V” shaped recovery? It all depends upon what the government does. To wit, if we are to achieve the “V” the government must stop this barking mad system of paying people more unemployment insurance than they can earn from returning to their jobs. Second, the more deregulation we have, the faster the recovery. Third, lower taxes, radically. Fourth, stop this madness with MMT, flooding the market with new money, continually lowering interest rates; this will only set the stage for runaway inflation and the Austrian business cycle.

Best regards,

Walter

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2:43 am on June 16, 2020