The Macroeconomic Consequences of Lockdowns and the Aftermath

During the past three years, Washington has made three catastrophic errors.

These include:

• The draconian one-size-fits-all Lockdowns in response to the Covid;
• The insane $11 trillion bacchanalia of monetary and fiscal stimulus payment designed to counter the supply-side shutdowns caused by the Virus Patrol;
• The mindless Sanctions War on Russia, which has caused global commodity markets to erupt skyward.

The resulting economic and financial dislocations, both global and domestic, are unprecedented and could not have come in a worst context. Prolonged fiscal and monetary excesses prior to February 2020 were already destined to generate an era of reckoning, even before Washington jumped the shark after the Covid panic was ignited by Donald Trump in March 2020.

Consider the course of fiscal and monetary policy over 2003-2019. During that 17-year period, the public debt share of GDP soared from an already high 62% to 111%, and the Fed’s balance sheet exploded under the bailouts of 2008-2009 and QE thereafter from $725 billion to $4.2 trillion. The latter embodied a growth rate of 11.0% per annum over the period, nearly three times the 4.0% growth rate of nominal GDP.

In a word, Washington policy makers had been on a reckless lark for the better part of two decades. It was only a matter of time before an unavoidable policy reversal toward restraint would bring the hothouse prosperity of both Wall Street and main street crashing down.

Public Debt As % of GDP and Fed Balance Sheet, 2003-2019

The history books will surely record, therefore, that it was Trump who foolishly ignited the above depicted ticking financial timebomb. Based on the facts known now and the evidence available then, the prolonged Lockdowns ordered by Trump on March 16, 2020 were one of the most capriciously destructive acts of the state in modern history.

The reason is simple: The Covid was at best a super flu that did not remotely rise to a Black Plague style existential threat to American society, and therefore did not warrant any extraordinary “public health” intervention at all. America’s medical care system was more than equipped to handle the elevated case loads among the elderly and comorbid that actually occurred.

Indeed, the IFR (infection fatality rate) for the under 70-years population has turned out to be so low as to make the brutal economic shutdowns ordered by the Donald and his Fauci-led Virus Patrol tantamount to crimes against the American people.

A thorough-going study by Professor Ioannidis and colleagues across 31 national seroprevalence studies in the pre-vaccination era,  for example, shows that the median infection fatality rate of COVID-19 was estimated to be just 0.035% for people aged 0-59 years and 0.095% for those aged 0-69 years. So we are talking about just four-to ten-hundredths of one percent of the infected populations succumbing to the disease.

A further breakdown by age group found that the average IFR was:

• 0.0003% at 0-19 years
• 0.003% at 20-29 years
• 0.011% at 30-39 years
• 0.035% at 40-49 years
• 0.129% at 50-59 years
• 0.501% at 60-69 years.

There is just no beating around the bush. The Lockdowns impacted the livelihoods and social life primarily of the working age and youth populations depicted below, but not in a million years should the heavy hand of the state been brought to bear on their ordinary freedoms to conduct economic and social life as they saw fit.

Nor does the Donald and Fauci’s Virus Patrol get off the hook on the grounds that these dispositive facts about the Covid were not fully known in early March 2020. But to the contrary, the results of a live fire case study involving the 3,711 passengers and crew members of the famously stricken and stranded cruise ship, the Diamond Princess, were fully known at the time, and they were more than enough to quash the Lockdown hysteria.

During late January and February the virus had spread rapidly among the large, close-quartered population of the cruise ship, causing nearly 20% of the population to test positive—about half of which were symptomatic. Moreover, the population skewed elderly as is normally the case on cruise ships, with 2,165 people or 58% over 60-years of age and 1,242 or 33% over 70-years.

So if there was a vulnerable population sample this was it: That is, a stranded population of the mostly elderly in the close quarters of a cruise ship.

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