Notable economist and NY Times bestselling author, James Rickards, has recently published an intriguing article about the U.S. economic rock bottom, in which he skillfully evaluates that the American economy could have been saved if better money policies and political management were enacted when the crisis burst. In that sense, his argumentation shows that the whole collapse happened for no good reason.
Jim Rickards discloses that the second-quarter GDP disaster was all but unexpected. At the pace that the economy was falling, the 31.4% drop in this year’s second quarter was foreseeable. However, for the third quarter, there was some excitement surrounding a potential V-shaped recovery with a sharp bounce-back after the reopening of closed businesses, rehiring of the unemployed, and a rising stock market. Yet, the economy hasn’t been following the script envisaged for it by the politicians and experts, and even though some events have been accomplished, they aren’t as good as they sound. According to Rickards, these factors hasn’t been seen since the 1930s. “It’s worse than a technical recession, it’s a depression, and its effects will be felt for years, or even decades, to come,” he outlines.
Going forward, the economic growth is expected to be even worse than the weakest-ever growth of the 2009–2020 recovery, and projections signal that the U.S. will not regain 2019 output levels until at least 2022. The rebound subsequent to the 2009 crisis has only produced 2.2% growth, configuring an L-shaped recovery. The economic upturn was real, but, as the expert points out, the output gap between the former trend and the new trend was never closed. In other words, the American economy has suffered a loss of over $4 trillion based on the difference between the former strong trend and the new weaker trend. That lost wealth has dramatically repercussed on the economy back then. But now, evidences indicate that the outlook for restoring growth is even lower than the weak post-2009 recovery.
Moreover, the expert defends that the widespread business shutdowns to restrain the spread of the virus weren’t effective nor it was worth it to put the economic activity on hold when different measures with significantly less damaging side effects could have been taken. In his article, he reports that numerous top scientists agree that lockdowns don’t work. When it comes to the current infection’s inherent specifics, the virus would likely spread with or without a lockdown. It would have been more efficient if health security measures were issued from the beginning.
According to Jim Rickards, some procedures such as washing hands, keeping social distance, and wearing masks in crowded spaces make sense. But there isn’t any evidence that masks do any good at all when the wearer is alone, outdoors, or at a reasonable distance from others. He argues that we could have followed these basic rules and gotten 90% of the benefit of a lockdown at only 10% of the cost. Those who support lockdowns have ignored the costs of increased mental health disorders, domestic abuse, and upsurges in depression and anxiety resulted from a lack of social interaction.
If the population were provided with proper health education from the start, it would never be necessary to close every bar, restaurant, salon, boutique, and public space. That’s why he asserts that the world’s greatest economy was destroyed for no good reason.
Epic Economist website: https://www.epiceconomist.com