U.S. Economy Set to Shatter Record for Worst Quarter Ever

US Economy

The record for the worst economic decline in a single quarter is 10%, set back in 1958. That record has lasted over 60 years, but it’s about to fall, and fall in a very big way.

Even in the worst of times, when the economy is in decline as much as it ever normally does, you just don’t see it drop all that much in a single quarter. Economic natural disasters take time to happen, although the current one that we’re in isn’t natural, it is man-made. When we go all out to cripple it, when we choose to shut down the economy and look to bring on something of the magnitude of the Great Depression overnight, this is really when the red glare of our rockets really fills the sky, and produce true shock and awe.

As more and more rockets get shot off into the sky, as we choke off more and more of our economy and mandate that more and more people are put out of work from the fear of COVID-19, the shock and awe just keep getting more shocking and more awesome, but not in a good way.

This all started out as a potentially minor thing economically, as we originally figured that the harm would come from China locking themselves down in their efforts to slow down the spread of the virus that started to really grow 2 months ago. This threat was pretty modest, and while people were concerned, this first wave only put a little scare into the markets which was quickly brushed away. Stocks even broke through all-time highs while this was going on over there, in the heat of their battle even, because the damage was seen as manageable in the U.S.

We knew that this virus would spread, but even if it remained business as usual in the U.S., there would be some lives lost to this but not an amount that should have concerned us very much. It should have been expected that our death rate per million people might be something like four times larger than China’s, since they were managing things much more authoritarian than we would ever consider in a democracy, but this still would not amount to anything statistically meaningful. We told you that the response here would be nothing like what China was doing, but we sure were wrong.

With China’s situation winding down and things returning to normal, we have a better idea of what their death rate per million will be. It currently sits at 2.5, and few cases left to resolve, this should come in around 3 per million. The U.S., who didn’t approach this anywhere near as aggressively as China has, is already at 4.5, and the 4 times China’s death rate looks pretty reasonable now once the bodies all end up getting counted in the United States as well.

Deciding what the economic value of a human life might be is not a pleasant task by any means, but it nonetheless a task we have to do, similar to how we don’t like to see people die but still need to bury them. Without the economic accounting though, we risk committing resources that are entirely out of proportion and this can cause harm on orders of magnitude greater than the benefits we receive by preserving more lives.

Measuring this is not a matter of just looking to decide whether we think that a life is worth so many millions, or in this case, so many billions of dollars, which we could argue about considerably, and this isn’t even a discussion that people are willing to have right now. We can look at comparable situations though, now much we normally are willing to spend on saving people from dying from infectious diseases and the attention we normally put on this, and use that as at least a guide to how much we may be blowing the current situation out of proportion, or not.

We could start with what we spend and what action we take to combat other deadly infectious diseases such as influenza, or what any country has spent on these things ever, but the level of spending with this one is so much higher as to make any comparison senseless. This should matter to us, but it does not, because we don’t read about, it or watch it, the current means by which we think.

The World Health Organization, the WHO, eventually declared COVID-19 as a pandemic, although that in itself isn’t anything special since this is pretty arbitrary. The definition of pandemic involves an outbreak that is both prevalent and widespread, and this leaves completely open how we are to understand how prevalent the outbreak has to be in order to satisfy this definition. WHO certainly has the bar pretty low with this one, because after all this time, it still isn’t that prevalent as far as these things normally go.

We’ve been comparing other infectious diseases to this one to try to give our readers some perspective, as well as comparing with other threats, but we haven’t mentioned tuberculosis yet. Since this is currently the biggest threat to humanity among infectious diseases, killing more people than anything else these days, as well as having long-term threats much greater than others, it does deserve at least a mention.

Tuberculosis, or TB, has been around at least as long as humans have, and probably for a lot longer, although it’s a disease that is particularly fond of humans and their historically poor sanitation conditions. After all these thousands of years, it still manages to kill over a million people each year, with the latest numbers that we have seeing its death toll rise from 1.3 million people in 2017 to 1.5 million people in 2018.

About 50 million people a year get the acute version of it, the one that puts your life at real risk, although the total number of people infected worldwide by this is in the 2 billion range. The infection remains latent in most people, waiting for its opportunity to take over our immune systems, and then often striking with deadly force.

Real Heath Emergencies Aren’t All That Exciting if they Don’t Scare Us Enough

This is what you call a real health crisis, and while we’ve tried hard to eradicate TB, if you can call using drugs trying hard that is, what we’ve done instead is bought TB bacteria a gym membership, as we’ve done with other forms of threatening bacteria, where we make them stronger and stronger by throwing more and more drugs at them, which they resist and then become much harder to kill.

TB has all been eradicated from many Western countries, including the U.S., but it wasn’t always so. The superior sanitation practices that first world countries now enjoy has made all the difference, but in countries where the people are less well off, the disease rages on, with no end in sight. We could help curb TB a lot by spending money on improving sanitary conditions in these countries, but a million and a half people dying a year just doesn’t hit the threshold, a bar set unimaginably higher than the one where we spend trillions on a minor outbreak.

WHO declared TB a “global health emergency” back in 1993, and promised to put a big dent in TB’s prevalence by 2015, but that day came and went and it’s still around in all its nasty glory. There has been a vaccine around for a long time now, but the vaccine really doesn’t help much, as they tend not to, in spite of the propaganda out there on vaccines in general.

Speaking of vaccines, the polio vaccine is actually a good example of how there is a double standard between have and have not countries. The U.S. banned this vaccine 20 years ago after too many children became paralyzed from it. We don’t just still use it though elsewhere, we use the live strain version of it in the third world, which can be produced very cheaply.

What is truly sad about this effort is that WHO has been able to achieve its goal of virtually eliminating cases of polio caused by what is termed the wild virus, although they don’t have to count the cases of vaccine-derived polio, or VDPV, so their numbers look good to them in spite of the alarming outbreaks of VDPV that we’ve seen in the 10 years that this program has been ramped up.

VDPD is about twice as deadly as wild polio, and we are killing a great many people in the third world, with Bill Gates happily arming them with huge sums, and the Western world being kept unaware. Tens of thousands of children are being killed and paralyzed every year, by our own hand, and we know we are doing it, but don’t care, and this just gets filtered out by the media here, the same way that the TB health crisis is filtered out.

The point of bringing up these two conditions isn’t to show how much more deadly TB is than COVID-19, although that’s certainly the case, it’s to demonstrate just how selective Western media is. Portraying COVID-19 as the biggest threat we have ever faced sets an entirely new standard for hyperbole, while few people may even be aware of the dire situation with TB or how we’re maiming and killing so many children in the third world by giving them a worse form of polio instead of looking to protect them from it.

Mainstream media plays a huge role in the great majority of people’s lives these days, and we’re not out to look to create any conspiracy theories here, but to look to point out how one-sided this media is. While there is some alternative information shared on the internet, its reach remains very shallow, and has Donald Trump may put it, the “fake news” is king.

All This Brainwashing Comes at an Excruciating Price

North Korea produced a documentary a few years ago lambasting Western media for how they have turned us all into brainwashed puppets that are used as economic bots programmed to consume, and sadly enough, even though this was blatant propaganda, it described what is going on in the first world far better than anything else you could ever watch. However, we have to look deeper to get at the real impetus behind this to really understand it though, and it turns out that it is all about our maximizing our entertainment levels, not just consumption itself.

Most think that there is a line that separates entertainment programming and the news, but that actually is pretty naïve, and all you have to do is look at how we report the news to see this pretty clearly. No one bothers though, with few exceptions, like Donald Trump lighting into a reporter that dared ask him what he would say to his fearful constituents. Trump did clearly over-react, but demonstrated what was clearly a high level of frustration over how the news media is handling the reporting of this story overall.

Trump needs to move one more step forward and realize that the news media not only greatly sensationalize things like this, they are fulfilling their purpose by doing so. The idea that their primary goal is supposed to be to inform us is a belief that even he seems to be foolish enough to buy into, and he should not be angry at this or other reporters because they are merely doing their job, doing their best to entertain.

They do have great power over us, as we’re really seeing now, and we have now even created a disease for which there may not even be a cure for, by way of their now monumental ability to really affect public policy, and not in a small way. This is the biggest side effect of this virus, not the miniscule number of deaths that we will see from it, not the trillions of dollars we’re spending on this hoax, not the huge percentage of people who are now out of work with more to come, it’s the mechanism of control that is the big danger here.

We are very well familiar with the power of the media, but seeing this turn into Frankenstein the way that it has lately has even shocked us. In the world of entertainment, this might be the biggest story of all time. We checked CNN’s home page recently, chock full of a lot of stories, and every one of them was about this coronavirus, without exception.

We’ve chosen to inflict a lot of harm on ourselves by playing our part in this live horror movie, and with health officials and politicians among those infected by this story, we’re all doing our part now to make this as scary as we possibly can and pay king’s ransoms and disrupt our lives in ways completely unimaginable until now to feed this monster.

We wonder what they could do with something a lot bigger, such as the flu. We couldn’t use that term though, but influenza comes in different strains, so we could just give it a name like FLVID-19 and then track the numbers the same way we’re doing with COVID-19.

Instead of seeing cases go from 10,000 to 20,000 to 30,000, we could show people 10 million, 20 million, 30 million, and so on. Instead of showing them 100 deaths, 200 deaths, 300 deaths, 10,000 deaths, 20,000 deaths, and 30,000 deaths is so much more exciting and compelling.

They are still claiming that COVID-19 is much more deadly than FLVID-19, but when one of them has killed people at a rate 100 times higher, and will be way higher when the final count is in, they seem to be playing us for fools, but sadly, we’ve played right along with their ruse. Perhaps we can be excused though, as if fear has consumed us so completely, there’s no more room in our heads for other things, like reasoning.

The power of the forces behind this pandemic of fear needs to be properly accounted for if we’re out to measure the long-term impact of the real disease that has spread like wildfire throughout most of the world, and it’s not COVID-19.

The harm that we’ve done to our economies from our trying to quarantine whole countries is great, but like the stock market, it’s hard to say where the real bottom is. We might have thought that the threshold is at the point of serious economic harm, but we’ve well passed this and there’s no telling how much worse this will get before it ends.

In spite of what Trump may think, it’s hard to blame the media because they are just giving people what they want. People spend a lot of money trying to scare themselves, and they have now found a real treasure trove, a real outbreak movie that they cannot get enough of.

We know that the damage from this will be very painful. Last Wednesday, Morgan Stanley raised their predictions of the loss of GDP next quarter to 14%. Things got worse. On Friday, Goldman Sachs threw out a much bigger number, 24%. That’s almost two and a half times bigger than the worst quarter in history, and it’s very likely to get worse as we contract the economy more and more each day now.

The good news is that this is far more benign than real depressions, which can take quite a few years to heal from. With not fate but the King blocking our way, when that goes away, we at least have the potential to heal plenty fast.

However, don’t be so sure that our appetite for this will be quenched once the numbers start coming down. We’re already seeing signs that the game plan will be to keep this going, whether it merits it or not. Social distancing may be the new reality, whether it makes sense of not. We now live in a land where sense and merit are shockingly disregarded.

We may have a pretty good idea when this should end, if this is to mean the end of reasons to fear this escalating to be the greatest disease of all time it’s believed by many to likely to be. Even some pessimists are seeing this as just a few more weeks, and the data does suggest this. It’s a lot harder to predict when the mob will settle down enough to actually return to normal though. Maybe they never will.

This therefore may be a much bigger deal than just a quarter long depression, which kicks in when we drop 10% over any period. Dropping three times that much in one quarter is just amazing. We’ve never faced a force this powerful though, not the disease, the way that our control and fate has been so controlled by the news.

They don’t talk about 60,000 deaths in the U.S. from the flu some years, they don’t talk at all about the TB crisis, they don’t talk about the over a million people a year that die of diarrhea caused by infections, the 100,000 people a year in the U.S. that die of medical errors, how we’re killing and paralyzing so many kids with live polio vaccines, or anything else we may not find entertaining.

There’s nothing like a script where you can have the fear open-ended, and if 60,000 deaths in 2018 from the flu in the U.S. doesn’t excite you, most of us dying will rock your boat plenty enough. The facts don’t matter, and although this isn’t pure fiction like the outbreak movies, and is a fact-based show at least, when you play this loose with the facts, we clearly see that it doesn’t matter.

This is brainwashing on a scale that on one could have ever imagined. It comes with a big price economically. The number being thrown around right now is $10 trillion worldwide, but this might even be on the low side when we’re done. This might be a show that people are very eager to watch, but the bill for this freak show will arrive, and it will bring us to our knees whether we realize it or not, whether the news decides to report it in a disparaging or heroic way. The smart money is on the latter, and now that they have shown us what they can really do, this would be a walk in the park.

Pink Floyd may have seen this coming, but were 45 years too early. The time has now arrived. Welcome my son, welcome to the machine.

John Miller

Editor, MarketReview.com

John’s sensible advice on all matters related to personal finance will have you examining your own life and tweaking it to achieve your financial goals better.