Thursday, March 19, 2020

Wuhan Virus V - The US Is Not China

I just heard that the Pennsylvania governor just ordered all non-essential businesses closed.  With the ‘Keeping Up With the Joneses, oops, the Other Governors’ one would expect this to spread across the US.

This is insanity.  We have an interdependent economy.  Keeping it going depends on commerce, the production of a wide range of goods, and people with the funds to make purchases.

We are not China.  China locked down one province and several cities.  Maybe a 100 million out of nearly 2 billion.  They had businesses going strong in much of their country providing food and goods for those locked down.

Having one governor after another throughout the US shut down all non-essential businesses removes that uncrippled sector of the US economy that can support the hard hit, locked down areas.

If this insane panic response spreads, the US economy will tank and it won’t come back.  To restart businesses you have to have funds.  If you’ve bankrupted 70% of American business by mandatory shutdowns for two months or more, that’s a huge bill. A trillion dollars of aid will be like a drop in the bucket.

Maybe all suppliers for the closed businesses will deliver the goods they need on restart on credit for a couple of months—after the crisis is over.  But the employees rehired are also going to expect to get paid.  If the feds inject more money in some super-massive aid bill, there will be inflation, serious inflation.  Maybe the economy will stabilize at a lower standard of living, but maybe it won’t.

I would now upgrade my recommendation to prepare with some extra food and water.  It seems prudent now to go full prepper.

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Topic number two.  The latest news is that individual checks for the crisis would be for people with incomes under $100,000.  But the data the IRS has is for 2018.  If you’ve retired, or your income was higher than that in 2018 but you’ve been laid off because of government or big business response, you won’t get diddly.

If they do this, they need to send everyone the checks, but point out if their income is higher than the limit in 2020, it will be expected to be returned to the government in their 2020 fed tax return.

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