Stevie Mnuchin doesn’t know and Kudlow won’t tell. Still, we wish someone would explain to the Donald that the US economy is not a bungee-jumper and that his ballyhooed “V” isn’t happening anytime soon.
Just because GDP plunged at a 32% annualized rate in Q2, it shouldn’t be assumed that the US economy was suspended on some kind of elastic chord that insures an equal and opposite rebound from the Q2 bottom. That’s because the plunging economy of March-May was a frail cyclical octogenarian that wasn’t up to the sudden, thundering shock of Lockdown Nation, and also because the massive monetary and fiscal stimulants subsequently applied to the plunging main street economy weren’t stimulants at all:
- The $3 trillion of Fed money pumping since March didn’t go into the purchase of consumer and capital goods; it went unto the most destructive speculative blow-off ever on Wall Street;
- The $3 trillion of free stuff from the Everything Bailouts produced precious few new goods and services; it just temporarily off-set balance sheet catastrophes in the small business sector and on the margin went into the purchase of imported goods and cautionary cash balances in the household sector.
But the US economy is still in Covid Shock and the Donald’s ridiculous braying that he saved 2.5 million lives by the folly of lockdowns, quarantines and stay-at-home-and-afraid orders is symptomatic of the reason why. That is, if the Covid was the modern equivalent of the Black Plague in March-April, it still is in the Dem/MSM/political establishment narrative and in the minds of the tens of millions of masked-up sheeples slinking furtively along main street.