The legacy of COVID-19

I’ve discussed in a previous article that the approach of governments to COV-19 in dealing with he virus is not the most effective (as we can see in Italy). It is not bringing down the death rates and is causing economies to collapse. It’s like fighting a twenty-first century battle using a nineteen-thirties economy.

This raises an issue that has been pushed to the back by the media, and that is the cost to the economy. The (usually unsaid) assumption is that this a pause and everything will resume when the health crisis is over.

Anyone who has been watching the world economy knows that it was teetering on the brink of collapse anyway. It could have been saved with astute management but the approach by Western economies was to push money into the system to prop it up. A collapse was widely predicted even a few years ago.

Someone who looks for conspiracy theories may surmise that this was a blessing which gives governments an excuse to allow economies to collapse whilst being perceived as doing the right thing.

No government can be perceived to be putting the economy ahead of lives

No government can be perceived to be putting the economy ahead of lives but the result of this is that it will herald a period of economic stagnation that will make the effects of the COVID-19 virus seem trivial by comparison. Many economists are pointing this out.

Britain seems to be the only country that is taking a sensible stand on this but it is heavily criticised by the medical profession who are not only stuck in the view that the only way to deal with the virus is by reducing contact between people, but also don’t have to consider the economic repercussions of these decisions.

The reason that currency is so called is that it has to be current. It’s like a river that has to flow. If the money flow stops, the economy collapses and once stopped it it is very difficult to restart. History gives us many examples: Germany before the war, Zimbabwe and more recently Venezuela, which went from a thriving economy to collapse in a few years.

By Philip Braham on March 16, 2020.