NEWSWEEK.COM 33
Funds Rate is at 0.25 percent, almost zero. The defi-
cit is at record levels. With the COVID-19 crisis, the
Fed has used its emergency 13(3) powers to lend to
business for only the second time since the Great
Depression. At some point we’ll run out of tricks.We all want to get back to “normal” right now (al-
though the levels of sustained growth and low un-
employment we’ve experienced over the last 126
months weren’t truly “normal”). That’s not going to
happen. Wessel says, “We don’t know how quickly
science can come up with treatments and a vaccine.
And we don’t know how consumer and business
behavior will change. The rapid V-shaped recovery
seems unlikely. The question is how long it takes
for us to recover. Quarters? Years? A decade? And
whether we’ll ever get back to the pre-COVID-19
baseline.” Things will be different after COVID-19.
That’s what Kevin Hassett wanted to say—before
Peter Navarro pulled the plug on his microphone.Ơ Sam Hill is a Newsweek contributor, author and
consultant.Big
Government
TRENDING BLUE
Billionaire hedge-fund
investor Leon Cooper-
man has proclaimed the
crisis will end “free-mar-
ket capitalism as we
know it.” That may be
an overstatement. But
economists talk about a
“ratchet effect” in which
government permanently
expands during a crisis.
Explains Ryan Bourne,
who occupies the R.
Evan Scharf Chair for
the Public Understand-
ing of Economics at the
Cato Institute, “Crises
normalize certain types
of interventions. After
the Great Recession,
people said ‘never again,’
but there is always a
next time, and often that
results in more extreme
interventions with
weaker cases, although
the current crisis is cer-
tainly not a weak case.”
Increased govern-
ment involvement won’t
meet a lot of resistance.
President Trump is in-
clined toward economic
activism anyway, and
the libertarian wing
of the GOP is in full
retreat. As recently as
the early 2000s, some
argued FDR’s economic
interventions made
the Great Depression
worse. That argument
is done and dusted. The
recovery from the GreatRecession proved that
intervention works. (It
also made a case for reg-
ulation, e.g., rules forc-
ing banks to keep more
reserves.) Bailouts have
gone from being rarities
(Chrysler, 1980) to fre-
quent (TARP, 2009) to
expected (CARES). And
as happened after the
Great Depression, there
will be a retreat from
globalization and an in-
crease in protectionism.Climate Change
Mitigation
TRENDING RED
Bourne argues this will
make the Sanders Green
New Deal and similar
initiatives less likely.
His logic is that absent
signiɿcant technology
advances, reversing
climate change is likely
to require cutting back
on consumption. The
Great Lockdown was
a taste of austerity. It
wasn’t very popular. If
we can’t last a month
without tattoo parlors
and beaches, it’s hard to
see any program that re-
sults in slower economic
growth getting traction.The
Election
TBD
As former British Prime
Minister Harold Wilson
said, “A week is a long
time in politics.” Six
months is an eternity.
ʡ6$0+,//