by Frank Shostak
In the midst of the emerging economic chaos triggered by the COVID-19 coronavirus, individuals are seeking answers from governments as to how to prevent the emerging economic disaster.
Most economic experts are sympathetic to this and are urging the authorities to push massive injections of money. Thus in the US the central bank has embarked on a $2 trillion stimulus. At the same time government officials are imposing draconian measures to keep the population in isolation. The isolation is expected to arrest the spread of the coronavirus.
Even if one were to accept that the total lockdown of the population will slow the spread of the virus, this will inevitably reduce the production of goods and services needed in the economy—needed to support individuals’ lives and well-being. This could lead to a global economic problem the effect of which is likely to be much worse than the damage inflicted by the coronavirus.