The Current Crisis Has Its Roots in the Central Bank

by Paul F. Cwik

We have been locked down for weeks. Classes have been canceled. Only essential activities are allowed. Although there is much to cover and analyze, I want to focus on the economics of the situation.

To understate it, the situation today is simply not good. The COVID-19 crisis has caused the world to lock down the population, which essentially ceased most commerce. While all businesses are affected in some way, a report by the US Chamber of Commerce shows that 24 percent of businesses are completely unable to conduct business in the emergency state, and further notes that 43 percent of all small businesses are less than six months away (and 10 percent less than one month away) from permanently closing their doors. From their highs in February, the DJIA is down approximately 20 percent and the NASDAQ is down about 15 percent. Initial claims for unemployment insurance since the US Department of Labor’s March 19 report exceed 22 million. A rough calculation places the current US unemployment rate above 17 percent. Yes, the situation is not good.

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