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“The essence of investment management is the management of risks, not the management of returns”*…

Paris Bourse

In 1754, the infamous scam artist, diarist, and womanizer Giacomo Girolamo Casanova reported that a certain type of high-stakes wager had come into vogue at the Ridotto. The bet was known as a martingale, which we would immediately recognize as a rather basic coin toss. In a matter of seconds, the martingale could deliver dizzying jackpots or, equally as often, ruination. In terms of duration, it was the equivalent of today’s high-speed trade. The only extraordinary fact about the otherwise simple martingale was that everybody knew the infallible strategy for winning: if a player were to put money on the same outcome every time, again and again ad infinitum, the laws of probability dictated that not only would he win back all he may have previously lost, he would double his money. The only catch was that he would have to double down each time, a strategy that could be sustained only as long as the gambler remained solvent. On numerous occasions, martingales left Casanova bankrupt.

In modern finance, the coin toss has come to represent a great deal more than heads or tails. The concept of the martingale is a bulwark of what economists call the efficient-market hypothesis, the meaning of which can be grasped by an oft-repeated saying on Wall Street: for every person who believes a stock will rise—the buyer—there will be some other equal and opposite person who believes the stock will fall—the seller. Even as markets go haywire, brokers and traders repeat the mantra: for every buyer, there is a seller. But the avowed aim of the hedge fund, like the fantasy of a coin-tosser on the brink of bankruptcy, was to evade the rigid fifty-fifty chances of the martingale. The dream was heads I win, tails you lose.

One premonition as to how such hedged bets could be constructed appeared in print around the time when gambling reached an apex at the Ridotto casino, when an eighteenth-century financial writer named Nicolas Magens published “An Essay on Insurances.” Magens was the first to specify the word “option” as a contractual term: “The Sum given is called Premium, and the Liberty that the Giver of the Premium has to have the Contract fulfilled or not, is called Option . . .” The option is presented as a defense against financial loss, a structure that would eventually make it an indispensable tool for hedge funds.

By the middle of the next century, large-scale betting on stocks and bonds was under way on the Paris Bourse. The exchange, located behind a panoply of Corinthian columns, along with its unofficial partner market, called the Coulisse, was clearing more than a hundred billion francs that could change volume, speed, and direction. One of the most widely traded financial instruments on the Bourse was a debt vehicle known as a rente, which usually guaranteed a three-per-cent return in annual interest. As the offering dates and interest rates of these rentes shifted, their prices fluctuated in relationship to one another.

Somewhere among the traders lurked a young man named Louis Bachelier. Although he was born into a well-to-do family—his father was a wine merchant and his maternal grandfather a banker—his parents died when he was a teen-ager, and he had to put his academic ambitions on hold until his adulthood. Though no one knows exactly where he worked, everyone agrees that Bachelier was well acquainted with the workings of the Bourse. His subsequent research suggests that he had noted the propensity of the best traders to take an array of diverse and even contradictory positions. Though one might expect that placing so many bets in so many different directions on so many due dates would guarantee chaos, these expert traders did it in such a way as to decrease their risk. At twenty-two, after his obligatory military service, Bachelier was able to enroll at the Sorbonne. In 1900, he submitted his doctoral dissertation on a subject that few had ever researched before: a mathematical analysis of option trading on rentes.

Bachelier’s dissertation, “The Theory of Speculation,” is recognized as the first to use calculus to analyze trading on the floor of an exchange, and it contained a startling claim: “I have in fact known for several years that it would be possible . . . to imagine transactions where one of the parties makes a profit at all prices.” The best traders on the Bourse knew how to establish an intricate set of positions designed to protect themselves no matter which way or at what speed the market might move. Bachelier’s process was to separate out each element that had gone into the complex of bets at different prices, and write equations for them. His committee, supervised by the renowned mathematician and theoretical physicist Henri Poincaré, was impressed, but it was an unusual thesis. “The subject chosen by M. Bachelier is rather far away from those usually treated by our candidates,” the report noted. For work that would unleash billion-dollar torrents into the capital pools of future hedge funds, Bachelier received a grade of honorable instead of très honorable. It was a B.

Needless to say, Bachelier’s views of math’s application to finance [published in 1900] were ahead of his time. The implications of his work were not appreciated, much less exploited, by Wall Street until the nineteen-seventies, after his dissertation was discovered by the Nobel Prize winner Paul Samuelson, the author of one of the best-selling economics textbooks of all time, who pushed for its translation into English. Two economists, Fischer Black and Myron Scholes, read the work and, in a 1973 issue of the Journal of Political Economy, published one of the most famous articles in the history of quantitative finance.

Based on Bachelier’s dissertation, the economists developed the eponymous Black-Scholes model for option pricing. They established that an option could be priced from a set-in-stone mathematical equation, which allowed the Chicago Board Options Exchange (C.B.O.E.), a new organization, to expand their business to a new universe of financial derivatives. Within a year, more than twenty thousand option contracts were changing hands each day. Four years after that, the C.B.O.E. introduced the “put” option—thus institutionalizing the bet that the thing you were betting on would lose. “Profit at all prices” had joined the mainstream of both economic theory and practice…

From the remarkable story of the French dissertation that inspired the strategies that guide many modern investors ad al that it has wrought: “A Brief History of the Hedge Fund.”

Spoiler alert: it hasn’t always worked out so well (c.f. Long-Term Capital Management)… at least for investors. As Janet M. Tavakoli observed in Structured Finance and Collateralized Debt Obligations: New Developments in Cash and Synthetic Securitization

Hedge funds have made massive leveraged credit bets, knowing that their upside is billions in fees and their downside is millions in fees.

Benjamin Graham

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As we ruminate on risk, we might recall that it was on this date in 2020 that the Federal Reserve rode in to rescue financial markets to prevent their complete freezing up– which could have entered history books as another global mega-crash. The Dow Jones stock market index had hit an all-time record of 29,551 on February 12, 2020. Then, the coronavirus emerged in earnest in the U.S., unemployment soared, and on March 9 the DJIA took a dive of over 2,000 points; it continued to fall, down to 18,321 on March 23… at which point the Fed intervened, pouring vast sums of cash into the financial system, resulting in a stock market bonanza in the midst of the worst economic collapse since the Great Depression. The Dow stands at this writing at over 35,000.

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“Nothing turns out to be so oppressive and unjust as a feeble government”*…

Yes, the private sector deftly turned publicly-funded technologies into commercial successes, and there was a place for individual genius in that. But those successes were also built on long hours by tens of thousands of engineers (many of them immigrants, many of whom went to public schools). The Ayn Rand image of the solo entrepreneur — Hank Reardon toiling alone in his laboratory to invent a new kind of steel — is a pernicious deception.

Myths have their place, and America’s worship of individual innovators inspires real achievement. The opportunity for success attracts the ambitious and those willing to work hard, like my parents, along with millions of others who land on American shores. But the myth becomes a liability when society becomes so enamoured with the idea of individual success that it forgets, and even attacks, the very institutions that enable it…

The efficiency of public-sector programmes can be seen all the time. An American family with an annual income of $52,000 per year pays approximately $16,000 a year in federal, state, and local taxes. In exchange, that family gets roads, public schools, environmental protection, national security, fire, and police. Try assembling that as a package of private services and see what it costs.

Antipathy to government institutions is often called “conservatism,” but it bears no resemblance to any principled tradition by that name. Conservatism is rooted in a respect for institutions. Its intellectual founding father, Edmund Burke, wrote, “Nothing turns out to be so oppressive and unjust as a feeble government.” The observation comes from his most famous work, a criticism of the anti-institutional, pro-individualism of the French Revolution and the bloody terror that followed. There is plenty to criticise about the American administrative state, but idolatry of the individual is hardly a true “conservative” critique.

Nor can the current, degraded notion of freedom be found in the works of America’s founders. The premise of the Declaration of Independence is not simply that our rights are “self-evident” but that “to secure these rights, Governments are instituted among Men.” This is to say, the founders respected “government” — they saw the state as a vehicle to guarantee freedom. In the years after the American Revolution, those who fought for liberty spent the rest of their lives progressively strengthening the central government they had formed in order to secure that freedom. Their legacy is the stability and prosperity we have come to take for granted. The exaggerated emphasis on individualism imperils their achievements.

In the U.S., Covid-19 did not find an exceptional country. Instead, the virus found a land of individuals — too many of them poor, overweight, under-educated, and overly imprisoned. It found underfunded institutions and a population teeming with a sense of entitlement rather than community.

What separated America from countries that staunched Covid-19 is neither size nor geography. China has the world’s largest population (Wuhan has more people than New York City). And though many countries that did well are islands, oceans offer scant protection from a pandemic. (The first person to die of Covid-19 in Iceland was an Australian, and the virus reached America from China and Europe, not Mexico or Canada.) No common political system or cultural tradition links the successful countries.

America’s response was inept because the institutions designed to protect the public failed or were enfeebled. At almost every level of society, people chose individual convenience over collective well-being.

What can be done to reverse the country’s self-destructive course, and to repair and prepare? America should use the pandemic as a turning point for renewal. Just as the human immune system develops antibodies from one viral infection to fight off another, Covid-19 presents us with the opportunity to build “societal antibodies” — practices to fend off the contagious disease of selfishness.

The country needs a “Corona Corps.” Similar to the armed forces or the Peace Corps, it would consist of people largely aged 18 to 24, trained and equipped to fight the virus. The Corps would conduct contact tracing, staff testing, and vaccination centers, and work with people required to isolate, providing anything from food delivery to a sympathetic ear. Corona Corps members could not only be paid but could also earn credits to reduce tuition and lower their debt — as well as gain experiences that serve as an on-ramp to jobs post-graduation.Once the virus is tamed, we should transition Corona Corps into a robust national service programme. 

A second reform is our tax system — a government function that is fundamental to all public programmes, but which has been ravaged by our disregard for the state institutions. Allowing the super-wealthy 0.1 percent to enjoy a greater share of spoils while we cut their taxes is not the hallmark of a functioning society. 

Regardless of the tax rules we adopt, administering them requires an efficient institution — and America’s Internal Revenue Service has been severely underfunded. A recent congressional report estimated that a $100bn investment in tax enforcement would take in $1.2trn — yes, trillion — in revenue over the next decade.

But the bigger point is that we must pursue a cultural shift: a renewed recognition of the value of institutions, and of the balance between the individual and the community in a prosperous society. Certainly, people should complain about the arcane and sometimes onerous regulations that hamper entrepreneurship — at the point of contact, institutions often feel like friction, like something to be avoided. Yet we must also recognise that beyond disagreements over the size and specifics of government institutions, those institutions are essential and honourable — as are the people who serve in them.

Individualism is embedded in America’s cultural identity, but it is a sign of national character to act together as a community. 

An excerpt from an essay by Scott Galloway (@profgalloway): “Institutions,” eminently worth reading in full. Indeed, this piece is a slightly-abridged version of “Scott Galloway on recasting American individualism and institutions” in The Economist (but behind their paywall).

See also the apposite (but differently-focused) piece by Scott’s NYU colleague, Davis Stasavage: “Lessons from all democracies.”

* Edmund Burke, Reflections on the Revolution in France

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As we seek a middle path, we might recall that it was on this date in 44 BCE, that Casca and Cassius decided that Mark Antony (Marcus Antonius) should not be killed with his ally Julius Caesar in the assassination planned for the next day; rather, that he should be waylaid so as not be in Senate at the time. It was the conspirators’ undoing.

They believed Caesar’s death would restore the Republic. But Caesar had been immensely popular with the Roman middle and lower classes, who became enraged upon learning a small group of aristocrats had killed their champion. Antony, as the sole consul, soon took the initiative and seized the state treasury. Calpurnia, Caesar’s widow, presented him with Caesar’s personal papers and custody of his extensive property, clearly marking him as Caesar’s heir and leader of the Caesarian faction. Antony negotiated a crafty compromise with the conspirators… then, on March 20th, gave his famous speech at Caesar’s funeral– which ended with Antony’s brandishing of Caesar’s blood-satined toga… Several buildings in the Forum and some houses of the conspirators were burned to the ground. Panicked, most of the conspirators fled Italy. The few remaining– including Brutus and Cassius– were assigned distant (and relatively menial) posts in Sicily and Asia by Antony “for their own protection”; insulted, they fled instead to Greece.

George Edward Robertson, “Marc Antony’s Oration at Caesar’s Funeral”

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“An imbalance between rich and poor is the oldest and most fatal ailment of all republics”*…

In a stark sign of the economic inequality that has marked the pandemic recession and recovery, Americans as a whole are now earning the same amount in wages and salaries that they did before the virus struck — even with nearly 9 million fewer people working. 

The turnaround in total wages underscores how disproportionately America’s job losses have afflicted workers in lower-income occupations rather than in higher-paying industries, where employees have actually gained jobs as well as income since early last year.

In February 2020, Americans earned $9.66 trillion in wages and salaries, at a seasonally adjusted annual rate, according to the Commerce Department data. By April, after the virus had flattened the U.S. economy, that figure had shrunk by 10%. It then gradually recovered before reaching $9.67 trillion in December, the latest period for which data is available. 

Those dollar figures include only wages and salaries that people earned from jobs. They don’t include money that tens of millions of Americans have received from unemployment benefits or the Social Security and other aid that goes to many other households. The figures also don’t include investment income… 

The figures document that the vanished earnings from 8.9 million Americans who have lost jobs to the pandemic remain less than the combined salaries of new hires and the pay raises that the 150 million Americans who have kept their jobs have received.

The job cuts resulting from the pandemic recession have fallen heavily on lower-income workers across the service sector— from restaurants and hotels to retail stores and entertainment venues. By contrast, tens of millions of higher-income Americans, especially those able to work from home, have managed to keep or acquire jobs and continue to receive pay increases.

“We’ve never seen anything like that before,” said Richard Deitz, a senior economist at the Federal Reserve Bank of New York, referring to the concentration of job losses. “It’s a totally different kind of downturn than we’ve experienced in modern times.”

The figures also underscore the unusually accelerated nature of this recession. As a whole, both the job losses that struck early last spring and the initial rebound in hiring that followed have happened much faster than they did in previous recessions and recoveries. After the Great Recession, for example, it took nearly 2 1/2 years for wages and salaries to regain their pre-recession levels…

One reason why the job losses have had relatively little impact on the nation’s total pay is that so many of the affected employees worked part time. The average work week in the industry that includes hotels, restaurants and bars is just below 26 hours. That’s the shortest such figure among 13 major industries tracked by the government. The next shortest is retail, at about 31 hours. The average for all industries is nearly 35 hours. 

The recovery in wages and salaries helps explain why some states haven’t suffered as sharp a drop in tax revenue as many had feared. That is especially true for states that rely on progressive taxes that fall more heavily on the rich. California, for example, said last month that it has a $15 billion budget surplus. Yet many cities are still struggling, and local transit agencies, such as New York City’s subway, have been hammered by the pandemic.

The wage and salary data also helps explain the steady gains in the stock market, which have been led by high-tech companies whose products are being heavily purchased and used by higher-income Americans, such as Apple iPads, Peloton bikes, or Amazon’s online shopping.

This week, the New York Fed released research that underscored how focused the job losses have been. For people making less than $30,000 a year, employment has fallen 14% as of December. For those earning more than $85,000, it has actually risen slightly. For those in-between, employment has fallen 4%… 

Some companies have cut wages in this recession, but on the whole the many millions of Americans fortunate enough to keep their jobs have generally received pay raises at largely pre-recession rates. Some of those income gains likely reflect cost-of-living raises; the Commerce Department’s wage and salary data isn’t adjusted for inflation…

Truman Bewley, a retired Yale University economist who wrote a book about the concept of sticky wages, said that most companies have a key core of workers they rely on through hard times and are reluctant to cut pay for them. 

And there’s another reason, Bewley said, why many companies cut jobs instead of pay. While researching his book, he said a factory manager told him why his company did so: “It gets the misery out the door.”  

More at: “Sign of inequality: US salaries recover even as jobs haven’t.”

See also “More Than 33 Million Americans Have Filed for Unemployment During Coronavirus Pandemic.” source of the image above.

And to compare the U.S. to other countries, try this nifty interactive visualization.

* Plutarch

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As we examine equity, we might send foundational birthday greetings to Pierre le Pesant, sieur de Boisguilbert; he was born on this date in 1646. A French lawmaker and a Jansenist, he is best remembered as one of the inventors of the notion of an economic market– he championed free trade in opposition to Colbert‘s mercantilist views (which generated government revenues through duties and tariffs).

But he is also noteworthy as the champion of a single tax on each citizen (in lieu of all tariffs, customs, and other trade-related fees) that in some ways presaged Henry George‘s proposals.

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“Don’t be afraid to break things. Don’t be romantic. Don’t take the time to breathe. Don’t aim for perfect. And whatever you do, keep moving.”*…

Eric Feigl-Ding picked up his phone on the first ring. “Busy,” he said, when asked how things were going. He had just finished up an “epic, long” social media thread, he added — one of hundreds he’s posted about society’s ongoing battle with the coronavirus. “There’s so many different debates in the world of masking and herd immunity and reinfection,” he explained, among other dimensions of the pandemic. “We at FAS, we’ve been kind of monitoring all the debates and how we’re seeing signals in which the data goes one way, the debate goes the other,” he said, referring to his work with the Federation of American Scientists, a nonprofit policy think tank. He rattled off a rapid-fire sampler of hot-button Covid-19 topics: the growing anti-vaxxer movement, SARS-CoV-2 reinfection and antibodies, the body of research suggesting masks could decrease viral load, along with a quick mention of the debate among experts about what “airborne” means.

This whirlwind tour through viral Covid-19 themes felt like the conversational equivalent of Feigl-Ding’s Twitter account, which has grown by orders of magnitude since the dawn of the pandemic. The Harvard-trained scientist and 2018 Congressional aspirant posts dozens of times daily, often in the form of long, numbered threads. He’s fond of emojis, caps lock, and bombastic phrases. The first words of his very first viral tweet were “HOLY MOTHER OF GOD.”

Made in January, weeks before the massive shutdowns that brought U.S. society to a halt, that exclamation preceded his observation that the “R0” (pronounced “R-naught”) of the novel coronavirus — a mathematical measure of a disease’s reproduction rate — was 3.8. That figure had been proposed in a scientific paper, posted online ahead of peer review, that Feigl-Ding called “thermonuclear pandemic level bad.” Further in that same Twitter thread, he claimed that the novel coronavirus could spread nearly eight times faster than SARS.

The thread was widely criticized by infectious disease experts and science journalists as needlessly fear-mongering and misleading, and the researchers behind the pre-print had already tweeted that they’d lowered their estimate to an R0 of 2.5, meaning that Feigl-Ding’s SARS figure was incorrect. (Because R0 is an average measure of a virus’s transmissibility, estimates vary widely based on factors like local policy and population density; as a result, researchers have suggested that other variables may be of more use.) He soon deleted the tweet — but his influence has only grown.

At the beginning of the pandemic, before he began sounding the alarm on Covid-19’s seriousness, Feigl-Ding had around 2,000 followers. That number has since swelled to over a quarter million, as Twitter users and the mainstream media turn to Feigl-Ding as an expert source, often pointing to his pedigree as a Harvard-trained epidemiologist. And he has earned the attention of some influential people. These include Ali Nouri, the president of FAS, who brought Feigl-Ding into his organization as a senior fellow; the journalist David Wallace-Wells, who meditated on Feigl-Ding’s “holy mother of God” tweet in his March essay arguing that alarmism can be a useful tool; and former acting administrator of the Centers for Medicare and Medicaid Services Andy Slavitt. (“We all learn so much from you,” he tweeted at Feigl-Ding in July.) Ronald Gunzburger, senior adviser to Maryland Gov. Larry Hogan, even wrote a letter to Feigl-Ding attesting to how his “intentionally provocative tweet” in January “elevated the SARS-CoV-2 virus to the top of our priorities list.”

But as Feigl-Ding’s influence has grown, so have the voices of his critics, many of them fellow scientists who have expressed ongoing concern over his tweets, which they say are often unnecessarily alarmist, misleading, or sometimes just plain wrong. “Science misinformation is a huge problem right now — I think we can all appreciate it — [and] he’s a constant source of it,” said Saskia Popescu, an infectious disease epidemiologist at George Mason University and the University of Arizona who serves on FAS’ Covid-19 Rapid Response Taskforce, a separate arm of the organization from Feigl-Ding’s work. Tara Smith, an infectious disease epidemiologist at Kent State University, suggested that Feigl-Ding’s reach means his tweets have the power to be hugely influential. “With as large of a following as he has, when he says something that’s really wrong or misleading, it reverberates throughout the Twittersphere,” she said…

A scientist has gained popularity as Covid’s excitable play-by-play announcer. But some experts want to pull his plug: “Covid’s Cassandra: The Swift, Complicated Rise of Eric Feigl-Ding.”

* Social media “influencer” Gary Vaynerchuk

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As we interrogate influence, we might send bombastic birthday greetings to Ted Knight; he was born on this date in 1923. An actor and comedian, he was well-known as Henry Rush in Too Close for Comfort, and Judge Elihu Smails in Caddyshack; but he is surely most famous for his role as newscaster Ted Baxter on The Mary Tyler Moore Show.

THE MARY TYLER MOORE SHOW, Ted Knight, Mary Tyler Moore, 1970-1977

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“Since the nation is defined by its inherent virtue rather than by its future potential, politics becomes a discussion of good and evil rather than a discussion of possible solutions to real problems”*…

Nathan Tankus (@NathanTankus) put his undergraduate studies at John Jay College of Criminal Justice on hold to become a full-time economics writer and researcher (he is Research Director at The Modern Money Network). He has been a visiting researcher at the Fields Institute and a research assistant at the University of Ottawa. He has also written for the Review of Keynesian Economics, Truthout and the financial blog Naked Capitalism. But he’s perhaps best known for (and most closely-followed on) his newsletter Notes on the Crises, from whence…

The election has come and gone, a winner has been announced and now the fallout begins. While the details are still being hashed out, and president Trump along with most of the Republican party are not accepting the results (at least not yet), my interest is not so much in the near term partisan fights but the implications of what’s happened for the future of the Coronavirus Depression. To understand this, we must look to the results in the U.S. senate. What we find there is an exceedingly mixed result. Republicans have 50 seats, Democrats have 48 seats and the final results will come from two senate runoff elections in Georgia. Even if the Democrats win those two races, that thin margin would require each and every senator to agree to pass whatever they want to pass. As I said in my pre-election piece:

This means we could possibly go until February 2021 before seeing another economic package. Worse, that package may even require a Democratic senate to become law. It’s possible that even that scenario is optimistic — it could then take a significant amount of time for Democrats to agree on a package among themselves. What happens to millions upon millions of people in that agonizing waiting period? A winter filled with a third wave of Coronavirus and no economic support to individuals is a recipe for absolute disaster — over 200,000 Americans have already died.

Since I wrote this the third wave of Coronavirus has taken off and it seems more likely than ever that we will not have an economic package passed in February. In other words, I worry that fiscal cliffication is just going to intensify. Indeed, it’s hard to imagine anything being able to break it at this point. The 2022 midterms are a long time away and there is no guarantee that the outcome would break the deadlock. We’ll likely see some sort of package go through congress in 2021 but it will very likely not be timely as the most optimistic scenarios laid out above had hoped. Meanwhile, the need is no less…

There are some overly rosy possible scenarios circulating financial twitter that make reviewing the unemployment situation important. Headline unemployment is still elevated but it is no longer at the high levels of the spring. However, this hides the damage that is happening underneath. Headline unemployment has mostly been driven by the behavior of temporary layoffs… But the real damage is in the permanent job losses.

The distinction between temporary layoffs and permanent job losses is very underemphasized in economic reporting and has led to the underlying economic damage from being missed in a lot of economics coverage. My colleagues Alex Williams and Skanda Amarnath at Employ America did a great job of making this point in their piece “The Shock and The Slog” last month. While there has been a lot of recovery in temporary layoffs, there has been a steady increase in permanent layoffs and it will likely keep on increasing as more businesses shutter and the effects of expanded benefits start filtering through the economy (and our economic data). It’s also important to emphasize that labor force participation of individuals 15-64 has only partially recovered from a very steep drop, which makes headline unemployment appear rosier than it is.

Worse still, the third wave of Coronavirus is in full swing. New York City schools could be shut as early as Monday, and indoor dining should probably already be shut. This second wave of shutdowns will be more economically harmful than the first wave because any savings they had were exhausted by the first wave and it is most likely that most affected businesses have already exhausted their access to credit (and perhaps even their willingness to take on more debt). It’s likely that the second wave of shutdowns will accelerate permanent job losses while the temporary job losses generate renewed drops in demand. In other words, the economic situation has still been deteriorating and it will likely get hammered at a time where fiscal support is, at best, months away.

In this context, the only game left in town is the Federal Reserve. Taking on responsibility for state and local governmental responses is the last thing that the Federal Reserve wants to do. However, the Federal Reserve has a mandate to to pursue maximum employment and price stability and meeting its maximum employment mandate requires it to use the tools it has available to do so…

Why the Fed is the last, best hope against post-Corona economic devastation and how that might work: “What is the Future of Fiscal Policy Now That the Election is Over?

* “In the politics of eternity, the seduction by a mythicized past prevents us from thinking about possible futures. The habit of dwelling on victimhood dulls the impulse of self-correction. Since the nation is defined by its inherent virtue rather than by its future potential, politics becomes a discussion of good and evil rather than a discussion of possible solutions to real problems. Since the crisis is permanent, the sense of emergency is always present; planning for the future seems impossible or even disloyal. How can we even think of reform when the enemy is always at the gate?” – Timothy Snyder, On Tyranny: Twenty Lessons from the Twentieth Century

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As we muse on Modern Monetary Theory, we might recall that it was on this date in 1994 that Noel Edmonds appeared on BBC television to announce the winning numbers in the first UK National Lottery. the draw was 30, 3, 5, 44, 14 and 22; the bonus was 10; and seven jackpot winners shared a prize of £5,874,778.

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