John Mauldin apologies to the Federal Reserve and says radical action is required to combat the coronavirus pandemic

John Mauldin apologies to the Federal Reserve and says radical action is required to combat the coronavirus pandemic
Fighting coronavirus is "a battle that could turn into a war."

By John Mauldin*

This is a short midweek note, something I haven’t done for years. But as we all know, these are very special and difficult times.

Below, I’ll give you two links. They describe the nature of the new coronavirus pandemic and its potential consequences. I have run this past the best medical professionals I know, and they agree.

I was critical of the Federal Reserve for its emergency moves last Sunday. I now assume they had the same information that I’m giving you today. They weren’t panicking, they were trying to get ahead of the situation, going where we know we need to go and doing it now. Good on them. I apologize for my criticism.

Without radical action (some of which is already happening, some places, but not enough), this pandemic could cost many lives and potentially launch an economic depression. I am not exaggerating when I say this. I really mean it.

That doesn’t have to happen. We can solve this. That is what we as Americans or British or Italian or Chinese do. That is what we as humans do. We come together in a crisis.

But it will mean that we have to treat this situation not as an emergency, but as a battle that could turn into a war. World War C. It will be costly and require extraordinary measures, even if we act quickly. This weekend, I will explain why we should forget about balancing the budget, not unlike we did in World War II. I will say things I never thought John Mauldin would ever think or say, let alone write.

In the meantime, I urge you to read the following links and understand the urgent need for extraordinary actions in terms of social distancing. It will come at a terrible cost for much of the country, but if we do it now, we can get through this crisis quickly.

Consider how South Korea, Singapore, and Hong Kong have fared. Swift, comprehensive actions work. And as in a war, we must bear this financial and lifestyle burden together, understanding it will have consequences. The longer we delay, the higher the costs will be.

It is not that I think my ideas are any better than others being proposed, but I will offer some philosophical underpinnings and ideas that can guide us. And I will argue that proposals I have read so far, which may change by this weekend, are inadequate to deal with the nature of the crisis. They merely seem radical in terms of what we have done in the past of those alive. It is not radical if we are to avoid a World War II type of situation.

I am proposing that we do not think outside of the box. We must get rid of the box.

The data below clearly indicates we must take action. That action is going to cost a great deal of people and businesses a great deal of money, time, and blood. The sooner we take action, the lower the cost will be.

This first link talks about the consequences of delaying serious social distancing and quarantine policies, even for one more day. I believe the math and science are overwhelming. And that means you, gentle reader, must take action today for your own family. If you are in a position of power, you must take action for your community or your business. Focus on the actions that will make a difference today and be ready to adapt further as we see how the battle is unfolding.

Coronavirus: Why You Must Act Now

Let me call out my own home state. As of this morning, Dallas has basically shut everything down. Fort Worth, on the other hand, is letting bars and restaurants open with six foot distancing. Fort Worth is putting Dallas and everyone else in the region at risk. Maybe in hindsight, we will find out that Fort Worth was right. However, given the data, can we risk it? Governor Abbott, I know you read my letter. Take charge and kick some Texas ass.

This second link describes a study by the Imperial College in Britain. A link to more detailed data is in the article. Basically, without drastic action now, it is possible a million Americans will die, and potentially even more. Again, the actions we take today can drastically impact what we can and cannot do a few weeks from now. It is very sobering.

Sobering Prediction

Bluntly, this is going to cost more than a few trillion dollars. It will have unpleasant financial consequences for a very long time. So did World War II. But acting quickly will cut that cost in terms of life and spending. The consequence of not dealing with it financially, let alone medically, will be a depression and an unacceptable loss of life and economic support for millions of people.

Longtime readers know I am the “Muddle Through" economist. But this is not a Muddle Through scenario.

Again, I urge you to read the links, think about your own personal situation, and this weekend we’ll talk about what we must do as a nation.

It is time for our own Greatest Generation to step up. Only this time, it needs to be all of us.

For those of you who are Tolkien and Lord of the Rings fans, it is time to light the signal fires and muster the Rohirrim. I can never watch that 30-second scene with a dry eye.

It is time for us to light our own signal fires and muster our own courage. God knows we will need to support the front lines who go into harm’s way to keep the country running.

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Plenty of upside already....we succesfully deported the entire NZ Warriors league organisation to Australia! Keep them, we don't want them back and its sweet revenge for all those 501 category visa deportations! Also, the long past used by date Super Rugby looks to be compost, finally! Pretty soon we'll have a completely nationalised airline again, hopefully its rejigged with a socially responsible pricing structure and actually will fly to all parts of NZ again, affordably!

Yes glad to see rugby off the screens.

When I saw the All Black Coach threaten to take a young reporter out the back and bash him after the young guy asked a hard question that needed to be asked after the mickey mouse World Cup but all the regular sycophants shied away from I know NZ will be better off now. Hardly any news channel commented on what the Untouchable Hansen did.

...and now I gather the thug has been knighted. What is wrong with NZ?

Auntie Helen was right to strap the knighthood and dames.

The reality is they get given out to most of the wrong people, by the wrong people, and as evidence mounts are a stay out of jail free card.

In times like these, you will see real leaders; volunteers that step up and donation their time for community causes. Very few paid (handsomely) to do the same fall into this category..


I agree about all the extraordinary measures needed but does everything really have to be termed a "war on..."? War on terror, war on drugs, war on everything. Is that still the only way to get action? I see Trump was quick to go there yesterday, with his particularly disgusting "war on the Chinese virus", like invoking China and war together would help with Americans' support.

I think its consistent with the broadly fascist times we live in. You can include war in the poor in that too. Contrast to the more caring 70s and 80s where every thing seemed to be in aid of a cause till neoliberalism made everyone aid, live aid, farm aid. How about Corona aid? Whats Sir Bob doing these days?

I think it started with Thatcher and Reagan (and Roger Douglas) in the 80s. (TINA - There Is No Alternative, to individualistic neoliberal policies).


Time the main benefactors of this flawed neo-liberal economic theory fronted up with some solutions.

I'm give you a major part of the answer. Regulate banks so they can only lend locally on what they take as deposits locally, and at no interest; but a one off cost for the service. We might then have a sustainable model, rather than lowering interest to pay for interest that people cant afford in the first place.

I don't think Reagan would be impressed with what has evolved..for him it was about 'we the people'. Not 'us the bankers', or 'us the property investors'.

The west was knackered and it was apparent to all that when the shouting and screaming died down after the GFC the ones that had caused it by largely illegal actions didnt go to jail, they received bonuses instead. When Hisco got given his housing bung and NZ said it was OK I though then we are maybe Fd again. Then Cruella, who was one of the leading protagonists, got made head of ANZ. Then I knew we were really Fd. The The only worse appointment would have been the Dutch fool from Fonterra.

I think I heard that he also called himself a great "wartime President". Gotta laugh, he's writing history about himself in advance.

Well Kate FDR he ain’t. That war cabinet drew on the most able such as Harry Hopkins and even staunch Republicans such as Henry Stimson. Don’t think Mr Trump has any mood for that scenario. And Lincoln managed a team that consisted predominantly of previous rivals of his for the presidency. Will history fondly remember Trump in the same light. Divide and rule hardly a good platform for that.

Ah well, it is, after all, the winner who writes history, but I think if comes down to tin tacks (which I am increasingly thinking it might) I'm not sure that it will be D Trump writing it.

There are always wheels within wheels. This is not the black death. More are surviving the virus than dying. Those that are dying are mostly the vulnerable. Elderly, pre-existing health issues, low immunity for instance. They are the ones that need to get out of, or be taken out of, harms way as a priority. If at all possible, they have to take that responsibility themselves first.

Yeah, it's been my thought as well.

Madness; Lets hope that NZ doesn't go this far: BBC US jails begin releasing prisoners to stem Covid-19 infections. "US jails are to let out inmates as cases of coronavirus infections are being reported in prisons.
New York City is releasing "vulnerable" prisoners, the mayor said on Wednesday, days after Los Angeles and Cleveland freed hundreds of inmates".

Madoff and Weinstein will probably be first out the gate. They didn't even need to kill Epstein. They could have just waited a few months.

Well, for starters, in any war setting, there is an intense prioritisation of resources, industries, logistics and supply lines, and people assigned to the most critical categories. So prioritising stuff like food production and distribution, ditto medical supplies, ditto machinery R&M, ditto Security, ditto essential transport like supermarket freighters, and so on. And that means de-prioritising fairly much everything else. Not many barista, travel agents, RE types, and so on.

No sign of any such priority-setting round here, though. Interest, it's worth asking......

War....if that were true someone should nuke China for allowing this to be exported globally.

Yes, CCP is responsible. perhaps rest of world can claim compensation-not for market collapses, but for cost to governments. holding back information in the first instances has let to many war crimes.

Yet Keith Woodford with his Epidemiology PHD from Hoskings alumni is praising China on another Interest site "for acting firmly".
This is after they sat on the Wuhan Flu for a month and imprisoned heroic whistleblowing doctors.

Compromised I believe by his Chinese connections.

I think their comeuppance (if any) will be in the form of global supply chains taking some of their business to other countries as insurance.

War like situation and uncertain future still RE Agents are trying to raise FOMO.......real shame.

Completely agree with you John.

After some self-delusion the conclusion I was forced to draw is that there is no more palatable alternative available to us, no "plan B" allowing us to turn away and no time for us to dither. The cause is worthy and the moment to unite behind action is now.

Share the burden together? - Liked JM sarcasm, will never happened with capitalism, the greed pattern is always that, focus tunnel vision to achieve their target prey hence the result is unlikely to be shared, not much differ than certain predatory animals. It's instinctive level. And too much drawing generic points about S/Korea, Singapore & Hong Kong - firstly their demographics size, then their societal culture, then.. most importantly evolution of stringent, filtered selection of highly educated, capable, experienced leaderships. The last one? how many do you observe exist in the likes of OZ, NZ?, local body politicians, line of CEO, COO, CFO, CIO, layer upon layer of incompetent Managers which loves meeting upon meeting, can't even write, have to be assisted by layers of PA.

Just to be clear. A Princess Lines ship arrived at Wellington port. On Saturday 14 Morning. The same day that the government was about to announce wide-ranging travel restrictions including a ban on cruise ships for 3 months. Onboard the vessel was 5 people with flu-like symptoms. That a doctor deemed serious enough to test for CV19. The test results would have been available at best that next day. Meanwhile, all of the guests were allowed to leave the vessel for shore excursions, shopping etc. Then the next day they were all allowed to go ashore in Napier as well.

And if all Billionaires pull together to make America Grate any cost to themselves....(Some Hopes)...

I posted these same links over a week ago and some people were highly critical.

As I explained. The penny just hadn't/hasn't dropped for you yet. But is either has, or it will soon.

The spirit of that humanity coop, as per JM said..were largely in distance past (eg. WWI & WWII).. it's very sad in the past 20-30yrs of selfish interest, nations greed, cartel behaviour. There's a glimmer of hope with regard to coop in sharing knowledge, to beat this Covid-19 on the healthcare front - But in this highly competitive number game to accumulate wealth? - I'm afraid sharing will not be one of them, the wealth sharing is always come with pre-determined strong future alliances, affiliation. Again turned into a block of self interest.