BACK TO THE PAST? OR BACK TO THE FUTURE?

What you gonna to do when you’re black & blue? ~ Louden Wainwright III 

In an all too real a sense, the coronavirus has forced everyone to grudgingly drop our hubris. Our now-exposed conceit is that we could straightforwardly surmount any issue we’re facing because of our richly “cutting edge” technology, science and vast knowledge. Not this time.

Once again Mother Nature has reminded us, “You are not in control of this situation, I am.” Is it going to be back to the past echoed by the 1918-20 Spanish Flu one more time? Hopefully not, but it does have its rhyming parts.

At this point, it seems we have a choice: Are we going back to the past, or back to the future (admittedly without Doc Brown’s time-travelling DeLorean)? My hope is that with clear, systematic planning and proper policies we can head back to the future, albeit a different one than originally planned.

For thousands of years diseases have challenged our place on Earth. However, for the first time a viral attack is happening with the modern rendition of widespread personal and national globalization as our standard operating practice and with social media instantly available to billions of us.

Virtually everyone has followed the coronavirus’ ruinous voyage ever since it first attacked humanity in Wuhan, China last December. We’ve tallied its daily destructive path via social media. And it’s rapidly turned the world upside down – in no small part because of globalized mass travel and complacent conceit.  

Historically, there have been other journeys that have turned the world upside-down. At the end of the 15th century, Christopher Columbus discovered a “new world.” It took him 7 ½ months to present Queen Isabella and King Ferdinand, his royal venture capitalists, with proof of his success. He offered the monarchs as his testimonials; gold, pearls and aji (South American chili peppers) he had taken from indigenous peoples. For our current viral journey, we haven’t had to wait until mid-July to learn about the coronavirus’ presence in China. We learned about it in real-time.

Shown below are some of the pandemics that have significantly wounded us over a very long time.

PANDEMICS THROUGH THE AGES 

Pandemic	Date	Worldwide Deaths
Black Death/Bubonic Plague	1331-1353	75-200M
3rd Bubonic Plague	1855	10-15M
Spanish Flu	1918-20	50-100M
Spanish Flu in the US	1918-20	675,000
Hong Kong Flu	1968-69	1M
Swine Flu	2009-10	150-500K
Typhus	1489+	11.4M
Smallpox*	18th C –1979	900M
Measles	500AD+	1.3M annually
Malaria	450AD+	2M annually
HIV/AIDS	1980’s+	32M
Coronavirus	As of 4/20/20+	151.0K (US: 36.1K)

*The only infectious human disease ever to be completely eradicated. +Continuing

Sources: Wikipedia and New York Times

The reoccurring Black Death that probably killed 30% to 60% of Europe's population in the 14th Century wasn’t the first human pandemic; the coronavirus pandemic won’t be the last. Why? Because Mother Nature always bats last. Non-flu diseases continue their deadly routs around the world. Over their long history of human calamity, “ordinary” diseases like Typhus, Malaria, Yellow Fever, HIV/AIDS and Measles are responsible for more deaths than any others. Thankfully, only a few of these ordinary diseases are endemic in the US.

The chart above shows the dates these pandemics have occurred, from about 15 centuries ago to the present day. Only in the last century has medical science been able to stifle some of these diseases’ plunder. The victory over Smallpox is an impressive, singular example. A strange Black-Death linkage happened this year when many Christian churches around the world were closed for their April 5th Easter Services. When was the last time Churches closed en masse on Easter Sunday? During the 14th Century Black Death.

Perhaps the 1918-20 Spanish Flu is the most similar pandemic to the current covid-19 virus. They are produced by two different virus types, but they both caused (or are causing) tremendous suffering. I have regretted not asking my father, who was then a teenager in Brooklyn, about his recollections regarding the Spanish Flu medical catastrophe.

The Spanish Flu occurred during WWI, when knowledge of viral diseases was yet to be well comprehended, and was unknowingly carried by thousands of troops in Europe and beyond. One expert estimated that the Spanish Flu killed 218 out of every 100,000 people living on Earth at the time. In the US this flu was first noticed at Ft. Riley, Kansas among returning US Army soldiers.

The US was crippled by this flu that preyed particularly on young adults (unlike covid-19). The average age of a 1918 flu victim was 28. Older adults seemed to have some immunity, again unlike covid-19. The 1918-20 flu was particularly devastating in the high-density, industrial cities in Eastern US, especially in Pennsylvania. More than 17,500 Philadelphians (my original home town) died of this flu in the first six months of 1918; magnified by the city’s holding a giant downtown parade on September 29, 1918. About 200,000 people attended the Fourth Liberty Loan Drive parade that promoted the war effort and public purchases of war bonds. Floats displayed the latest locally-built additions to America’s arsenal. Within three days, every bed in Philadelphia’s 31 hospitals was filled with Spanish Flu victims. This flu struck in three distinct waves. In Philadelphia, the case fatality rate was a colossal 37%. By the end of this flu’s rampage over 60,000 Pennsylvania residents lost their lives. [At this point, 1,285 Pennsylvanians have succumbed to covid-19.] Many epidemiologists believe the Spanish Flu is still with us; over time it has metamorphosed into the seasonal H1N1 flu.

The “novel” characteristics of the current coronavirus mean we don’t yet have any way of directly alleviating its damage; mitigation persists as our only means of fighting covid-19. In stark terms, it’s 6-feet apart or 6-feet under. The frenetic, on-going efforts to produce a coronavirus vaccine won’t be finished for at least 12-18 months under the best of circumstances. Success is not guaranteed despite our knowledge and technology. So far, every nation including ours has been fighting a defensive battle against this virus by attempting to flatten the curve.

Illustrating the global scope of relevant experience, Liberian Tolbert Nyenswah, who ran one of the most successful contact tracing efforts in Africa during the 2014-16 Ebola epidemic, said “All people are talking about right now is hospital beds, ventilators, testing, testing, testing. Yes, those are important, but they are all reactive. You are dealing with the symptoms and not the virus itself. You will never beat a virus like this one unless you get ahead of it. America must not just flatten the curve but get ahead of the curve.” A growing number of knowledgeable people have united around a test-trace-quarantine strategy, while we wait, hopefully, for an effective vaccine. Before a vaccine becomes available maybe by the end of next year, testing is the most essential tactic for managing the coronavirus.

The initial CDC-designed and assembled coronavirus test proved unreliable, due to its complexity and mis-fabrication (which it only admitted later). It failed to follow Occam’s razor with tragic consequences. The wheels of government always turn slowly: The Administration once promised that 27M tests would be available by the end of March. After this disastrous start, only 3.56M tests have been conducted through April 17.

There has been worthy, wide-spread criticism leveled at #45 and his obsequious associates for not definitively planning how to combat this coronaviral pandemic. His autarkical approach is doomed. I’m reminded of a well-known quote from #34, Dwight D. Eisenhower; “Plans are worthless, but planning is everything.” The current president doesn’t believe in either planning or plans. He’s an all-too-sterling member of the “Ostrich Alliance;” world leaders who have kept their heads firmly planted in the sand with respect to fighting the coronavirus. [FYI: The Ostrich Alliance also includes President Gurbanguly Berdymukhammedov of Turkmenistan; say his name just one time fast.]

We are all suffering because #45’s viral testing efforts are wholly insufficient. Such efforts are vital for reviving our comatose economy that he alleges to care about. Apparently, he’s decided to toss the testing “ball” into the states’ court of already-filled unfunded responsibilities rather than offer any real leadership or support. His decisions are senseless, reckless and irresponsible.

The viral policy contest between epidemiologists and economists has now become more heated. More than 22 million people have filed for unemployment benefits in the past month, 15% of our labor force. The coronavirus’ consequent economic turmoil is growing ever-larger. The US labor market is beyond black & blue. Which has amplified the calls for “opening up” the economy, that in turn has increased appeals/pleas for additional, much-needed federal funds for covid-19 and serology (antibody) testing, equipment and personnel. When is such fiscal relief coming? Astonishingly, the president hasn’t said. Congress should halt its politicking, and get dollars into the pockets of suffering people and businesses.

Economists predict the unemployment rate will rise to at least 15% by May, a level last seen 81 years ago. A gaggle of GDP forecasts for the second quarter range from dreadful (-8%) to disastrous (-15%), portraying an abysmal near-term future. Consumer spending, the single largest part of GDP, is also black & blue and expected to drop at least 14%. Macroeconomic policies are needed to bring our economy out of its coma. But no one knows when they should begin, without causing a second wave of deaths.

From an ivory-tower macroeconomic perspective, the sizeable federal funding that has already been provided, with more in the offing, is affording a tragic, real-time test of nascent Modern Monetary Theory (MMT). MMT posits there won’t be much if any inflationary consequence from the giant, supplementary monetary (and fiscal) policy expansions that have happened within the last three weeks. Many doubt the MMTers.

We are all debt-heads now. Every single dollar of expanded federal, state and local government expenditures that’s fighting the coronavirus is debt-financed. The federal government is expected to increase its deficit-financing by $4 trillion (T) dollars this year alone, a deficit that’s two times as big relative to GDP in any year since WWII ended. Business’ borrowing is also at record levels, and their credit lines are being depleted. Over the past decade households’ debt levels have also greatly increased. To counter this, the Federal Reserve has reduced interest rates to zero and provided more than $2T in loans to banks.

Total government, business and household debt is now 224% of our GDP, a worrying all-time high. Macroeconomic textbooks state in normal times such vastly-increased debt could create increased inflation and topple our economy’s now fragile house of cards. And, of course, these are not normal times at all.

The president’s shouts to immediately “liberate” states from the shackles of Sheltering-in-Place (ShiPing) orders demonstrate his total inability to properly lead our nation. His path will take us back to the past.

Economic and other policy-makers who value peoples’ well-being and public health strongly caution against suddenly stopping the states’ and localities’ mitigation efforts now, despite the economy’s strong recessionary drift. They aptly believe using data from broadly increased testing (at some point) should ultimately foretell when governors can more safely relax their ShiPing rules, and mitigate another covid-19 resurgence. This is the path back to the future.

TOILET PAPER, CHICKS AND GOLD BARS

I’m not counting any chickens. ~ Jeff Bridges  

How’s your Sheltering-in Place (Sh-i-P) coming along? We’ve been at it since Monday, March 16, which seems like... The SF Bay Area counties now have extended their Sh-i-P orders through May 3. Further extensions, with masks, are only a matter of time.

Don’t worry, this blog doesn’t get within 6 feet (or should it be 27 feet, see here) of casting judgement on how rigorously any of us are following our Sh-i-P rules. It is only semi-virus-related so I consider it mildly other-worldly, since covid-19 occupies 110% of the public’s conscious attention, or so the media presumes.

Instead, this blog centers on toilet paper (TP) and chicks 🐥 (not the Dixie kind) that have flown off stores’ shelves, just like TP. For more fiscally-focused folks, I also consider gold, a precious metal that humans have valued through innumerable crises of every sort, including ones like this one.

It’s an understatement to say many aspects of people’s behavior have been changed over the past several months, during this initial chapter of covid-19. Countless folks’ expectations have become frenzied by Sh-i-Ping, the Administration’s pinballing, sometimes deceptive messaging and the media’s ceaseless proliferation of coronaviral stories – letting us know for example when Papua New Guinea registered its first coronavirus case. Such untethered expectations change personal consumption patterns, create panicked, feverish purchasing and subsequent emptied shelves. Voila, resulting scarcities of toilet paper, chicks, and glass gem popcorn seeds, among other items.

Toilet Paper: (FYI, the use of the colon as part of this subsection title is purposeful.) What is it with TP anyway? Normally it is an ordinary, inexpensive consumer product that sells for $0.67 per roll at Costco, when it’s in stock. That’s very different than TP’s price in Venezuela, where hyper hyperinflation has taken its toll. A roll of TP in Caracas costs at least 2,600,000 bolivars. Yet another of the multitude of reasons to not live there.

Toilet paper has been around for a good long time. The first documented human use of TP happened in China during the 6th century AD – 15 centuries ago. In Ancient Rome, a sponge on a stick was often used, and, after use, placed back in a pail of vinegar. In other locales, wealthy people wiped themselves with wool, lace or hemp. Less wealthy folks used rags, wood shavings, leaves, grass, moss, water, snow, seashells, or corncobs. The rise of publishing in the 18th century led to the use of newspapers and cheap, popular books’ pages for cleansing.

However, actual rolls of TP didn’t accompany toilets until more recent times. Commercial toilet paper began in the mid-19th century, with a patent for roll-based dispensers filed in 1883. Indoor plumbing first started to be placed in American homes in the mid-1800s. In 1940 nearly one-half of US houses lacked hot piped water, a bathtub or shower, or a flush toilet. Toilet paper dispensed from rolls was first popularized in 1890 when the Scott Paper Company began selling it, coinciding with mounting use of indoor, flush toilets. Now more than seven billion rolls of toilet paper are sold yearly in the US. Over time, deflation has struck the rolls. The size of a general single sheet of TP has shrunk 26% since 2000. Nothing’s sacred.

Today’s TP scarcities recall another shortage when Johnny Carson joked in his December 19, 1973 Tonight Show monologue that “there is an acute shortage of toilet paper.” There really wasn’t any shortage; on stage, he verbally made it up.

The first OPEC oil embargo also was happening when Johnny joked and created large amounts of public anxiety as well as blocks-long queues at gas stations. Carson’s audience apparently found his jest more frightening than funny. His “news” sent large numbers of shoppers into grocery stores to buy and hoard toilet paper. Thus an actual shortage was born. The Scott Paper Company urged people to stop panic-buying their product. Nevertheless for several months, TP was in short supply or actually absent from store shelves. TP was bartered for, traded, and even sold on the black market.

 That was then, the present-day TP shortage, shown above, arose from consumers’ anxiety-driven purchases, but not from a misplaced joke. It has been happening not just in the US, but in Australia, New Zealand, Hong Kong and Japan. Why? Perhaps shoppers fearful of coronavirus quarantine measures have stockpiled essential supplies to last out a week or two (or more) of isolation. In Hong Kong, ambitious thieves actually held up a supermarket to steal a TP delivery.

Buying TP is a relatively cheap action and satisfies people’s need to think they are “doing something” when they feel at risk. Also, customers may sense that buying TP is part of their crucial “preparation process” for Sh-i-P. Finally, TP is utterly non-perishable, has few straightforward substitutes and is one of the rare products someone can buy in larger-than-normal quantities that is guaranteed to be eventually used before it goes bad. Hence, large expanses of emptied-out TP shelves exist here, as displayed above. Not to worry; breathe deeply, it’s hopefully temporary.

Chicks. Everyone loves baby chicks, especially at Easter-time. Demand for new chicks is off the charts this year. Flocks of people have been rushing to raise backyard chickens amid their coronavirus concerns and egg shortages. Hatcheries report an increased demand for baby hens as more people want to grow chickens for eggs, meat and companionship. Baby chicks are certainly cute, as shown below, and look great under the Easter bush.

 The USDA reported last week that the national inventory of shell eggs decreased 10% for the second consecutive week and the nation-wide supply of Large eggs declined 14%, characterizing the current run on chicken eggs across the nation. As a consequence, wholesale prices for shell eggs continue to show sharp daily increases, rising to levels not seen since March 2018. In some areas, wholesale prices of eggs have tripled during the past three weeks, which has spurred more panic buying of eggs and chicks.

This year, Cackle Hatchery, based in Missouri, has seen its chick sales rise 100%. It’s been so hectic at McMurray’s Hatchery in Iowa that callers wanting to order chicks have been put on long holds. The hatchery is nearly sold out of chicks for the next month. McMurray’s has seen a rise in “homesteader types” and others who want to raise their own chickens. A growing number are first-time, wanabe chicken farmers.

“This has to do with the perceived hoarding that is going on,” Bud Wood, McMurray’s owner and president, said of the surge. “People are afraid they won’t be able to buy eggs and chickens in the grocery store, and they don’t want to have to go to the store and possibly be infected.” “They’re panic-buying chickens, like they did toilet paper,” stated Tom Watkins, McMurray’s Vice President.

My daughter Lindsay and her family have already raised backyard chickens several times, and are about to start anew. As a veteran chicken-raiser she offers the following observations. Newly-hatched chicks are fragile creatures that first take careful indoor tending, including the use of heat lamps to keep them warm. Her kids have likened them to little-dinosaurs. Once they’re living outside, you must keep your chickens safe from predators. One of their chickens was picked off by a dive-bombing hawk while they were still young, and several others met their demise by racoons. Be prepared for the long-haul; it takes six to nine months for them to mature enough to produce eggs. Once they’re big enough, letting them free-range in a large run during the day means your yard’s bug population will surely decline because of their constant search for food, as well as have more nutrient-rich eggs and happier chickens. Remembering that they’re farm animals is key; they’ll poop everywhere and their cage needs to be cleaned out regularly. However, you can use their composted droppings as a high-nitrogen fertilizer in your newly-created virus “victory” garden. (Don't use fresh chicken manure, it'll burn the plants.) Finally, if you add a bit of cayenne pepper to their food, you’ll get really gorgeous orange-yolked eggs, that aren’t spicy. Yum.

Gold. Given the deep drops in stock prices and increased market volatility, demand for gold is rising, even for 400 troy ounce (27.4 lb.) bars similar to those in Ft. Knox’s vaults. There are over 368,000 golden bars at Ft. Knox which used to “back” our dollar until 1971. Thank goodness the market for gold and gold bars isn’t closed like your favorite local bar is. You’ll want that quarantini for home delivery, right? So let’s take a shallow dive into gold, where unlike TP and chicks, shortages don’t exist, yet.

 Gold is a precious metal that has been used for coinage, jewelry, and other arts throughout recorded human history. The first precious metal coins, made of electrum an alloy of gold and silver, were used as money around 600-500 BC in several places around the ancient world; in China’s Yellow River valley, in India’s Ganges River valley and by the king of Lydia in western Asia Minor (modern Turkey). The Lydian coins weighed anything from a slender 0.006 troy ounces up to half an ounce, varying by value. These coins were stamped with animal heads, such as lions and rams to discourage counterfeiters.

The world’s largest gold producer is China, by a large margin. The US, the fourth biggest producer, supplied 253 tonnes in 2019. About one-half of all gold produced is used in jewelry, 40% in investments and 10% in industry. Overall, there is about one ounce of refined gold in the world for every person. Being a mature commodity, the world supply of gold increases at approximately the same pace as population growth. The several gold crowns that I “wear” in my mouth thus have accounted for an infinitesimally miniscule portion of “industrial” gold usage.

Many investors look to gold in periods of market turmoil because they believe it holds value through recessions better than other assets. And guess what is now coming to an economy and stock market near you, a recession. Over 10 million Americans filed for unemployment benefits in March. Precious metals like gold have often served as a hedge against market volatility, political instability, currency weakness, and economic collapse. Demonstrating this increased demand, the price of gold has recently risen, as shown below.

GOLD SPOT PRICE, March 19 to April 3, 2020 

Will investors turn to gold as covid-19 continues its horrific assault on our health? Or will it be fools’ gold? If the nastiest predictions about the economy’s second quarter performance become valid, it’s certainly possible gold will be good. Will it be another golden age? Exceedingly unlikely.