The CCP (Chinese Communist Party) virus, commonly known as novel coronavirus, pandemic presents a comprehensive threat to this country that we’ve never before witnessed—at least, not in living memory.
The response by our political leadership has, at least for the time being, changed the foundational relationship between the government and the governed that has set the United States apart from all other nations on Earth.
Emergency Measures Needed
Of course, one should recognize that action needed to be taken. As a result of the deadly and highly contagious virus making its way from Wuhan, China, to our shores in just a matter of weeks, there’s a real and imminent threat to the lives of millions of Americans.
In response, the Trump administration has suggested limiting gatherings and will likely impose extensive restrictions on the movements and activities of the entire nation. As the president noted in his March 14 press conference, with the inevitable emergence of infection hot zones within the United States, he will likely impose domestic travel bans in key areas. The administration also is rightfully suspending international travel to China and specific countries in Western Europe, including the UK.
As authoritarian as this sounds—and, in fact, is—it’s likely a necessary step to minimize the spread and mortality rate of the disease. But dictating business practices and restricting social activities feels more like North Korea or China than it does America.
The federal government is also mandating some of the terms of employment for private business, such as extended paid sick leave. The costs are to be covered by the federal government—at least for the time being.
More on what that may mean in the future in a moment.
Washington, D.C. on Wall Street
The stock market is another area in which Washington will now be even more directly involved than it has been in the past, in a most overt and comprehensive way. The Federal Reserve will begin making massive, short-term loans to Wall Street banks as well as buying large tranches of Treasury securities.
In a word, the Federal Reserve is supporting both the stock market and the Treasury market.
The rationale for doing so temporarily is compelling. Replacing the liquidity that has fled both of those markets will hopefully stabilize them. The Dow Jones Industrial Average, a key index in the stock market, has seen swings of up to 2,000 points up and down, in a time when the market has already seen sharp rises in volatility as it repeatedly reached new record highs.
But under these unprecedented circumstances, the much-anticipated and much-needed correction has begun. The problem is that the pandemic is adding to the already strong, fear-driven momentum, leading to a deep recession or even depression. That logic is also rather clear, as the market has seen a 15 percent correction in just the past week.
Therefore, with the federal government and the Federal Reserve committing their full weight to maintaining the markets, it’s anticipated that some level of confidence will be restored. It’s noteworthy that Federal Reserve market intervention has been going on since at least the financial crisis of 2008, via the various forms of quantitative easing (QE) from that time until today.
But the difference of today’s intervention is in scale and time frame. Washington isn’t just helping Wall Street—it has now become a fully integrated principal in the world’s largest and most important financial market. It’s guaranteeing liquidity on a massive, trillion-dollar scale in order to keep the markets functioning. This is a significant expansion of the QE policies we’ve seen in the past.
Nationalizing the Economy?
That’s not to say that the steps we’re taking aren’t necessary. Most probably are if we’re to defer the ultimate reckoning of a distorted, credit-based (and de-based) economy.
But it’s also important to recognize the risks that accompany these measures. There’s a large segment of the political and academic elites in this country, for example, who would very much like to see these temporary, ultra-statist policies become permanent ones.
They may not be the only ones, either.
Will market stability and confidence return once the pandemic is over? Or will spooked investors stay away? If it continues to fall, will the Fed or the Trump administration continue to intervene?
Quite possibly. Wall Street may not be able to function without it. That would change the very nature of our capital markets into a type of socialized financial market, dependent not on investors, but on taxpayers.
The right answer, of course, is to try to manage the correction. But, ultimately, if the markets continue to fall, they must find their own equilibrium. Otherwise, they will never normalize, and become addicted to massive market distortions by government intervention. That will only open up a new, social democratic era in the United States.
Undoubtedly, this large dose of statist medicine we’re getting right now sends tingles up the legs of far-left Democratic Party presidential candidates Joe Biden and Sen. Bernie Sanders (I-Vt.), not to mention the uber-statists in the media and academia. Their collective dream of collectivization—of nationalizing the entire U.S. economy—is materializing before their eyes.
That’s why this relational change between Washington and the rest of the country must be as short as possible. Otherwise, the temptation to make the temporary cure permanent grows stronger over time. Acting on it would be more toxic to the country than the pandemic itself, and in the process, we’d risk losing our republic.
The Epoch Times refers to the novel coronavirus, which causes the disease COVID-19, as the CCP virus because the Chinese Communist Party’s coverup and mismanagement allowed the virus to spread throughout China and create a global pandemic.
James Gorrie is a writer and speaker based in Southern California. He is the author of “The China Crisis.”
Views expressed in this article are the opinions of the author and do not necessarily reflect the views of The Epoch Times.