Surprised Again! The Covid Crisis and the New Market Bubble Reviewed at Law & Liberty

Surprised Again! The Covid Crisis and the New Market Bubble Reviewed at Law & Liberty

In 2017, then Chairman of the Federal Reserve Board Janet “Inflation Is Transitory” Yellen hinted there would not be another financial crisis “in our lifetimes.”

Maybe she got the idea from Morgan Stanley boss James Gorman, who in 2013 put the chance of a crisis “in our lifetime” as “close to zero” as he could imagine. Well, imagination, as the song says, is crazy. “Your whole perspective gets hazy.”

These two experts, as Alex J Pollock and Howard B Adler tell us in Surprised Again! The Covid Crisis and the New Market Bubble, are far from alone. Economic experts, they confirm, have a collective accuracy that would embarrass a busload of blind golfers. Not one expert, they remind us, saw the Great Depression coming. And none foresaw the Calamitous Coronadoom Panic of 2020. Which lasted until now.

And will last how much longer?

What fascinates is that being wrong in no way dents the awesome armor of assurance experts don. Whatever they do when given power, they do boldly, and without doubt. Whether this lack of humility is caused by amnesia or hubris can be debated. What can’t are the astonishing effects of the economic “solutions” foisted upon us by a string of experts during the panic, each trying to correct the ill effects of the other “solutions”.

Pollock and Adler take us through it all. From the lockdowns to the Fed printing money with glee to the resultant market swings to the rush and retreat from cryptocurrencies to the run in the housing market to crushing municipal debt and its ill effects on pension funds to student loans and all back again to the banks and the Fed.

This book serves as excellent introduction to modern economics and monetary policy, presenting it cleaner than in any textbook, and with a complete absence of pedantry. Theory is backed by observation in a wonderful Appendix (my favorite part) where the reader can write down a handful of indices at the time of reading, and compare them with history and with the authors’ predictions.

Primarily, this is a book in which we re-learn the ancient truth that much of what we have learned will be forgotten in the next crisis. One perennially lost lesson, even though it’s been verified by history time and again, is that panic kills. In the literal and figurative sense. This is not a book about public health, though. Pollock and Adler accept medical “solutions” as a given, and only question economic “solutions”.


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  1. JohnK

    Panics create bad things all by themselves just by being panics, yes. But my monetary expert vigorously disagrees with Matt’s Economic expert. I am relying on Matt’s review, but the picture of money painted in that book is entirely inaccurate, according to Jeffrey P. Snider, who has shown repeatedly that the central banks of the world (i.e., including but not at all limited to the FED) have almost nothing to do with money, the monetary ‘supply’, etc.

    That being the case, then inflation — aside from temporary supply and demand shocks (hello COVID restrictions) — cannot be caused by the central banks ‘printing money’, since they control so little of the real money in the world.

    To the contrary, the vast majority of the ‘money’ in the world consists of balances, etc, in ‘offshore’ accounts not controlled by any central bank. Mr. Snider calls these ‘eurodollars’. They are ticks on a computer, true — but computers outside the purview of the central banks.

    If they were NOT ticks on a computer, the economic system of the entire world would grind to a halt. Imagine the economic friction generated just from paying all your own bills every month by physically lugging gold from the place you have it to the people you owe. The idea of substituting marks on something (paper, bits) for the physical transfer of physical things is old.

    “Eurodollars’ — these computer accounts entirely outside the purview of any central bank — is the real currency today, and Mr. Snider shows that this has been the case at least since the 1980s. But the FED and all central banks have never kept any track — have refused to keep any track — of that money, on the grounds that not only are they the Experts but that they remain “in control” of the “money supply.”

    He writes

    The gross eurodollar size was in 1988 a third greater than the entire M2 stock would be three years afterward, while its net size was closing in on two-thirds of it. And this was three decades ago.

    The eurodollar was declared as non-money, therefore no sense in spending any time or effort keeping track of the psycho next-door. And when they couldn’t even figure out a useful M1 anymore, then fed funds targets were substituted to “reach their ultimate objectives by influencing…”

    But in moving past the geographical boundary, the actual offshore system hadn’t become less money-like, it had transformed the very idea of money itself. That, more than anything, had been the crucial error, the villain’s pathos spun in motion long before the events of our current story had begun. The very one which removed central banking from the central bank model which followed.

    That is not to say that government overspending is a good thing. Ultimately even eurodollars are ‘backed’ by real things in real economies — peaches, pears, oil, labor. Eurodollars are promises from A to pay B, which requires collateral if A cannot pay.

    Hence the real economic crisis, which precipitated the Great Depression, is a collateral crunch — deflation, not inflation. According to Mr. Snider, eurodollar markets are already experiencing calls for increasingly costly collateral.

  2. Vermont Crank

    Dr Edwin Vieira, an absolute genius when it comes to The US Constitution and sound money has, among many other toils, co-written a fantastic novel, Crashmaker, which is a summary of all that is good, true and beautiful in political philosophy, Catholicism, sound money, The US Constitution etc but few have taken the pains to read it.

    But he has striven to remind patriots of what The Constitution holds when to comes to sound money and precious metals-based currency but us Americans get submerged by the detritus of demented demagogues.

  3. DAA

    Would then anyone point to me a good reference for the nature and use of money?

  4. C.R.Dickson

    For DAA
    References for money and banking and the economy: You can go to
    AbeBooks | Shop for Books, Art & Collectibles
    which has used books from US and Canadian bookshops for sale. It was purchased by Amazon and is still operating. Amazon now has a used books listing for sell from various bookstores as well, so you might do just as well by starting there. Many of these books are very inexpensive.

    Old, but informative, are two books by John Kenneth Galbraith, who is a master wordsmith-sophist:
    1) Money, whence it came, where it went, ISBN 0-395-71085-5 and
    2) The Great Crash 1929 (1961 Time Inc no ISBN number)

    3) Panic on Wall Street, Robert Sobel …get the updated version with the 1987 crash.. ISBN 0-525-48404-3. This is a wonderful very easy to read book. There are several chapters (stories) that I like but the one about U. S. Grant gave me an insight I did not have before reading.
    4) A classic, but well written textbook, by Hutchinson, Harry D.: Money , Banks, and the United States Economy ISBN 0-13-600379-6
    5) A lot of people like this book: Manias, Panics, and Crashes by Charles P. Kindleberger, ISBN 0-465-04404-2. The political types, history buffs, and sophists use this book a lot.

    The best pick (information wise) for the least amount of money is 1,3,and 5. I bought copies of these two years ago for a former student who now works at the comptroller of the currency. The average price was about $6.50 including shipping.

  5. dadgervais

    For DAA:

    Skip the Keynesian/Galbraith/Marxist crap and try “A History of American Currency” by William Graham Sumner (Author).
    Also, any von Mises, Hazlitt, or even Friedman text will be instructive of good (but seldom employed) policies.

  6. DAA

    For C.R.Dickson: I will look into this. Thank you very much!

  7. DAA

    And also thank you to dadgervais. I had the page still to be refreshed.

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