Thoughts from the Frontline

In baseball, there is a situation where a base runner is sprinting to home plate and can’t see what is happening behind him. Totally focused on scoring, he doesn’t know if the outfielder is throwing a ball that will reach home plate first. That’s where we get the phrase “out of left field.” (If the ball were coming from right field, the runner could actually see it.)

Last week I talked about the polls misleading us. I, for one, didn’t see a high probability of a Biden presidency combined with a Republican Senate. But, pending recounts, legal actions, and some run-off elections, that’s probably what will happen. We will muddle through.

Here in Puerto Rico we are now an hour ahead of Eastern Time, as we don’t do daylight savings time. I stayed up much later than normal on election night to watch the returns. I knew fairly early, when Florida and North Carolina looked so close, we weren’t going to see a “blue wave.” But beyond that, it was clear the presidency would not be settled that night.

“If I have seen further it is by standing on the shoulders of Giants.” —Sir Isaac Newton, 1675

Those who lived through the last financial crisis might may recall the Green Shoots episode. It drew laughs on March 15, 2009, shortly after the Federal Reserve fired its heaviest artillery and, we now know, launched the longest bull market in history.

We're caught in a trap I can't walk out Because I love you too much baby

Like everyone else, I am weary of this pandemic mess. I want to travel freely, enjoy dinner with friends, hug, and shake hands.

"There is no means of avoiding the final collapse of a boom brought about by credit expansion." —Ludwig von Mises

Amid all 2020’s new problems, it’s easy to overlook the old ones. Yet they are still there and, like a silently spreading virus, silently getting worse.

When Cornwallis surrendered to George Washington at Yorktown in 1781, tradition has it that the British band played an old English children’s folk tune, “The World Turned Upside Down.”

Simply discussing COVID-19 will undoubtedly make this letter controversial and, in some circles, political. That is not my intent. I truly believe that something affecting all of us so deeply should be kept in the scientific realm to the extent possible, not the political. Sadly, that is not the case today in many countries.

One little-noted aspect of central bank policy is how rarely “policy” happens. Officials at the Federal Reserve and elsewhere long ago learned how to achieve their goals without actually doing anything. Creating perceptions is often enough to modify people’s behavior.