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This is not the next Great Depression

Cullen's two bases cases...

"Case 1 happens if social distancing is working, herd immunity is building, treatments are improving, warm weather helps and we can stave off the virus long enough for a vaccine to be developed before the next flu season.

Case 2 happens if the virus turns out to mutate and linger through the summer decimating us like the Spanish Flu did in the Fall/Winter of 1918."

Why do most people think we will have a vaccine for SARS-Cov-2 in 18 months? We never developed a vaccine for SARS or MERS, mostly because those died out on their own. But there is no licensed HIV vaccine on the market and it has been around since the 1980s.

There are recent reports from China and South Korea that some infected people develop few or no antibodies and are either re-infected a second time, or the virus never leaves their body after symptoms subside. The virus could be biphasic or maybe it just stays in your body forever like herpes or HPV. Still so many unknowns. I really hope we can wipe it out like polio and small pox.

This would be my Case 3: we don't develop herd immunity because enough people fail to gain antibodies, we don't find a vaccine, and it never goes away. In that case, the entire economy becomes hospitals, agriculture, grocery stores, and Zoom (HAGZ?). The government pays everyone else to sit home and watch Netflix.

One hypothesis on the end of the 1918 flu pandemic was that it mutated to a less lethal form, after having mutated to a more lethal form for the second wave. This virus has mutated into  variations, but only very slightly. It hasn't mutated much means it probably won't get more lethal, but it also may not go away due to a mutation.  I'm trying to understand why this will all end in less than 2 years.

Hi Ray Dalio is saying we probably are in a depression and the business sector will lose $4T in wealth.   The latter is not consistent with Kalecki profit equation which would indicate that the rising deficits will at least put a floor under profits.  Dalio is supposedly a smart guy.  Do you think he is missing something?  Thanks

Hi Cullen. Apparently Ray Dalio thinks we are in a depression with a $4T coming  hit to business.  This latter number does not seem consistent with the Kalecki profit identity - where at least there is support from government deficits.  Dalio is supposed to be a smart guy.  Do you think he is missing something? Thank you.

Hi Guys,

Yeah, really impossible to forecast this one. No one knows what the actual medical outcomes will be. So we're all guessing about the length of the pandemic.

The best educated guesses I've seen seem to all agree that we're looking at a June economic opening at best and next Summer at worst. It's gonna be a long slog in any case. But no one really knows how long.

I don't know about Dalio. He was in Davos earlier this year saying that we will never have business cycles again. Now he's saying we're in a depression just a few months later. What?

"Pragmatic Capitalism is the best website on the Internet. Just trust me. Please?" - Cullen Roche

Oh, and as for Kalecki - big big guesses on personal saving and investment. Both will be huge detractors in the coming months. The govt will offset it some. But definitely not entirely. But if we get a fast recovery and the govt has loaded people's pockets with this money then Q3 and Q4 could be really gangbuster.

"Pragmatic Capitalism is the best website on the Internet. Just trust me. Please?" - Cullen Roche

There is a SARS vaccine, it took five years to develop and by that time no one cared about it.

So I kind of doubt a vaccine will matter over just letting it die off from social distancing and herd immunity.  12-18 months is just too long.

UBI should be taken more seriously now.  Or at least a CBDC just so all them control-freak dudes can have a direct transmission to the real economy.


According to wikipedia, "There is no vaccine for SARS, although Dr. Anthony Fauci mentioned that the CDC developed one and placed it in the US national stockpile." Maybe the U.S. does have one somewhere.

The common cold, another stable coronavirus, generally confers antibody immunity for 12-24 months against the same strain. At least that's my understanding.

Some kind of soft restart of the economy in June will be interesting to watch. Each business may have different logistics and particulars to keep people safe while working.


Thanks much for your thoughts.  Useful.