EDITOR NOTE: Have you read the Fed’s Neel Kashkari’s New York Times Op-Ed published last Friday? It essentially warns us that the economic damages caused by COVID-19 won’t cease until the healthcare crisis itself is under control. Kashkari also warns us that unless we’re able to prevent further COVID spread, everything we’ve seen thus far is merely a “warm up” to a much greater catastrophe. We can only guess that this means a plunge in equities, the dollar, and bond yields--all of which serve as tailwinds for gold and silver.
The Fed's Neel Kashkari warned in a New York Times op-ed that unless a stricter lockdown is imposed in the US, the last few months could feel just like "a warm-up to a greater catastrophe."
The op-ed, dated August 7, was co-written with Michael Osterholm, director of the Center for Infectious Disease Research and Policy at the University of Minnesota.
To drive down the coronavirus case rate to less than one per 100,000 people, "the lockdown has to be as comprehensive and strict as possible," they wrote.
"If we aren't willing to take this action, millions more cases with many more deaths are likely before a vaccine might be available."
Kashkari is a voter on this year's Federal Open Market Committee, which sets US monetary policy and is one of its more dovish members.
He and Osterholm warned that in the absence of effective measures, the economy would face slow recovery, with failed businesses and high unemployment lasting into the next couple of years.
Both argued that the COVID-19 containment response by the US government had failed in comparison to other nations in Asia and Europe.
"Simply, we gave up on our lockdown efforts to control virus transmission well before the virus was under control," they wrote, and added that the US reopened "too quickly," leading to around 50,000 new cases a day.
Over the last 16 weeks, nearly 50 million people have filed for first-time unemployment benefits, surpassing the 37 million unemployment claims filed during the 18-month Great Depression.
The two said that stimulus efforts must be reinforced to stem a worse economic downturn.
"If people can't pay their bills, it will ripple through the economy and make the downturn much worse, with many more bankruptcies, and the national recovery much slower."
Chicago Fed President Charles Evans agreed with this opinion, suggesting that another support package should be executed to ensure people can stay home and sustain costs of living, especially vulnerable populations.
"I think that public confidence is really important and another support package is really incredibly important," Evans, who will be a voting member of the FOMC next year, said in a CBS interview.
Originally posted on Markets Insider