Chris Martenson of Peak Prosperity recently joined Jim Puplava on a special edition of the Financial Sense Newshour. Chris shared his thoughts on the economic impacts of the pandemic, when he realized it was going to become a major event and how the world could be different after it. Read below for excerpts from the fascinating interview.
See Chris Martenson on the Coronavirus: Things You Won't Hear on the Evening News for audio.
We know a typical flu virus and the coronavirus are very different things. Can you explain some of the differences?
The first thing to understand is that the 30,000 to 60,000 people who die from the flu each year in the U.S. is just an estimate. The second thing is how easily the coronavirus spreads. If I have the flu, I’m likely to pass it to about 1.28 people, whereas if I have the coronavirus, I’m likely to pass it to anywhere from 2.5 to six people. The coronavirus is more effective at spreading—it jumps and spreads easily.
The third thing that's tricky about the coronavirus is that it can spread during what's called the asymptomatic phase. Meaning I've gotten exposed, it's replicating in my body, but I don’t have any symptoms yet. I don't have a fever, chills, muscle aches—nothing like that. But it's in my body and it's shedding from my body, so I'm passing it to others. And so those things make this very different from the flu.
This coronavirus survives on surfaces anywhere from hours to days, where the flu survives for minutes to hours. So, the coronavirus is very persistent and can land on a doorknob and sit there for days waiting to be picked up by somebody. So, you put all of that together and it comes back down to the final thing we need to talk about, which is that the complication rate of the coronavirus is vastly higher than the flu.
Somewhere under 1% of the people who come down with a bad case of the flu will end up in the hospital due to complications. But what we know so far about the coronavirus, is about 15% of people infected will end up in the hospital. Now that number might come down when we do more testing and get a better sense of it. But for now, that's the number we have.
A lot of people end up in the hospital and it swamps the hospital. When you get it—and this is the worst part—by day eight of having symptoms, it's either going to start to resolve or you're going to go down the other path. And if you go down that other path, which is very bad, you then go down the critical path, and you end up in the ICU and on average you’d be there 21 days. These are things that separate the coronavirus from the flu: it spreads easily, we’ve never seen it and it has a serious complication rate. It's just a beast of a sickness when you get it and as people are describing, way worse than the flu.
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Our healthcare system was not prepared for this.
It wasn't and it's a failure to plan, that wasn't a failure of imagination. It wasn't because smart people couldn't envision this. Science fiction writers have written books that tracked this remarkably closely and there have been movies and TV series to do the same. We've always known the plot line. When you have a major pandemic, you have a virus that ticks several boxes.
One of the most important boxes is a species to human jump. That's critical because when it comes out of a species, it means no humans have been exposed to it. A second checkbox is that you need to have it spread easily and survive well outside of the host. Check. Third is it's going to have some serious complication to it and that’s certainty the case with the coronavirus.
All these things should have been setting off alarm bells very early on. When China finally announced a quarantine around the Wuhan province, I thought, I know enough about China that if they're willing to shut down an important manufacturing center with 11 million people, this thing must be really bad. I didn't know how bad yet, but I knew it checked all the boxes for being a pandemic virus. And I knew how China was responding. That was good enough and that's when I first became concerned.
I wrote a piece called The End of Money detailing the possible financial impacts of this, including the return of inflation. What are your thoughts on the financial ramifications and inflation?
Inflation is something that I think is coming sooner than most people realize. We do have a lot of deflation and unnecessary debt in the system right now. I think 16% of all companies were zombie companies meaning that their operating income flows were not sufficient to meet their debt interest payments. So they needed to continue to roll and tap credit markets which are now shredded.
We have, of course, all the destruction happening in the oil business right now, particularly in the shale space, a lot of deflation there, a lot of debts going belly up. We had record amounts of BBB corporate debt, which is all in the process of getting downgraded. We have millions of companies in China that are out of cash. You're going to have fewer companies producing things. So that's less stuff. That's macro story one.
Macro story two is the trillions of dollars of straight stimulus printed out of thin air and handed out. I don't think $1,200 a person is going to even get close to covering the hole that was created. I think the $2 trillion is just the start. I'll be surprised if they're not doubling and tripling it within months. People are going to be buying less, even with all this printing of money, so I’d say that would create a lot of inflation.
What are some comparisons to the flu pandemic of 1918 and today?
There are some remarkable parallels. Back in 1918, there were real heroes, people who were willing to be leaders and make very unpopular decisions like canceling events and limiting any gatherings. Then there were knuckleheads who just didn't believe the whole thing and who were slow to the game and advised everybody not to panic. We see that same thing today. We have a bunch of knuckleheads out there and then there are people who take it seriously.
I've been really heartened watching all these people do super creative things to make masks in the face of a worldwide personal protective equipment shortage. People are home cottage industry sewing and sharing patterns and figuring out the best type of material to use. So that's where the information is working for us.
Working against us is the density of people that we have crammed into small spaces, with I think 70% of people living in cities now. Also, if you go to flightracker.com there are thousands of planes in the air and I guarantee a lot of them are carrying virus around from point to point. Another thing I’ve been telling everyone is to plant a garden if you’re able to. One of the things that's different between now and in 1918 is that then most people still lived on a farm or could go back to a farm. That's absolutely not true today. It's the exact opposite.
I'm a little worried about what's going to happen particularly with vegetable production this year, because it's very labor intensive, and that requires people to move and that’s not happening during critical planting season. So, for a variety of reasons, I’d suggest someone start a garden. Not just to battle food insecurity, but to get outside, to have something to do and contribute to the food supply because I believe we all have a role to play in this. The government failed us. It failed to prepare people, especially those the healthcare system.
But now that we're here, we can't wait for the government to do anything because they're not going to and they can't. I do think that we all have a role to play in making sure we're all wearing masks and gloves, using appropriate social distancing and modifying our behaviors so that we're not spreading this thing as much as possible. And we're going to have a role to play, I think, in in feeding ourselves too, that could be really beneficial and helpful to the nation.
How do you see this playing out over the next 10 years?
I think this is something to meditate on, you know, what are these changes going to be? I think it’s going to be a very long time before we know any of them. I believe that nothing's ever just bad. There's a lot that's not good about the coronavirus and I wish we’d had a gentler way to get to this next stage of things. But I think what's crucial is that people aren’t taking as many things for granted and are remembering what's important in life again.
I think we have a very disconnected government that became more about corporations and power and became very unconnected from the people. So unconnected to the point that it felt like it had to lie to about something as silly as face masks. It just shows you how bad it got and I'm hoping that somehow, we get a correction.
I do think that there's a change coming. We're no longer going to put up with stuff that really wasn't serving us and to be honest, one of those things is our health care system. I call it a sick care system. If that burns down and gets rebuilt, that would be a great thing. I think there's a chance to really get our arms around some stuff that wasn't working right. And finally wake up to that and have the opportunity to reshape them and reform them to things that do serve us. If there’s one thing this virus has exposed, it’s how few things really serve the people of this nation, and instead serve the corporations and the power structures.
Click here to listen to the full interview with Chris Martenson or for an archive of past shows, visit our Financial Sense Newshour page.
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