Monetary policy is only a band-aid, not the cure
Having survived the initial panic in the market and the extraordinary gyrations of the gold price, we now wait to see whether there is any merit in relying on the loosening of monetary policy as the ultimate solution. So far, one should be sceptical.
In true Greenspan fashion the Fed has acted to minimise the negative wealth effect of a falling market by dropping interest rates, but how effective will this be in the long run? It provided a short term circuit breaker but the moves at the end of the week suggest that this is not enough.
Individuals needs to take greater responsibility for their behaviour as the virus saga unfolds. Governments can make larger policy decisions but these have no finesse. There needs to be more precision in shutdowns and containment policies to ensure that vital supply lines are given priority just like in times of war when essential industries are exempted, and in fact are promoted with special care, to keep the wheels turning. Failure to recognise this will not do us any good.