Monetary Matters with Jack Farley The Fed and The Flu | David Kotok on How Pandemics Transform Economies and Markets
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May 16, 2025 David Kotok, Co-Founder & Strategic Advisor at Cumberland Advisors, dives into the economic twists brought about by pandemics, particularly through insights from his book, "The Fed and the Flu." He discusses how historical pandemics have consistently lowered natural interest rates and exacerbated inequality. Kotok also critiques the U.S. response to COVID-19, emphasizing the need for better preparedness. With a focus on historical data over centuries, he illustrates the interconnectedness of health crises and economic shifts.
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Pandemics Lower Interest Rates
- Pandemics typically lower the neutral interest rate and increase productivity and inequality.
- The least productive enterprises fail, raising wealth per capita and concentrating savings among the rich.
Fear and Scapegoating in Pandemics
- Fear and governance reactions have marked every pandemic throughout history.
- Disinformation and scapegoating are consistent, often complicating pandemic responses.
Early Mask Anecdote
- At a January 2020 conference, David Kotok and Matt Hogan wore masks while most attendees did not.
- This early precaution foreshadowed soon widespread mask use as COVID spread.
