Welcome to Radical Personal Finance, a show dedicated to providing you with the knowledge, skills, insight, and encouragement you need to live a rich and meaningful life now while building a plan for financial freedom in 10 years or less. Today on the show, we're going to talk about the week ahead or the few weeks ahead as I record this.

It's Saturday, March 14th, just before 8 o'clock in the evening, and it's been quite the momentous last few days. But I wanted to share with you a few ideas. Now recently I've been sharing with you what I've been thinking about, trying to help guide you, give you someone to hopefully thoughtful and rational to talk through some of the events that we're living through.

And it seems like you can't keep up. News is changing very, very fast, which is why I'm recording this. And basically what I'd like to accomplish in today's show is I'd like to give you some ideas so that you can understand basically what the different options are. And as we think about the path ahead, as we think about where we're going from here, I want to share with you what I see as the best case scenario and the worst case scenarios.

And then you can watch over the coming days to try to figure out what we're more in line with. And I want to talk about this in light of the specific threat of the virus itself, talk about kind of what a best case scenario looks like and what a worst case scenario looks like as I see it, and then also talk about it economically.

What is an economic best case scenario and what is an economic worst case scenario? And I did this analysis for myself because as I look around and watch the events of the day, it makes me, it's hard to believe. I think we're probably all in that same situation where it's hard to believe.

And I figure if I'm finding this hard to believe, and the reason I say me is simply I'm someone who's thought about this for years. I've read novels about viral outbreaks. I've read history of previous viral outbreaks. I've thought about it. I've considered what it would mean, and I find it hard to believe where we are.

My normalcy bias is quite strong. I just think, man, my analysis says that these are the events that are happening, but I can't really believe it. And that's that normalcy bias kicking up its head. And so I figure if I'm finding it this hard to believe, then you're probably wrestling with the same thing.

So I want to talk it through with you. Let's begin with the virus. Where do we go from here? Well, obviously we don't know, but let me paint out what I see as the bad situation, the really bad situation, and also the not so bad situation. And then you can consider where the facts are taking you when you look at this data.

Let's start with the not so bad situation. That's actually where we are, again, on Saturday evening at a quarter to eight. If we're going to say that the virus itself is not going to be so bad, here are some of the things that you would need to be convinced of.

Number one, you would need to be convinced that there aren't actually that many people sick in your country. You would probably need to be convinced that the official statistics are accurate. You can go and you can look up the official statistics. There are many websites that are tracking it, saying something like almost 150,000 people around the world currently have this virus.

Those official statistics are tracking the number of people that have it, the number of people recovered, the number of people who have died. And so perhaps you can look down at the official statistics in your country and you can say, "Look, it's not quite so bad. There aren't actually that many people sick.

Maybe there's only 5,000 people sick. Maybe there's only 2,000 people sick." And perhaps that would be worth considering. After all, the official statistics are official. Now let me go through the list and then I'll come back and poke some of the holes in this because I don't think that this kind of best case scenario is realistic.

But that's what you would need to believe. There aren't actually that many people that are sick in your country. The second thing that you would need to believe for a not so bad scenario—notice I'm not saying great, just saying not so bad—is that the social isolation and various containment procedures that have been instituted in your country and in countries around the world, that they're going to work, that they are effective in slowing the spread of the virus.

Not entirely, but they're effective enough to slow the spread of the virus so that the healthcare providers can actually keep up. There's a good chance that happens. It is true that social isolation will work. It's basically the only strategy that's really going to be effective. That and washing your hands, which is why you hear it everywhere.

So if you're looking for the best case scenario, you want to believe that it's going to work. Number three, you want to believe that because this is not such a serious sickness, for a best case viral situation, you're looking around and you're going to find that not very many people get seriously sick and die.

Basically you're looking for a low morbidity and a low mortality rate. Yeah, we know that you get the virus, but it's a little bit of a cough, a little bit of a fever, a couple of days in bed and some chicken soup and people get better. And so there's much debate and discussion about what's the actual mortality rate.

Is it 1%? Is it 0.04%? Is it 20%? Well, of course there are various complicating factors to it, but if you want to see the best case scenario, that's what you're going to look for. And I think there's evidence to think that it's not as bad as it could be.

Another thing that would really lead to a best case scenario with not that many people getting sick is just that we find some ways to really help treat people who are currently in serious condition. There are some breakthrough therapeutic reliefs or methods of relief that are developed to help people who are really sick.

Maybe a company develops or maybe a physician or hospital proves that an antiviral drug is really helpful to people who are suffering from this condition. Perhaps somebody finds a really breakthrough way to develop a new drug that provides relief for somebody who's experiencing the symptoms of the disease. That would be really helpful.

Another thing you would want to see is that perhaps those who do get the virus develop immunity from it and they don't suffer any serious long-term effects. Yeah, they got it, but they were young, they were healthy when they started and they were healthy afterwards. And then they also developed antibodies and they developed immunity to the virus.

That would be good because in many ways then you could say that the people who get it earlier, that's the best situation. So that's one thing. You would look for the virus to be pushed back with warm summer weather. Many viruses are not tolerant of the heat and so perhaps the warm summer weathers that are coming to the northern hemisphere would help to have a relief from the virus and its effects.

Another thing you would look for is you would look for a successful vaccine. You would look to see that a company or some companies or researchers are able to develop, are able to test, and then are able to manufacture and deliver a vaccine. And that that vaccine would have wide acceptance, there would be wide vaccination rates, and that it was effective.

That it didn't have a lot of side effects, people were willing to take it, and they're able to develop and deliver billions of doses of the vaccine. And then another thing that you would want to see for kind of a not so bad case scenario is simply that internationally the virus is only bad in the countries where it's already bad.

Yes, we know it's bad in Italy. Yes, we know it's bad in Iran. We know it was bad in China. But people in other countries all around the world learn from the successes and failures of the countries that were hit first and they successfully follow the same procedures. And that would help to mitigate its spread.

Now I see this scenario as the not so bad scenario. This is about the best case that I can say because realistically, although the total number of people who are killed by it so far is less than some past sicknesses and viral infections, you have to acknowledge that it's pretty bad already.

There are many, many people dying. Hundreds and hundreds of people dying all over the world. Many hundreds and now thousands of people have died. So it's pretty bad already. So I don't think that we could call this a really good scenario, but I would call it just a not so bad scenario.

Certainly there are other factors, but if you're trying to think it through, those are some factors that I think are significant. Now let me give some quick analogs to those points. First you'd have to believe that not very many people are currently sick in your country. And in the last days I'm seeing many public officials openly and clearly acknowledge that the official statistics are simply not accurate.

And they're not accurate either because of problems with testing people or various factors. Some estimates are that the true rates of infection are 10 times higher than what the official data is reported. Some estimates are much, much higher than that. In countries where there have been major problems with the testing, such as in the United States, where only a tiny number of people have actually been successfully tested, it's almost impossible for a rational person to believe that the numbers are accurate.

It just can't get there. And so it's much more likely that there are many people sick. If we switched from the not so bad condition to the really bad condition, what would make the viral infection really, really bad would be if there are hundreds of thousands of sick people already here, here being where you live, and that the virus has been spreading in the community for weeks and weeks and weeks, and that it wasn't accounted for due to poor testing or due to people not understanding the symptoms, et cetera.

That would be the really bad scenario. Now is it really hundreds of thousands of people? I don't know. I'm not an epidemiologist. This is not my area of expertise, but I don't believe the official statistics. And so I would say realistically, we're probably somewhere between the official statistics and the worst case scenario.

But my instinct at this point is that there are at least thousands and thousands and thousands, if not tens of thousands of people who are sick and who've been spreading the sickness, and it just simply wasn't detected. I hope I'm wrong. The next thing that you would say, back to social isolation and containment procedures, to make something really bad, a really bad scenario, would mean that instead of social isolation and containment procedures being put in place quickly, that they're put in place very slowly.

They're enacted too late, and they're followed too little. The social isolation and containment procedures are most effective if they're done before there's really strong evidence that they're needed. If you wait until somebody's demonstrating symptoms, you wait until you have several sick students before you close schools, then you get better results.

Sorry, you get worse results if you wait for them to be sick. If you find out about a sickness, find out that it might be closed, and then you close the school, it's much, much more effective. And so a really bad scenario would just be that social isolation and containment procedures are enacted too late, and then they're just simply not followed.

They're not enforced, they're not followed. People take it casually, they interact with one another. Now here, my assessment is that it's probably a little of both. Probably some of the hardcore social isolation and containment procedures are a little bit too late to be maximally effective. I think people were caught sleeping and too slow because of the heavy cost of imposing those social isolation procedures, that people responded very slowly.

But I do think that people are taking the advice seriously. If we look at some of the scenarios like in Italy currently, and Spain last couple days, and then France today, locking down France as of tonight, I think that people are taking it seriously. And I think that people are taking the risk seriously in the United States and other places around the world.

So probably not at the really bad scenario, but probably not at the very best scenario. Now the third factor, that not very many people get seriously sick and die. If the virus were not going to have a severe impact, you would be looking for low morbidity and low mortality rates.

Whereas if you were looking for a really bad scenario, where it was really impactful, instead of it being low morbidity and low mortality, people would be very seriously critically ill and you'd have a very high death rate. Now here, one of the things that's been encouraging to me over the past weeks has been that people who are generally healthy don't seem to suffer the most severe of complications from the virus.

Unfortunately, that means that those who are unhealthy do. And so we know of course that people who are older are at a high risk. And here's one where I think the United States may face some very significant problems. In the United States, there's a generally unhealthy population, significant levels of obesity, significant levels of diseases, lots of elderly people.

And in that population, it's possible that there would be a much higher rate of illness and a much higher rate of death. So it's not the worst case scenario. The disease is certainly not unsurvivable. But when you consider the factors of who's involved, it's pretty significant. And so the short answer is we don't know.

But the United States population is not the healthiest around. Right now I'm focusing on the United States. The bulk of my listening audience is in the United States. But there are also other places in the world as well, which also have generally low health. We'll cover that in a moment.

The next thing that would make it really bad would be that instead of there being some breakthrough way to, you know, some great therapeutic relief, development of an antiviral drug that proves really helpful, what would happen is the opposite. That not only is there not a breakthrough relief, but the healthcare system could be completely overwhelmed.

The healthcare system is flooded with cases, just far too many for the healthcare workers to handle, and then perhaps even worse, maybe due to the shortages of personal protective equipment, of masks, of face shields, the healthcare workers themselves get sick. Hospitals are overwhelmed. And then the hospital workers have to—they can't treat everybody who needs help.

They have to engage in triage. And there's a very high death rate because not only are there a lot of people who are sick, but the hospital systems are overwhelmed. The healthcare workers are overwhelmed. There's not enough ventilators. There's not enough relief supplies, and there are not enough doctors, not enough nurses, etc.

I think this is a very possible outcome. I hope it doesn't happen, but it's a very possible outcome. And I think if you look at Italy, you see that outcome right now. You see the tents set up outside the hospitals, and you could see that same thing in the United States.

Instead of being able to treat people in hospitals, you're treating people in gymnasiums or out in tents, things like that. And they're just simply triaging people. They're saying, "You're too old. We can't treat you because we don't have the facilities to actually treat you." And that would be very, very significant.

In addition, one thing that would go to the far end, the end of making it really bad, is simply instead of people who develop the virus getting immunity and not really suffering long-term effects, rather what would happen is that those who do recover continue to have lingering effects. They have lung damage even after the illness, or perhaps they don't even develop immunity to the disease.

I'm not convinced on this subject one way or the other. I've read concern on both sides, but I don't know how to judge what I read. But it could be the case that those who have the disease experience, especially more significant cases, have continuing effects. And I think that would change how people viewed it.

What I see happening is most people looking at this particular disease and saying, "Oh, the death rate is only this tiny percentage." But realistically, perhaps 20% of people, if 20% of people who get it have lingering effects, that would be really, really significant. I don't want to spread fake news, so I'll just pause and just simply say I've seen stories on different things.

I don't know what the case would be. What about the weather? Well, on a best-case scenario, the virus would abate with weather. But in a worst-case scenario, perhaps it wouldn't abate significantly with weather. Or perhaps even worse would be that it does abate with the weather. People become complacent.

They return to their normal lives, and then it returns with a vengeance in the fall when the weather goes cold. Now many people say, "Well, the virus is here. It's going to be with us for a long time." And that may be the case. That would be the kind of thing that's a worst-case scenario, where it maintains a very high infection rate and then it's with us for years in the future without the development of a vaccine or an effective treatment, et cetera.

And so that's the kind of thing that would make it really bad. And then two more would be that instead of successfully developing, testing, manufacturing, and delivering a vaccine, researchers just can't create one. There's no luck in developing a vaccine. There's no luck in effectively finding one that would work.

And/or there are problems in the development and distribution of it. I mean, ask yourself this question. Given the current problems of developing an effective test for a disease, and then given the current problems of manufacturing and distributing an effective test for a disease, do you have a high degree of confidence in the authorities in your country to be able to actually successfully develop, manufacture, distribute, and deliver a safe and effective vaccine?

Especially given the widespread concerns with vaccination in general? As far as I'm concerned, that's a hard one to really believe. And then perhaps the worst case scenario, or the last factor that would make it a worst case scenario, would be that instead of the best case that we talked about, that internationally the virus is just where it's already at and then people close their borders, every country in the world closes their borders and they're able to stop it right there.

Instead of that, you have a real international pandemic. You have real international contagion. And perhaps countries with strong, well-funded healthcare systems hold out for a little while longer before they get overwhelmed and they collapse, a la Italy right now. But the virus spreads globally and you have countries with weaker healthcare systems and poorer populations and people in poorer health that are just decimated by the virus and it leaves hundreds and hundreds of thousands of citizens, if not millions.

That would be a worst case scenario. The question would be, I'm sure there are other factors that you can think of, but the question would be if you're trying to analyze it practically, look around you and see which of those seems, which of those factors do you see happening right now?

My answer is, for me, what I see right now is I'm hoping for the not so bad case, but I think it's probably somewhere in the middle of that. The point being, it's a serious, serious problem. And the reason we have such a hard time with it is just simply the difficulty of understanding the numbers, difficulty of understanding the multiplying effects and exponential growth and the difficulty of really digging in and grasping the significance of the numbers.

We're still at that place where it's only some thousands of people. I still hear people saying, "Well, so many thousands of people were killed by H1N1," or "So many thousands of people received it," and "So many thousands of people get the flu," etc. Nobody disputes that fact. The fact that disputes that argument, however, is just simply the fact of viral replication.

Time will tell. I think my guess is we're probably somewhere in the middle of those two things. And my point in going through that type of analysis is to say, I believe that an analysis that leaves you saying, "This is bad, and this is going to be bad," is rational.

Because that not so bad scenario, still pretty bad. Now, hopefully there's something I'm missing there. I really hope, but it's still pretty bad is the point. Time will tell. Now let's switch to the economic effects. I'm encouraged that I'm not—I don't think we're going to be in that worst-case scenario.

I think there'll be some breakthroughs. I have a huge degree of confidence in human ingenuity. There are thousands of people all around the world who are working day and night to try to find solutions to some of these problems. And although the problems are real and they're dire, human beings shine in times like this.

And so I don't think it's going to be a worst-case scenario, but I do think it's going to be quite bad. Hopefully I'm wrong. Now let's switch to the economy, because after all, this is a finance show. And now let's talk about the best-case economic scenario and the worst-case economic scenario.

First, remember where we are as I record this, again, Saturday, March 14 at now, 8.06 p.m. Eastern Time. The best-case economic scenario is already quite difficult. As I record this, Italy, Spain, and France are all in basically a societal lockdown. They still have some services like supermarkets and pharmacies open, some other necessary workers, et cetera.

But basically, the whole countries, all of those countries in Europe are basically locked down. Dozens of countries around the globe have closed their borders to travelers, some completely, letting in no tourists, no travelers, some just to tourists and travelers from certain regions. That's where we already are. Now the best-case scenario would be that it just stops with this.

These countries that have locked down, they finish their lockdown in two weeks, as they talk about, two or three weeks, and then life goes back to normal, perhaps. That would help with the economy if it were a short-term thing. Perhaps all of the countries that are not, Italy, Spain, and France at the moment, perhaps for some reason they can escape having to do the same thing.

Maybe the United States doesn't actually have to go to a nationwide lockdown or martial law. Perhaps it's just magically it doesn't need to be done. Maybe magically there's actually only 2,000 cases in the United States or 5,000 cases or whatever the official number is right now. I forget at the moment.

Because of that, they're all perfectly quarantined and all those people are locked away and the United States doesn't actually have to go to lockdown. You just have what's already in place. We continue what has already been done for a few weeks. School is canceled, but it's only canceled for a couple of weeks.

Large gatherings of people are banned in the vast majority of states, but only for a few more weeks. The timing is relatively short, maybe one more month of this. The schools follow through on their current few weeks of breaks. They do some extra cleaning, maybe move the desks farther apart, and then everybody goes back to school, back to work, and life resumes.

All of the events that have been canceled start slowly picking up again. Baseball, for example. Maybe spring training was mixed, but baseball season starts on time. Then conventions are rescheduled, but are later and smaller. All the people that had to figure out how do I do this with my event and they canceled it, but later on they go ahead and reschedule.

Maybe this magically happens all throughout the world at the same time. Right now it's just three more weeks and then we're out of it. I'm sorry if I sound sarcastic. It's just I'm trying to paint the best example and you can hardly believe it. I don't know. Maybe you say this is an economic good.

We're looking for the best case scenario. We got rid of all the old people. They're all dead. We got rid of all the sick people. They're all dead. We freed up some of the strain on Social Security and Medicare. And now, hey, after all, in the United States, the baby boomers, they're all the old ones.

They have all the wealth. And so they die. All their children inherit the wealth and the younger generation gets all the money and they can go out and start spending and consuming the money. After all, the old people were just sitting on it. They didn't need it anyway. So get rid of them.

We released the strain on the social net and then everyone can spend money. Obviously, that's an incredibly offensive and horrific thing to say, but it's like, I don't know, maybe that helps the economy. Maybe all the people in industries that have already been devastated by this just get bailed out by magical government printing presses, magical loans, free money, free money for all.

No student loan interest. Forgive the student loans. Give it all away. Free money and it all just works. Even that best case scenario is pretty stinking bad. And that's where we already are. If you count the cost on the amount of money that is being lost every single day by so many people.

Now right now it's industries that are very close to things like travel. But the news headlines of yesterday, Delta Airlines cutting 40% of their capacity. That's 40% of flights and I bet the remaining flights are not even full. Just imagine everybody associated with travel and think about all of the industries that rely on that.

When you go through these industries, you go through the NBA, you go through these big headlined ones, but it's not just them. It's people who have conferences and classes and who make their living in small hotel rooms and small meeting rooms and things like that. All of that stuff, devastated.

And even if the event itself is just short term, the trouble of planning it, they can't plan. When some of these events are held, think about the Olympics. The Olympics is years of very, very carefully scheduled and planned out events that have to happen exactly on schedule. Otherwise they just don't work.

And so imagine if the Olympics wind up canceled and that just affects the big guy, the little guy. The point is simply that what already is, is bad, is devastating. Even down to your next door neighbor. There are lots and lots of people who have rental houses that they put on Airbnb.

Well Airbnb just came out two days ago and changed their booking policies and provided free cancellation to everybody. I saw lots of people rejoicing over that about go Airbnb, taking care of the customer. The problem is what about the person with the house to rent? They depended on a clearly written policy from Airbnb and now their schedule is just being completely down.

They have no cancellation fees. They've got mortgages to pay. They've got rent payments to pay. They've got expenses. And that's just, these are just examples that I think about. You can't even imagine the number of examples that are out there. So if the best case scenario is economically that we just deal with what's already been done and then magically in a couple of weeks everyone goes back to work, everybody picks up and we're back at it, it's already devastating.

So what's a worst case economic scenario? Well let's paint that one out. Worst case scenario is all the countries that are currently locked down stay locked down for longer. Because here's the thing, you've got to, for the lockdown thing to work, which is really one of the very few public health tools that a public health official has, for that to actually work you have to do it until the virus runs its course.

If you do it, if you release too early then it winds up being no good. And so maybe, everyone gives these todays, right? It's like if your child's school was canceled, the school sent home a letter saying your child's school is canceled until March 29. That's what the letter says.

But you know that the school has no idea how long school is actually going to be canceled. They're just trying to give an initial date. Because there's so many factors that are involved with them having a date to start again that that's just their first goal. Realistically it could be school's canceled for a month.

Realistically it could be school's canceled for six months. They have no idea. None of us do. So all the countries that are currently locked down stay locked down for longer. And then worst case scenario is that more and more and more countries are locked down tightly. Now personally I think that is the probable outcome.

I think it's probable that many of the countries that are locked down stay locked down for longer and that many more countries are following suit. The reason I think that's probable is just simply due to the time delayed nature of dealing with the viral outbreak. The countries, if you put yourself in the head of a public health official in any country and you think through what they're facing, they're facing the same data that you and I can see.

They're facing a viral infection that is spreading through the population. It's multiplying every few days, doubling every few days. They're dealing with a healthcare system that can't cure it, can only provide therapeutic care and try to keep people alive until their bodies can get rid of it. And basically the only tool that they actually have is some version of isolation.

That's it. That's about the only tool they have. They can try to put out tests and whatnot, but all of that is designed around the strategy of isolation. The goal is not to isolate an entire economy and shut everything down. The goal is just to isolate a family. That's why the testing is important in the early phases of an outbreak, so that you can test and then you can test the person that that person talked to and you can isolate those people.

But it's still an isolation strategy. Once it breaks out, once it gets to that system of community spread, then now isolation and quarantine becomes just a giant hammer that has to be used. And so you start, because it's such a devastating thing to do, you start in modest amounts.

You try to isolate and say to people, "Well, let's cancel schools. That's some measure of isolation." And then you say, "Well, there's an outbreak in this city over here, so let's isolate this city and let's lock this city down." Again, look at Italy. Let's lock these regions down. And then you see that that's not working and then you lock the whole country down and it just gets tighter and tighter and tighter until you can get it to work.

But because it's such a heavy, awful thing to do, because it devastates lives and livelihoods, that's why a public health official will move slowly. So if you want to look at where you're likely to be in the United States, look at where Italy was a few weeks ago, because you can't speed it up or slow it down.

It's just a systematic progression. Unless there's something that comes in and stops the spread, it's highly predictable. It just feels like it's all happening very slowly, because it is, but it's as predictable and as inexorable as almost anything else. I think that you're going to see a lot more lockdowns and I think that they're not going to be nearly as effective as they seem to have been in China.

Now it'll be interesting to see what happens in Italy, France and Spain in the coming week, but China says that they have effectively stopped the spread of the disease. My guess is they probably have. I have a hard time trusting anything they say, but my guess is they probably have.

Maybe I'm wrong. But even that said, I think the only country in the world capable of doing what China did is China. One of the major benefits of a viciously strong authoritarian government is they can move fast in situations like this. Just think about their response of building those hospitals.

China comes in and says, "We're building a thousand bed hospital on that field," and nobody starts protesting environmentalism and nobody starts protesting about, "Well, you don't have a diverse workforce and you can't do that and you can't make those people work overtime and blah, blah, blah." China just says, "We're doing it," and they do it.

That's one of the benefits of an authoritarian dictatorship. They can do incredible things and that's what China has been doing for decades now. They've been taking money and just building these mega cities just again and again and again and again. Now in the process they destroy people, but that's not the society that we live in in the West.

We are almost the polar opposite of that. This is how ridiculous it is. I was in bed the other day listening to the radio and I was in the United States and I had LASIK eye surgery done and while I had to recover from that surgery, after the surgery I had to go home and I had to lie in bed with my eyes closed for six hours as part of the surgery, but I had to put drops in my eyes every hour and a half so I didn't sleep.

I put on NPR and I'm listening to NPR and this is in the midst of it. When I was younger I used to listen to NPR all the time. Loved NPR. I don't know, maybe I just wanted to have that cool NPR voice and modulated sound and those elegant tones and perfect diction of the perfect East Coast and West Coast neutral accent and talk with all my hoity-toity friends.

But I'm listening to NPR and they're talking about school closures. I could not believe some of the stuff that they were saying on NPR. It's been years since I've listened to NPR. I could not believe it. What they were talking about was how all these schools are canceling school, but they're trying to decide whether they can teach school online, teach classes online, or whether they should just cancel class.

And they're talking about how the school superintendents and educators, administrators are wrestling with this because they have to treat everybody perfectly fairly. And after all, only the privileged students have computers and internet connections. And unless the school can provide the same access to education for all the students, then the school can't teach and they can't do the classes.

And so probably what they're going to do is probably just completely cancel class because they can't guarantee that all the students have access to computers and internet connections. So they're probably going to cancel class and make up the work in some kind of summer term. I couldn't believe it.

I thought, "Is this what the United States is these days? That any 10-year-old kid can go online and become a teacher themselves with nothing but a cell phone? And you have an entire world who lives on a cell phone, but you're saying that we can't teach school online because only the privileged kids have computers and internet?" I'll acknowledge as much as anybody that there may be somebody who doesn't have a phone.

Maybe, hopefully. Probably the kid's parents are smart. Maybe they don't have a computer. But that's got to be the tiniest percentage of problems. And to have the entire student body dragged down and not be allowed to learn or study based on this is insane. That's the world in the United States that we live in.

So now you take that culture and the going on and on about how do the stools deliver free lunch and certainly, and I'm listening to all these stories about food insecurity and housing insecurity. And I think I'm like, one thing I learned is I'll never listen to NPR. You're guaranteed to be depressed at the end of that when you listen to NPR.

I felt so disempowered and overwhelmed and like I just couldn't do anything in the world unless somebody came and solved my problems for me. But you take that kind of culture and you try to say, "We're going to lock everybody down and we're going to stay locked down and then we're going to bring this technological system in that China has done where now you got to show the pass on the internet in order for you to get on the train." It's insane.

The United States is doomed in that situation. That's not even acknowledging just the complete general lack of compliance culturally. The Chinese, they do it, right? They put up with it. And some of them speak out, but Americans start a war before they do that. Americans certainly aren't compliant with that kind of thing.

So the point is the lockdown, it's not going to be a short-term thing. They can't turn around and pivot the way that China has. It's not going to happen. You can't even get testing kits created and delivered and administered. How on earth would you do anything even more difficult than testing?

And the testing doesn't even fix anything. So worst case in economic scenario is that the countries that are currently locked down stay locked down and locked down for a long time. That would be very bad. What about supply chains? Well, what you're seeing right now is you're seeing supply chain weakness.

That's why there's shortages. We've talked about this extensively on Radical Personal Finance. There's always some slack in the system, but the whole system is designed for efficiency, for maximum profit. And maximum profit means that any store, any retailer, any distributor, any manufacturer at every stage, you don't want to maintain large amounts of inventory because that's inefficient.

So you want to maintain enough inventory to maintain operations during normal conditions, plus you want to maintain enough inventory to be able to resupply and to cover some shocks to the system. Because especially if you think about large retailers, large retailers want to be a basic source of supply for their customers.

So if you're running public supermarkets and public supermarkets is getting ready for Thanksgiving season, public supermarkets does not ever want to run out of turkey. And so they're going to do everything possible to maintain turkey, including having an excess supply, which is why they put it on sale afterwards.

It's far more important during Thanksgiving that publics not run out of turkey, or whatever your local grocery chain of choice is, it's far more important that they don't run out of turkey than that they have perfect efficiency during Thanksgiving, which is why you see big buckets of turkey and then sale afterwards.

But and the same thing applies during other difficult times of crisis. So if it's hurricane season, Costco does not want to sell out of water during hurricane season and so they plan for that. Walmart does not want to sell out of chips and beer during Super Bowl season. So they plan for it with these very sophisticated supply chains and you have warehouses that do have stocks of that because they don't want to run out.

But the problem is that only works for predictable events like hurricanes or Thanksgiving or Super Bowl. It doesn't work for the black swan events. It doesn't work for things like a global flu pandemic. And it doesn't work for a global flu pandemic if the manufacturers are not able to create and deliver.

And so what happens when supply starts taking off? First, it's a little weird and the suppliers, the stores don't know how to deal with it when something weird takes off like toilet paper. The great toilet paper shortage of 2020 is not necessarily a practical thing. It's a product of human psychology in my opinion.

Nobody just magically needs cases and cases of toilet paper. But that was the thing that people started to realize, "Hey, if I get locked down in my house, I'd like to be able to use toilet paper. After all, I use this stuff pretty frequently. I'd like to have it." So they started buying more and it creates a self-fulfilling prophecy and it creates a human panic that's all based upon human psychology.

Somebody says, "Well, you should buy some toilet paper." And another person says, "Hey, that's a good idea." So they go and buy some toilet paper. Then somebody posts online and says, "Look, people are buying toilet paper, big carts full of toilet paper." And then you get worried about it and you say, "I got to go get toilet paper." And you're worried because now instead of just getting one or two packages because you thought it was a little bit, you thought, "You know, there's going to be a toilet paper shortage." And so you load up your cart and then that creates the toilet paper shortage.

And so the toilet paper shortage is not due to a practical need for months and months of toilet paper. It's based upon the human psychology of seeing that there is a need. Now the current food shortages of some kinds of foodstuffs in some places are a much more obvious example of a more practical need.

But even still, the human psychology comes into place. And that's where the just-in-time delivery system fails because you can't predict human psychology. It could have been toilet paper, but it could have also been something that was related to, I don't know, Tylenol or chicken or something. It just happened to be toilet paper.

So it's got to be obviously some useful good like toilet paper, but you can't predict that. And then once there's a need, then people start to freak out and they start to buy more and then you start to have hoarding and then people stop trusting the system. And so the supply chain continues to be stretched and stretched and stretched, little by little, pulled tighter and tighter and tighter.

And the retailers rush all the goods out from their central warehouses. They rush all those goods to the stores as fast as they can. And if the whole supply chain is working on the back end where stuff is coming into those warehouses, then they've got a chance of making it.

What's the problem? The problem is the virus hit China first. The problem is that China was shut down for weeks. The problem is that it's still not up to normal capacity. The problem is that many things are manufactured in many other places and countries are starting to protect themselves.

One of the most concerning ones was the Indian ban on the export of medicines. A huge percentage of medicines are manufactured in India and that is very concerning because the medical supply chain has exactly the same need or the same system as toilet paper. Now there's some slack in it, but then when the shortages come, it's more and more and more and more.

So the worst case scenario is that the supply chains continue to be stripped out and that resupply doesn't happen for months and months. Now we could make this worse. Now so far, thankfully, the trucks are still going. The truckers are still delivering goods and everything is still working. But what if there's some kind of problem with the trucking system and the truckers stop delivering goods?

That would shut down resupply and that's one of the major weak links in the supply chain. Now thankfully at the moment, I don't see any current risk that would say that the truckers would have to stop delivering goods. A trucker in his cab is just as safe from the coronavirus as he is at home and so he can still keep working and be happy for the money, probably.

But if something happened that interrupted trucking, it'd be desperately terrible. Or more importantly, it would be more countries stopping exporting products. We've mentioned the Indian medicines. For a nation that lives largely on imports like the United States, it's really tough. And so you'd have shortages everywhere. And now part of the bad economic scenario is that people are hurting.

They're uncomfortable. They can't get the stuff that they're used to. Now the United States, we're used to a ridiculous amount of variety, but it can be serious. There are people right now who are having to come up with alternatives to toilet paper and that's frustrating, annoying, and uncomfortable, and hopefully sobering enough to make them recognize how foolish they have been and perhaps how foolish you have been by not planning ahead for that.

Now what else would make the economic situation really bad? Well, large numbers of layoffs. Do you think that there will be large numbers of layoffs? The answer right now is probably I don't know. Over the last months, been significant good jobs reports, right? Hasn't been a lot of layoffs.

And I think right now we're in a situation where everybody is kind of holding their breath. Now there are starting to be people laid off, but there are people who are at the very front end of the supply chain. There are people who are at the very front end, maybe some dock workers.

I've read anecdotes of gyms laying off personal training staff. People aren't going to want to go to the gym, be exposed to people, and so they're laying off personal trainers. That's expected, but so far I don't think there's been a lot of layoffs. The reason is the most difficult thing that a company faces or an employer faces is how to figure out how to bring on good staff and get them trained.

And so an employer does not want to lay off staff unnecessarily because it's hard to replace them. And so you have Apple, Apple computer, or I guess I should say Apple electronic product. Make a lot more than computers these days. So you have Apple that comes out and says, "We're closing all stores all around the world except in greater China." That's a pretty serious thing.

But Apple is saying, "We're going to keep paying everybody their wages." Well Apple has been hugely profitable. Apple has a nice war chest of cash. They can do that for a little while. The neighborhood grocer wants to do the same thing. The neighborhood hardware store guy or whatever, the local businesses, our neighborhood restaurateur wants to do the same thing.

He wants to keep his staff. He knows it's good for business to treat employees right. But we all have a limit to how much money we actually have. We all have a certain amount that we can dedicate to paying our staff. And everybody, all of us are sitting here with bated breath waiting to try to figure out what's going to happen.

I'm sitting here late on Saturday evening trying to figure out what's going to happen. Every business owner is sitting there trying to figure out what's going to happen. We're all sitting down looking at our bank accounts saying, "Okay, what's my triggering point? When am I going to make a decision?" Which is why the next week is going to be crucial.

And then probably the week after that. And then within two weeks probably the trajectory that we're on is going to be clearer. But still we're going to be waiting and waiting, watching, waiting, watching, waiting. What happens? What happens? But back to that viral outbreak, best case scenario, worst case scenario.

If magically it's all cleared up in the next two weeks and we can get back to business as usual, maybe it's not so bad. But do you see any reasonable, rational analysis that would say that we're just going to magically get back to work and everybody be ready to go two weeks from now?

I can't see it. And so economically I think most business owners are watching. They're probably giving it a week and they're probably getting things ready and they're calculating the cost of severance. If they approve severance, they're trying to figure out who it is. This has all come on so fast.

They're trying to figure out who the best employees, who are they going to keep, who are they not going to keep, what tiers of employees are they going to lay off, et cetera. Because there are entire industries that are being brought down to nothing right now. This is very, very significant, but everyone's waiting with bated breath.

So worst case scenario, companies lay off huge numbers of workers and outside of healthcare and maybe grocers or something like that, medical systems, entire industries are just brought to a halt. Working from home is great for those who can, but there are so many, many people who can't work from home.

And then what else? The economic effects, the job layoffs lead directly to people reducing spending. Reducing spending leads to recession and it just has an ongoing spiraling effect where it goes down and down and down and down. Now the Federal Reserve is doing its very best to stave that off.

Maybe they do it, maybe they don't. I don't know. Worst case scenario, the Federal Reserve is exposed to have done everything they can and they can't improve things. The era of free money and debt and it's all going to do is perhaps exposed to be the lie that it is.

That would be a worst case scenario. And the worst case scenario there would just be it goes on for a long time. At some point in time there's going to be a major reckoning on government debt. I don't think we're there yet, but maybe I'm wrong. Maybe we're there.

Some point there's going to be a reckoning. So that's what I see it. That's my kind of best case, worst case, best case, worst case. And my hope is of course that I'm too pessimistic and the best case is maybe it's better than the best case. I don't see how.

If you see how, tell me. But I've talked myself through this for days and I don't see any arguments to say that my best case scenarios are really even possible. They just don't, I don't see how. Now the worst case scenarios I don't think are going to be here.

I think it's probably going to be somewhere between them. But when the best case scenarios are bad enough, you don't need the worst case. So how do you know what's really going to happen? The only thing I say is just simply watch. You're going to have to trust yourself and trust your own analysis.

You can't, you need to listen to experts obviously and I've tried to talk about where I'm an expert and where I'm not. We need to listen to experts and we need to listen to the experts' arguments and assess them to see are they compelling. We need to listen to the official data.

That's important. There are genuine public servants. There are public health officials. They do know what they're doing. But it's hard for me to trust the info from the government. Just simply because the number one vested interest that a government official has is in avoiding panic. And generally it's very rare to find a government official who's willing to tell the truth because they're willing to trust people.

I desperately wish they would. I desperately wish they would just stand up and say, "This is probably going to be bad but we're going to get through it together." But instead they lie and it's sad. So listen carefully, listen with a jaundiced eye because they don't really have another choice.

But my method is just simply to say, "Let me do the analysis and then what can I do to prepare?" You have to do the same thing. We're all in different circumstances. We all have different businesses. We all have different things that we're capable of doing. But prepare for the worst case, hope for the best, and then lay out tiered plans.

Hopefully Monday I'll talk some more about, we'll talk about stocks, we'll talk about the economy. Maybe Monday, maybe Tuesday I'll try to come with you. I'll work steadily this next week to bring you ideas and solutions and information to try to help you through. I hope to be able to host some Q&A calls.

I'll do my best to help you and walk with you through this. But here's what I want to encourage you. In a bad situation there are always opportunities and there are always things that you can do to make a bad situation better. And the thing that is fantastic, at least about the American culture, is that Americans have often shown, and I think still can show, and you can do this from anywhere in the world, an indomitable spirit in the face of adversity.

And I think that that is what is needed. This next week I'm going to do a show, it's on my outline, I hope to be able to do a show. I may be cautious with my words. We don't know what this next week is going to hold. I'll do a show on simply not participating in the recession.

And then I'll do a show on changing your goals. Because when life changes you can change. And just because things are bad doesn't mean they have to be bad, bad, bad for you. We'll give you ideas, try to walk with you through it. We'll work with you to try to do things well.

Don't panic, but do take stock. Don't do anything stupid, be careful. But I hope that by going through this if you see some error in my logic, then of course you'll know that. But if you don't see an error in my logic, then hopefully this will help you to have some idea of what's to come in the weeks ahead.

The very least you need to be prepared to stay at home and be quarantined, or isolate, self-isolation or whatever it is for some weeks. And then what I'd say is make a plan on how to make that useful for yourself. I was talking last night, I did a live stream in the Radical Personal Finance Facebook group and I was talking about some information that I received from a friend of mine who lives in Italy.

And she was talking about what she wished she had known before being locked down. And some of her comments were, "I wish that we had, there's so much time we could have done on house projects. So I wish that I had gone and I wish that I'd gotten paint and we could have painted our house and we could have, I wish I'd had flowers and we could have redone our landscaping and put the time to good use." And I thought, "That's a great idea." So if there's any house projects that have been on your list and you need lumber, you need paint, or you need flowers, or you need seeds, or you need shovels, then go out and get that stuff and just be prepared to work from your house.

The other thing that I was thinking, I was wandering around Twitter and there was a Twitter trend on Twitter this afternoon about how Shakespeare wrote evidently King Lear when he was stuck home, working from home during a plague. Newton invented physics or calculus when he was off of university during a plague.

And that's really my point, is that if you're going to be stuck at home and not able to leave, might as well make it productive, might as well make it useful. I'm intending to ignore the recession and I'm intending to work hard to serve you. And I'm intending my goal is to have the best year ever.

Because at the end of the day, if you can serve people effectively in their current needs, you can help them. You may have to adjust your business, you may have to lay off your staff, you may have to hire someone else, but there's always a way to serve. And in the middle of a recession or in the middle of a crisis, there's always opportunities if you look for them.

And so I want you to do your best to ignore the recession as well. I want to be realistic, but maintain a positive, optimistic attitude, because if you do that, you'll see the opportunities in the middle of it. Thank you for being with me. If you need more help on some of these practical things, remember that I have a number of courses available for you.

Those are relevant, especially my radical preparedness course. You can still buy that at radicalpreparedness.com. The first one is on food, the next one is on water, or sorry, the first one is on philosophy, then food, then water. On Monday night, we'll be doing a live class on sanitation. And there are a lot of things that you can do to be well prepared in the midst of it.

And so if you didn't think that was relevant before, it's relevant now. That course is an astonishingly low price of $29, and I guarantee you, you'll get more value from that. I'll be doing an extensive Q&A on Monday evening on the topic of preparedness. And so if you're trying to find something, you can't find it, and you need ideas of what is available, I'll help you with those ideas as well.

So go to radicalpreparedness.com and sign up there. Thank you for being here. If you are looking for an exciting role in customer service, food service, or retail, connect with a job at the airport. Get started in a role that offers competitive wages, consistent schedules, and fast-tracked in management while you work in a vibrant, exciting environment where security is a priority.

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