After The Hurricane

I'm not big on predictions, but here I am making one that I will stand by. The hurricane that is currently battering the East Coast of the USA has already caused enormous damage; I have seen the figure $20 billion mentioned, and it may well be higher. We cannot of course put a price on the deaths caused, nor on non-fatal injuries great and small, but householders, businesses, infrastructure and much more have all taken a pounding and probably will for some time yet. Now, here is my prediction, there will be absolutely no problem with regard to repairing the damage to the infrastructure. No politician, no business or professional person, and certainly no banker will stand up and say railway X, road Y or building Z cannot be repaired or even totally rebuilt for lack of money. Both the money and the resources to carry out all the necessary work will be conjured up out of thin air. Indeed, there will be some asinine commentary to the effect that - deaths and injuries aside - the storm has been good for the economy. While it is unquestionably true that some individuals, some businesses and even some industries will benefit financially, the broken window fallacy assures us that the bad will far outweigh the good. Why then will the storm damage be repaired, if not at the drop of a hat, then extremely swiftly? Because politicians will demand it, all the way up to the President (hopefully still Obama), and the banks will make the credit available. In short, they will do what they always do under extreme pressure in time of emergency, especially war time, namely they will ensure that cheap credit is made available until the task is done. Then, they will demand repayment of this credit at compound interest in perpetuity, and no mainstream politician will ask why said credit has to be re-paid after the job is done instead of this imaginary debt being cancelled out of existence.