Part 1 – A Second Farley Interview

“When you’re making decisions in real time, you don’t have a full deck of cards, ever.” – DRK

“We’re learning slowly, and when it comes to an epidemic, a pandemic or a plague, they don’t happen every week. They are a test of those who study history; and those who forget their history, as George Santayana wrote so poignantly in his poetry, are condemned to repeat it.” – DRK

Back on April 4, Jack Farley and I doubled down with two back-to-back interviews for his podcast, Monetary Matters. The first was on the tariff shock (just after “Liberation Day” tariff announcements). The second, released on May 16, was on how pandemics impact economies and markets, and how monetary policy has come into play. That, of course, is the subject of our new book, The Fed and the Flu: Parsing Pandemic Economic Shocks (https://www.thefedandtheflu.com).

Jack and I talked about a whole gamut of issues like the two Camp Kotok fishing buddies that we are — everything from how it is that pandemics have historically caused the real natural interest rate to decline, to how the Fed responded to COVID, to how the fragmented US healthcare system makes us more vulnerable, to how COVID is still impacting the US economy today. Jack asked me whether I think SARS-CoV-2 escaped from a lab doing gain-of-function research or nature (where gain-of-function “research” conducted by viruses goes on perpetually). And with tariffs on our minds, we turned to how ancient Athens handled them rationally and with success after an epidemic and a long war.

Toward the end of our conversation, I posed a question of my own:

“We are witnessing economic shocks, tariff wars, isolationism rather than globalism, protectionism rather than integration. Does that exacerbate the risk of another Wuhan or reduce it?”

If you’d like to listen to our conversation, which runs about an hour, the link is below. You can see time stamps at this link in case there are particular sections you’d like to target.

“How Pandemics Cause Economic Shocks | David Kotok on The Fed and The Flu”
Monetary Matters with Jack Farley, May 16, 2025

Part 2 – A Fish Story

What do you do when the United States loses its AAA rating? Do the same thing you did the first time it happened. Go fishing. For the story of the first US downgrade (2011), see “Mike McKee’s Lobster Dinner,” https://kotokreport.com/a-memoir-mike-mckees-lobster-dinner/.

This time, Christine and I and our friend Jack (another Jack, not Farley) drove to the headwaters of Lake Okeechobee on that recent fateful night of the Moody’s downgrade. We stayed at the Hampton Inn and enjoyed a terrific local seafood and western-style restaurant called Lightsey’s Seafood Restaurant & Fish Co. on SW Parrot Avenue (https://lightseysrestaurant.toast.site). This was my second time at Lightsey’s, and I recommend it if you are in that neighborhood. Getting there is a drive through central Florida’s cattle and horse country. This is a much different world than the east or west coast high-rise condo crowd. I think of it as a Colorado trip without the mountains.

This time of year, it is hot in central Florida, which means go to bed very early because you are getting up very early, and you want to be on the water around sunrise. By 9:30–10:00, it is too hot to fish, IMO. There are different species — predominately large-mouth bass, crappie, and bluegill. One can even find an occasional tarpon or snook — yes, tarpon in fresh water because they migrate up the rivers from the salt water. We saw them but didn’t catch any.  

But this friendly largemouth bass was kind enough to make me work with my fly rod. That’s bass fishing pro and guide Jared McMillan helping me. 

(Photo taken by Christine Schlesinger)

The moral of the story is simple.  When the US loses its AAA credit rating, the only thing to do is go fishing. 

Jack Farley, who makes it to Maine sometimes, is welcome in Florida, too. I can introduce him to the other Jack, from Sarasota. 

Part 3 – “Off Again, On Again, Gone Again Finnegan”

The three-minute song “Off Again, On Again, Gone Again Finnegan” was written back in 1910. That was during the era shaped by high tariffs that begin with the McKinley Tariff Act in 1890 and persisted until 1913, the gold standard established by law in 1900, and the post-1907 banking crisis, all of which unfolded prior to the existence of the Federal Reserve. Please enjoy the three-minute song while thinking about the DT 2.0 tariffs roller coaster we are riding in America.

“Off Again, On Again, Gone Again Finnegan” (1910)
https://www.youtube.com/watch?v=3EdRfoPYv0Y

(Image Credit: The Lester S. Levy Sheet Music Collection,
Johns Hopkins Sheridan Libraries and University Museums, https://levysheetmusic.mse.jhu.edu/collection/154/003)

How do businesses proceed in an “off again, on again, gone again” tariff policy environment? What can consumers expect? We note this May 30 report:

“Trump’s tariffs are under threat, but ports aren’t seeing a big rebound yet. That’s bad news for prices,”
https://www.cnn.com/2025/05/30/business/ports-tariffs-imports

It’s June. It’s hot. Our Camp Kotok gathering in Maine is in August. It is “sold out.” I guess we’ll have some things to talk about. Plus some fishing. 

If you are new to the Kotok Report, we invite you to check out commentaries, subscribe, and share:

David R. Kotok, June 1, 2025

(The above was first published on The Kotok Report website and via LISTSERV. For details, and to subscribe to The Kotok Report, visit https://kotokreport.com/.)