The markets were on edge last week. Up. Down. Sideways. Mr Market seemed undecided. Unsure. Was the Fed getting ready to ‘pivot’? Was the recession going to be ‘softer’ than we expected? He didn’t know.
But our guess is that the Fed will stick with its rate hikes a while longer…the recession will be deeper than expected…and stock prices have further to fall before finding the bottom.
In the meantime, we’re on our way south…driving down US 95…unarmed. And we’ll take this occasion to develop an old theme…and introduce a new one.
We begin, today, by going back in time.
Louis the 14th was the Sun King. He was an ‘absolute monarch’ whose word was law.
He was also at the head of what was the 17th century’s richest and most powerful nation: France. Whatever Louis wanted, he got.
But he also got things he didn’t want. Dental caries, for example, and a toothache. Charles Spencer, Princess Diana’s brother, describes it:
‘In the autumn of 1685, Louis developed an agonizing and persistent toothache, and his doctors decided to extract the offending molar.’
They did it without anaesthesia, neither local nor general. And then, with no antiseptic, and limited understanding of post-operative hygiene, an infection soon set in. It spread to the King’s jawbone and threatened his life. The royal sawbones — the best in France — decided on more surgery. Mr Spencer continues:
‘They removed all of the teeth from the top layer of his mouth, then punctured his palate and broke his jaw. This was all completed without anaesthetic; the king was awake throughout the procedure.’
When the gruesome ordeal was over, the medical team cauterised the wounds by placing red-hot coals in his mouth.
His life was spared. But not his dignity. When drinking, liquid would sometimes come out of his nose.
Facts of life
Antiseptics weren’t widely used until 200 years later, when Joseph Lister began applying what we call ‘phenol’ to wounds. Phenol is derived from petroleum distillates.
Anaesthetics weren’t in service until a plethora of experiments — also in the 19th century — with chloroform, ether, cocaine, and opium led to both general and local pain killing.
Public buildings in France weren’t centrally heated until the 20th century. The Palace of Versailles didn’t get heat until 1956.
Penicillin came on the scene in 1928 when Alexander Fleming extracted it from a laboratory mould. Root canals were done long before the birth of Christ, but the first modern root canal was performed in 1838. They became routine with anaesthetic only in the 20th century.
At least Louis 14th ate well. For while Louis’s toothache occupied his attention, in the 1690s — 1.5 million people in the world’s richest nation — starved to death. Then, came another famine in 1709, with another 600,000 dead. Famine — like war and slavery — was a ‘fact of life’ in the 17th century.
In famines, people do not necessarily die from starvation. Many are undernourished and weakened by hunger; then, they die of opportunistic diseases.
Crops fail from time to time. Drought, heat, cold, too much rain…too little sun…can all cause a bad harvest. Then too, crops and farm animals are subject to common illnesses, blights, and epizootics.
Working as hard as they could, families could usually produce enough to live on (or else they wouldn’t have survived) but they could rarely produce a substantial surplus…or save it ‘for a rainy day’. And even when they could produce more, food was hard to keep. Fruits and vegetables rotted. Grains were eaten by mice and birds. ‘Food security’, as it’s called today, was rare.
Throughout the Middle Ages, and up to the 18th century, there was a major famine almost every 10–20 years. Some of them were terrifyingly lethal. The great famine of 1315 killed some seven million people…or about one out of every 13 Europeans. Even as late as the 1840s, the Irish famine killed more than a million — or nearly a quarter of the population.
But by the middle of the 19th century, there were few famines in Europe.
The last major famine in France occurred in the years just before the French Revolution. Possibly caused by a volcanic eruption in Iceland, the French went hungry in 1787 and 1788. By 1789, they were ready for a change. Soon, they were cutting off heads by the thousands.
Over the years, the number of people who starve to death has dropped dramatically. Modern, civilised countries suffer more from obesity than from hunger. Food is cheap. Plentiful. And extremely varied. A person in Baltimore can sit down for breakfast and enjoy a bowl of muesli with nuts from California…quinoa from Bolivia…other grains from Iowa and South Dakota…dried raisins from Chile…and cashews from Brazil.
If he wishes to put in some fresh fruit, he will have no trouble cutting up a banana from the Philippines, blueberries from New Jersey, or strawberries from Florida.
What accounts for this dramatic abundance?
Why did the number of starvation victims decline?
While deaths from starvation have decreased, so have the number of victims from other natural disasters. Though there are far more people on planet earth than ever before, fewer, and fewer of them succumb to nature’s torments.
One of the myths from our last hurricane season is that storms are getting worse…and ‘climate disasters’ are becoming more frequent.
When Hurricane Ian struck the west coast of Florida earlier this month, for example, the press was quick to point the finger: at climate change. The Financial Times reported that ‘hurricane frequency is on the rise’. The New York Times added that ‘storms are becoming more common in the Atlantic’. The Washington Post got the same memo; ‘climate change is rapidly fueling super hurricanes’, it told readers.
And then the president himself, Joe Biden, added:
‘I think the one thing this has finally ended is a discussion about whether or not there’s climate change, and [that] we should do something about it.’
But none of it was true. The National Oceanic and Atmospheric Administration (NOAA) had already studied the issue and concluded that ‘there is essentially no long-term trend in hurricane counts’. Nor were hurricanes becoming more intense or more dangerous.
‘We conclude that the data do not provide compelling evidence’ the NOAA wrapped up, for neither more storms nor fiercer storms. If the storms were doing more damage, it was only because there was now more development on the Florida coast to do more damage to.
The reporters must have known the truth. You’d think someone would have clued in the president too. But they chose to ignore the facts in favour of the approved fantasy.
An embarrassment of riches
In the 1950s, when we were eight years old, a snowstorm closed the roads of Maryland for a full week. We walked for miles to the closest store to get supplies, pulling a sled behind us. Today, the roads are cleared quickly.
In general, people suffer much less from nature than they used to. When they get a toothache, they go to the dentist and have a fairly painless remedy. When it’s cold, they have central heating. When it’s hot, they turn on the AC. When the wind blows, they stay in their well-built houses, safe and sound. When it snows, they load up on food and toilet paper…and then drive around in four-wheel-drive automobiles, waiting for trucks to clear the roads. Even floods are much less dangerous. Usually, the warnings come out hours…days…or weeks in advance. People are given plenty of time to get out of harm’s way…or ‘ride out the storm’ in a protected space.
What accounts for these changes? Nature has not changed much. She still has her tempers and her tantrums. But now they are much less lethal. Few people die, from cold, from heat, from tidal waves, from floods, or from wind. Whatever Mother Nature throws at us, we humans are generally able to cope with it fairly well.
In the very old days, nature was always a threat. Humans were hunters…and also prey. But today, few people are killed by wild beasts. Even tiny beasts — viruses, bacteria, and fungi — are no longer anywhere near as dangerous as they used to be. The Black Death in the 14th century killed an estimated one out of every four people in Europe. Then, in the summer of 1665, the Great Plague of London killed 15% of the population of the city. But during the COVID Crisis of 2020, the world’s population actually went up. Fewer than one person out of every 10,000 died, and he was usually over the average age of death anyway.
What made the difference?
Tune in tomorrow.
For The Daily Reckoning Australia