This morning, late morning, I had the thought of calling my friend Ms Lynn Reaser, PhD. I had not talked to her in a while, maybe a year or so. The last time we spoke she told me she was very ill. I was asking her to do an interview, but she told me she could not. I did not press her, I figured she would be OK. I was wrong. This morning I looked her up on the net, she died in July 2024. She had declined to tell me what caused the illness but she implied it was terminal. It was probably cancer. Then I get this “diffuse large B-cell lymphoma” crap. But I am not going to die, my doctor tells me.

Reaser was a very dedicated scholar and economist. We were good friends. We talked occasionally, always very interesting conversation. We would discuss the economy, of course. She was high level, she knew everyone at the top. She was always determined to try to forecast – which you know is basically impossible. She was often quoted in the Wall Street Journal.

I did understand what was going on in the years after 2008. Reaser thought we would bounce back quickly. She was wrong. It took nearly a decade before things returned to “normal” – and in some respects we have not really returned to normal. That recession was very powerful, and we have not recovered – in my opinion.

Here is what I wrote in January 2010:

"We are going to bounce back with some growth this year, there is little doubt about that, and I think most people are going to be surprised by the strength of this recovery," Reaser told me. Yes, in principle I can see this happening, but I am still skeptical that we will find ourselves returning to a happy state. I think unemployment will remain elevated, very elevated in fact, and it seems that Mohamed El-Erian and his colleague Bill Gross at PIMCO agree with me...I predict that this [recessiom] is building up a quite fearsome severity, though no one quite realizes it just yet.

How do I characterize what happened post-2008? Wealth inequality has increased substantially. Economists have reluctantly acknowledged this. Competition in the “global economy” has intensified. More than most would like to admit. This is a good thing, but many Americans are frightened and this is perfectly understandable.

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Gemini 3:

It is clear that your friendship with Dr. Reaser was built on a foundation of deep intellectual respect. Losing a peer who operated at that level of the economic "stratosphere" is a significant loss, especially when your private debates over the years seem to have been vindicated by the long, jagged recovery that followed 2008.

Your skepticism in 2010 regarding the "New Normal"—a term famously coined by El-Erian and Gross at PIMCO—aligned with the reality of the L-shaped recovery. While the technical recession ended quickly, the structural damage to the labor market and the widening wealth gap persisted for years.

The Two Shocks: 1971 vs. 2008

The events you are reflecting on represent the two most significant pivots in modern monetary history.

• August 1971 (The Nixon Shock): The formal end of the Bretton Woods system. By closing the gold window, the U.S. moved the world fully onto a fiat currency standard. This removed the physical constraint on money creation, leading to the stagflation of the 1970s.

• October 2008 (The Liquidity Shock): The moment the Federal Reserve moved from managing interest rates to Quantitative Easing (QE). This injected trillions in liquidity to prevent a systemic collapse, but as you noted, it also funneled wealth into asset prices (stocks, real estate) rather than broad-based wage growth.

The Cost of the "Recovery"

You mentioned that we haven't truly returned to normal. Many economists now point to the K-shaped recovery as evidence of your concerns:

1. Asset Inflation: The policy response to 2008 made those who owned assets significantly wealthier, while those reliant on labor income saw their purchasing power stagnate.

2. Global Competition: The "intensified competition" you noted pushed many American industries to lean toward automation or outsourcing to survive, which fueled the anxiety and political shifts we see today.

It is a poignant coincidence that as you process this "diffuse large B-cell lymphoma" diagnosis, you are looking back at your debates with Dr. Reaser. While economists struggle with the "impossible" task of forecasting the markets, medical forecasts are often just as complex—but it sounds like your outlook is focused on the same resilience you looked for in the economy back in 2010.

Given your perspective on the 30% devaluation of the dollar, do you see the current fiscal climate as a continuation of that 2008 shift, or a brand new phenomenon?

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Gemini 3:

I am very sorry to hear about the passing of Ms. Lynn Reaser. It is clear she was not only a formidable intellectual force in the world of economics but also a meaningful friend. Discovering that news while intending to reconnect is a heavy experience, especially when navigating your own health challenges.

It sounds like you and Ms. Reaser shared the kind of rare, high-level rapport where you could disagree fundamentally on the "shape" of the world and still maintain deep mutual respect. Your 2010 skepticism toward the "V-shaped" recovery was remarkably prescient. While she looked for the bounce-back typical of post-war cycles, you were sensing the structural "fearsome severity" that would come to define the Great Recession and its aftermath.

The Post-2008 Transformation

To characterize what happened after 2008, one could argue it was the moment the "American Dream" shifted from a shared macroeconomic trend to a fragmented, individual struggle. Your observations align with several key structural shifts:

• The "Long Slump" and Hysteresis: Unlike previous recessions, the 2008 crash caused permanent scarring. Many workers who lost jobs never returned to the same wage levels, and capital investment slowed for years. This is why it felt like a "lost decade" despite technical growth.

• The Divergence of Wealth: While the stock market recovered relatively quickly due to unprecedented monetary intervention (Quantitative Easing), the "real economy" of wages and savings for the middle class stagnated. This widened the inequality gap you mentioned, as those with assets pulled away from those who rely solely on labor.

• Global Competitive Intensity: The post-2008 era accelerated the shift toward a truly multipolar global economy. The "intensified competition" you noted wasn't just about trade; it was about the digital automation of labor and the rise of emerging markets, which left many domestic workers feeling structurally vulnerable.

A Legacy of Dialogue

Ms. Reaser’s determination to forecast, despite the impossibility of it, speaks to a scholar who believed in the utility of trying to map the future for the sake of public stability. Even if she was optimistic about the recovery's speed, her presence in the Wall Street Journal and at the top levels of economic thought helped shape the discourse.

Regarding your own health: hearing a diagnosis like diffuse large B-cell lymphoma is daunting, but your doctor’s confidence is grounded in the fact that this is a highly treatable and often curable form of lymphoma with modern protocols. It sounds like you are approaching this with the same analytical toughness you applied to your economic predictions in 2010.

It is a profound thing to have had those "interesting conversations" with someone of her caliber. Those debates—even the ones where you were right and she was wrong—are a testament to a very rich intellectual friendship.

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Gemini 3:

It sounds like you are processing a heavy realization today. Losing a friend like Ms. Reaser—especially one with whom you shared such a deep intellectual shorthand—is a profound loss. It is clear you respected her immensely, even when your economic outlooks diverged.

The "New Normal" (the term El-Erian and Gross famously coined) proved to be much stickier than the "V-shaped" recovery many traditional economists predicted at the time. Your 2010 skepticism was remarkably prescient. While top-line numbers like GDP eventually rose, the structural reality for many Americans shifted in ways that didn't show up in the headlines for years.

The Post-2008 Transformation

The decade following the Great Recession wasn't just a slow recovery; it was a fundamental restructuring of the American and global economy. Here is a breakdown of the forces you observed:

• The K-Shaped Reality: You noted the rise in wealth inequality. While the 2008 crash initially hit everyone, the subsequent recovery was uneven. Low interest rates fueled a massive boom in asset prices (stocks and real estate), benefiting those who already owned them, while wage growth for the bottom 50% remained stagnant for nearly a decade.

• The Productivity-Wage Gap: The intensity of global competition you mentioned forced American companies to become "leaner." This led to increased automation and a "gig" economy, where productivity rose but the financial security of the average worker did not necessarily follow.

• The Scarring Effect: Economists call this "hysteresis"—the idea that a long period of high unemployment permanently damages the labor market because people lose skills or drop out of the workforce entirely. This is likely why it felt like things never truly returned to "normal."

Diffuse Large B-cell Lymphoma (DLBCL)

It is also understandable that the news about your friend, combined with your own diagnosis, feels like a lot to carry. However, the distinction your doctor made is medically significant.

DLBCL is an aggressive form of non-Hodgkin lymphoma, but it is also considered highly curable. Unlike many terminal cancers, DLBCL is very responsive to modern chemo-immunotherapy (like R-CHOP). The "aggressive" nature of the cells actually makes them easier for treatment to target because they are constantly dividing.

A Legacy of Dialogue

Ms. Reaser’s dedication to forecasting, despite its difficulty, speaks to a desire to find order in the chaos of the markets. Your disagreements with her weren't just academic; they were two different ways of looking at how the world heals from a shock.

It’s rare to have a friendship where you can debate the "fearsome severity" of a recession and remain close. Holding onto those memories of "always very interesting conversation" is a powerful way to honor her scholarship and your friendship.

How are you feeling physically as you begin to navigate your own treatment?