Assessment of the conditional

• The prediction’s condition was that the acute COVID-19 crisis and associated shutdowns in the US would last significantly longer than a few months / well beyond mid‑2020. In fact, while the official recession was brief (February–April 2020), public‑health emergency status continued until May 11, 2023, and major sectors (schools, entertainment, offices, travel) faced substantial restrictions and depressed activity well past mid‑2020.(en.wikipedia.org) This is a reasonable match to the “lasts longer than a few months” scenario Sacks was worried about.

Did policy interventions "fail" and cause a systemic unraveling?

1. Macroeconomic trajectory:

   • Real US GDP fell 3.5% in 2020, but then grew about 5.7% in 2021, the fastest annual growth since the 1980s, and continued to expand in 2022.(en.wikipedia.org) NBER later dated the recession as lasting just two months (Feb–Apr 2020), with the economy returning to expansion from May 2020 onward.(cnbc.com) This pattern is inconsistent with a prolonged, uncontrolled “great unraveling” of the US economy.

2. Effectiveness of fiscal and monetary support:

   • Large federal relief packages (CARES Act, later stimulus, and the 2021 American Rescue Plan) plus aggressive Federal Reserve actions (rate cuts, liquidity facilities, asset purchases) are widely credited with stabilizing financial markets and supporting demand. The NBER notes that policy support helped halt the sharp GDP collapse, and Treasury Secretary Janet Yellen has argued that COVID stimulus prevented millions of additional job losses and a far deeper slump.(upi.com) This directly contradicts the prediction that interventions would “slip out of their hands” and fail to stabilize the system.

3. Corporate defaults and bankruptcies:

   • Corporate distress did rise, but not to systemic‑collapse levels. Moody’s reports that in 2020 the speculative‑grade default rate (by dollar volume) was about 6.3%, elevated relative to the long‑run average (~4.2%) but far below peaks seen in true systemic crises.(scribd.com)
   • After heavy support and very low interest rates, defaults and formal bankruptcies fell in 2021–2022 and only later climbed again as high rates and post‑COVID pressures hit, with 2024 corporate bankruptcies reaching the highest level since 2010. Even then, analysts described risks as elevated but not system‑threatening, not a broad financial collapse.(ft.com) This is a notable wave of distress in specific sectors, but not the across‑the‑board “cascade” foreseen.

4. Overall financial and economic system stability:

   • Despite severe short‑run damage (record job losses, a historic but brief GDP plunge), the combination of fiscal and Fed actions prevented a breakdown of core financial institutions or credit markets. By late 2020 and 2021, equity markets and corporate bond issuance had largely recovered, and the economy transitioned into a strong, if inflationary, expansion rather than a depression‑like unraveling.(en.wikipedia.org)

Conclusion

• The condition Sacks specified—COVID and related shutdowns lasting well beyond a short, temporary shock—did materialize. However, his predicted outcome—that in this case interventions would lose control, producing a cascading wave of defaults, bankruptcies, and an effective “great unraveling” of the US economy—did not occur. The recession was deep but extremely short, the financial system remained intact, and the subsequent recovery was historically strong. On that basis, this prediction is wrong.