The lack of continued large-scale stimulus is tragic. We need a strong stimulus package with direct monetary relief (one $1200 check is not enough), and a program of structured financial relief / rent forgiveness. Unfortunately, I don't see it happening.
We should have explicitly been paying people to stay home, but somehow the $1200 + the $600 unemployment bump became welfare payments, and morons were giving speeches about how they were incentivizing people to stay home. No shit.
Once we had things under control, we could loosen up quarantine, then when it got shitty again, tighten it up again and pay people to stay home. It would have goddamn paid for itself. If people could quarantine and know their livelihoods were secure, they wouldn't be so upset about it.
edit: this is a rehearsal for when the next coronavirus comes around that has an infection rate like covid-19 but a death rate like MURS. It's going to whip through the world like the plague.
Well fucking said but both times the stimulus was enacted we neglected large portions of the economy. If we do so again it wont be fixed and hello deep depression.
The problem is that one stimulus check cost $2 trillion dollars. Doing that every single month for an indefinite period of time is, quite expensive to put it mildly. And that’s not even taking into consideration that there’s a lot of people with monthly expenses in excess of $1200 per month.
I know these are large numbers, but the 159 million economic impact payments cost $267 billion [1]. This article [2] gives a pretty good overview of the $4T spent in total so far
> I know these are large numbers, but the 159 million economic impact payments cost $267 billion [1].
Great, but the bill cost $2T. Same with the recent one that’s been put on ice. Because there’s no such thing as a bill that only contains direct cash payments to citizens, they’re loaded up with pork and stuff that doesn’t even having anything to do with the pandemic.
Yes, we need at least another 6 trillion. Maybe 20 trillion. Why stop there? We should quadruple the money supply maybe, we need to protect commercial real estate investors, after all.
... and then in 2021 we can all scratch our heads and wonder why income inequality is worse than ever, and despite all this spending, we didn't even make an appreciable dent in the impact of Covid-19 on public health.
Monetary stimulus (QE, Low interest rates) is not fiscal stimulus (spending). Maybe we need to do a lot less buying assets, and a bit more spending on people and jobs. The parent is recommending the latter (spending), not the former.
When you dramatically expand the money supply you make the rich richer. It doesn't matter how the money is distributed, it tends to inflate asset prices, and the people who own the most assets (the rich) reap the rewards in the end.
If you wanted to stop that, you'd have to actually pay for your spending, perhaps by implement some sort of wealth tax or dramatically increasing income taxes. Of course, nobody wants to increase taxes, so we just keep printing money to try and fix every problem.
The number of people who are homeless, in medical debt, and unable to work or make any money due to limited skillsets and COVID is astounding. These people need some type of immediate help, and if they don't receive it, the effects will be far more detrimental than the effects of fiscal stimulus.
And I think you're confusing monetary stimulus with fiscal stimulus.
> It doesn't matter how the money is distributed, it tends to inflate asset prices
For the US, that's not true. The US Dollar is the world's reserve currency, and the Fed isn't worried about inflation, but a lack of money supply. The pandemic has led to a huge demand for safe assets, including Treasury bonds, which has led to incredibly low interest rates on Treasury bonds, and a stronger dollar. See, for example, this article: https://www.washingtonpost.com/business/2020/04/05/what-2-tr....
Why not just print 1 million dollars per person and end poverty in one fell swoop? If there are no consequences for printing 3 trillion, why not print 300 trillion?
This is the worst strawman argument I've ever seen. The problem is precisely that corporations (especially badly managed ones) have been able to bleed the stimulus coffers dry, and they will continue to do so, because we have a system of government which caters to them.
Direct payments and rent forgiveness are not "printing money", they are limited, specific relief packages targeted at people in need. These are people who are about to be evicted, homeless, in medical debt, etc. These people need help, or the consequences will wreak havoc on a colossal scale.
I think it's instructive to set aside money for a minute and think about things in real terms: if we shut things down, then which parts of the economy won't be functioning and what is the cost of that.
For example: suppose hospitality workers are paid to stay at home. How is that paid for? Well actually it's entiely paid for by people having fewer of the hospitality experiences that they are used to. It is obvious when you take money out of the equation that hospitality workers staying at home will not cause there to be any less of essentials such as food and shelter to go around.
There are other sectors like manufacturing where there is a real cost to be paid. But that could be as small as delaying the purchase of the manufactured goods by period of lockdown. No so bad.
Whem you look at it like this way, QE seems entirely justified. All it really does is spread the effects accross the economy to people who can bear them, and avoids financially ruining people which will be a primaey cause of long term economic damage once things reopen.
I'm not concerned about justification for QE, but more about where is the limit of debt you can take on to provide cash to a vast population, and is there a better way to fix things?
I see the problem as a lack of agility of the economy. The hospitality works could have another job, but those jobs can't get created fast enough. How can they get paid by other people rather than the government.
Another question is post-covid do we want to ramp up consumption again. Do we need people flying to hotels to meet up, or will Zoom do? And if Zoom will do, what of the hospitality industry (already taking a stab wound from Airbnb etc.).
They don't need jobs because we don't need those people to work. What we need them to do is stay at home.
There shouldn't need to be any debt involved. It should be as simple as printing money (the central bank can do this) and distributing it to the people who need it. Normally this would cause excessive inflation because it would be injecting extra money into the economy. But it shouldn't in this case because it's injecting money that was already there until very recently.
Mostly deficit spending. QE and the like is for increasing the money supply, not really spending. Though it can have a knock on effect in terms of the rate the govt borrows at.
Really, it's an infrastructure problem. We don't have direct payment rails set up for something like UBI, and the political will to build this infrastructure is next to zero.
Most of the companies receiving relief were badly managed before the pandemic, and they should be allowed to fail. But it's very hard to structure relief in a fair and effective way.
How many people are/were barely attached to the banking system? Especially if you’re working, well, a bit under the table, in day labor situations like construction or office cleaning.
I got my stimulus check. Basically immediately. Because I have a standard 9–5 salaried job with direct deposit, so the government knew exactly where to send the money. But that seems to obviously not have the force multiplier effect of sending it to someone who just got fired from a movie theater.
I'm not the above poster, but I took your comment to mean direct deposit from your employer to your account, not direct deposit from the IRS to your account (for tax refunds, which is what I assume the above poster means).
Yep. It's any tax refund setup to direct deposit from the IRS to your bank account. It doesn't matter if you have employer direct deposit. One other problem is that many people in the US are unbanked so they get prepaid debit cards or a check.
I agree its very difficult and in making decisions like this we will incidentally help pick winners and losers.
I dont think temporary relief will make or break a business model effected by the pandemic. On some of those edge cases we will need to decide whether the government will get their money back or accept losses.
In WW2 we transformed every industry overnight to be geared for war.
I think we can handle setting up a payment system...
Like what kind of weak ass excuse is that? You can't figure out how to pay everyone?
Please. Give me a break.
Ubi is the effective and fair way to stimulate the economy btw.
All this stimulus aimed at businesses is absolutely moronic.
If people know they have secure pay coming in they will spend the money. Its the uncertainty that causes people to hard cash.
Businesses don't need the cash, if they can't stay afloat during this they shouldn't be allowed to make it through.
I do believe they deserve some help,aybe tax breaks, maybe short term allowance to make people redundant / reduce so they can equalise the books but there is no fair way to give them money and not the people.
In an economy with 80% consumer spending, your assertion should be supported because it is fundamentally at odds with the economic context and make up of economic activity.
Supporting consumers obviously worked this year, the fact that a 30% drop in economic activity has been as mild systematically as it has is direct counter evidence to your statement.
This is too reductive and unclear what you are saying.
If we do no redistribution and simply allow people to starve in the streets then revolution is coming.
On the other hand, if we prioritize helping people, and stop propping up failing businesses then we can maintain social stability long enough for the economy to restructure according to natural economic forces.
You don't need to print money. The measures of injecting money for consumption never work. There are too many precedents, the best, I think, is Argentina, which uses the Keynesian method of injecting money to generate consumption, creating brutal annual inflation and putting the country into recession every 2 years. If you really want to improve people's quality of life, you have to encourage investment, saving and deregulating things so that prices fall, and investment strategies change and focus where it would really give money.
Between the socialists years, 2006-2010 they've spent so much in consume programs that we will be paying for that many years. We're lucky that we have euro, but the proof is unemployment is hight as crazy every year and there are no signs of investement. People also changed mindset from savings to spendings, and now they are demanding more money from the goverment for anything. Please check also Chile, they had couple of programs made by Bachelet, they all failed.
I agree that there was a massive mal-investment in much of the Eurozone post 2002 (I'm irish and remember this well), but I don't really see how this maps to socialism/socialists. Can you clarify?
It is not. During Zapatero's we had the worst crisis ever, now we have covid's and Sanchez ruling agenda: money spent on gender, progresive things and not in real infraestructure. There's a sort of basic income done, and it is not even working.
