Isn't that the biggest goal right now? Maintaining a healthy banking and housing system by subsidizing rent, mortgages, debt payments etc? $1000 a month doesn't seem like a stimulus, it seems like a bridge to the other side.
normally a stimulus works because if you give people $1000, people will go and spend at least some of it. With most options for discretionary spending shut down, there's really just two things left to spend on: rent and groceries (and i guess: amazon orders).
$1000 to every american right now will end up just being a huge payment to landlords. i'm not saying it's a bad idea, people still need to make rent and buy food, but it's not going to stimulate anything. grocery stores are already bringing in record revenues, and landlords don't need the money. It's financial aid, not a stimulus.
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.
Giving everyone money makes sense as fiscal stimulus once the economy is back to normal. It does not make sense now because people are avoiding spending and many will not need the $1000 and not spend it.
Demand-side stimulus, especially to middle- and lower-class citizens tends to have very high multipliers. The intent isn't simply to say "here's $1000 so you can live the high life" it's $300B worth of fresh aggregate demand to keep businesses in business that will turn into more $500B once it's finished circulating.
Not necessarily. If the monetary stimulus was like $10,000 per person, it would be totally different than lowering interest rates that mainly benefit the rich that can get even more cheap money now to buy properties off the market.
Also, it's not a stimulus package. People need to stop calling it that. A stimulus is intended to get people spending money because they're all scared and keeping their money in savings. This is meant to keep people afloat because they have no income.
Its long overdue, and I hope it happens (even though I am a home owner). It seems to me all the stimulus money ends up in the realty market. It looks great for home owners (but money printing isn't good for anyone). It really hurts the people just getting started in the economy.
In fact, those are probably the only ones who really need the stimulus in the first place. It's not like someone with $400 on a bank account and a stimulus check of $2000 is at risk of spending it all on something nonessential like Bitcoin or Tesla stocks instead of paying rent.
We need a debt stimulus for the lower class, by lower I mean the bottom 90%.
Back when they gave the stimulus to the banks, it almost would have been better to get money/stimulus to the people to use strictly to pay down debt (credit card, home, student loans). Even if it was only a chunk, not only would this have helped free up debt load, it would also go directly back to the banks that had been lending to the lower 90% all along.
Instead they gave money to banks to help with loans/lending, overlooking the fact that it does nothing to help consumers. They gave it to groups that weren't really lending to the 90% of consumers.
Trickle up is not just trickle up, it is trickle up and down. When you give money to the lower 90%, most of them give it right back. When you give it only to banks and upper 10%, it typically stays locked up in that 10%.
Anybody surprised by this consumer economy sputtering hasn't been looking at it and doesn't get that you need to get money to the lower classes to prop up the upper classes and banks.
Wages have stagnated this entire century so far, when people were surprised in 2008 when it came crashing down, it wasn't housing alone, it was that people had no money, less raises, while costs rose immensely.
I won't go into the trillions on war spent on credit by the country as well that further harmed the downturn. We financed the wars with China's credit, it is almost as if China wants to break us with debt and ongoing, un-winnable wars. We aren't playing the game very smart and the greed is thick.
In the future, stimulus should mean lowering debt loads of personal and state debt from the bottom up. Again, rich people mad by this aren't thinking it through, it is a two step hop and it is right back to them. But you'd have the lower classes now with more debt room and or room to spend. This is the only fix.
If you were playing a simulation to create a good economy in a game, you'd probably do something like this instead of enrich modern day kings to hold onto, hoard and lock up more money in the upper 10% backdrift that does not make it's way to the lower 90% with enough force.
This is doable by a large govt. $300 billion is 1/10 of covid aid and related stimulus. The point is that small, strategic payments can stave off much greater systemic damage, which is what a bailout does.
Australia avoided recession in 2008-09 by doing almost precisely this. Everyone got A$900 or thereabouts (a month's rent or more for some). Worked fantastically.
Think of it as applying a defibrilator to all parts of the body at once because there's no central point you can target. Infrastructure projects aren't as good as this because they take time and only really effect one particular geographic region with some spillover if you're lucky.
Home buyers and other debt owners sure. But otherwise they weren't intended to help workers as that isn't part of the Fed's mandate. It helps indirectly in that it helps pave the way for the federal government to enact fiscal stimulus via debt.
The stimulus packages provided for far more than just bank lending. Read some of the bills, there were a lot of projects and spending programs.
Regardless, even it if had only been for banks. Anyone was able to borrow nearly interest free money to turn around and spend.
This means anyone (that was wealthy enough) could take their $100k and borrow an additional $X00k they used to purchase assets. When half the purchasing power of the country does that you suddenly have 2x inflation as there are 2x more purchasers (or 2x more money).
I mean, it’s not hard to understand. Give everyone a bunch of money and most of them will fix a bunch of problems in their life, feel less stressed, and be more optimistic.
On top of the federal stimulus, this housing bubble has a lot of people thinking “okay I can retire off the sale of my home now,” though I doubt they’re thinking through where they’ll live after that sale, nor how inflation may devalue what seems today like a vast accumulation of wealth on paper.
The current situation makes me (a) more convinced that policies like a negative income tax are a superior safety net to the bureaucratic means tested programs we use today, and (b) more concerned that zero interest rate policy and the incredible distortions in the financial markets are going to end very badly.
As long as the government can keep spending more every year, everyone is happy. This will apparently work forever. Best not to ask questions about how this affects the poor that don't have inflation hedges such as real estate or stocks.
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