Financing programs to help the U.S. economy pull out of the coronavirus crisis could be worth $4 trillion, Treasury Secretary Steven Mnuchin said Sunday.
The Federal Reserve would likely put up approximately $700 billion as part of grants and loans authorized under the bill.
The liquidity efforts come along with fiscal help that could be worth $2 trillion, according to statements from Mnuchin and Larry Kudlow, the National Economic Council director. Unemployment claims next week could total three million, Bank of America said this week, as some workers get laid off without severance, paid leave or health insurance. Hospitals are also facing equipment and staff shortages amid the crisis.
There will be direct checks for about $3000 per family. There will be money or loans for small business.
The multi-trillion dollar packages could be passed today.
Nextbigfuture notes that some are concerned that these and follow-on measures could take the national debt to $30 trillion or more. I do not think this will be an issue because interest rates will be about zero for the next decade. There was negative interest rates in Europe and Japan even before this crisis. The US, China, India and South Asia were the only engines of global economic growth. The crisis and its after-effects means all major countries will be in the same situation.
SOURCES- CNBC, Analysis Brian Wang
Written By Brian Wang, Nextbigfuture.com
Brian Wang is a Futurist Thought Leader and a popular Science blogger with 1 million readers per month. His blog Nextbigfuture.com is ranked #1 Science News Blog. It covers many disruptive technology and trends including Space, Robotics, Artificial Intelligence, Medicine, Anti-aging Biotechnology, and Nanotechnology.
Known for identifying cutting edge technologies, he is currently a Co-Founder of a startup and fundraiser for high potential early-stage companies. He is the Head of Research for Allocations for deep technology investments and an Angel Investor at Space Angels.
A frequent speaker at corporations, he has been a TEDx speaker, a Singularity University speaker and guest at numerous interviews for radio and podcasts. He is open to public speaking and advising engagements.
You don’t see it, I guess.
Paying those out-of-work while not suspending their debts is a new way to funnel billions or trillions to banks to keep them from suffering any lost profits. You can bet the bankers are right there behind the politicians urging them on.
In the case of rent, the dollars just funnel through an additional layer, the apartment owners. Suspend their mortgages as well – but in return, they only get to pass along short term operating expenses to renters. The minority of small-scale apartment owners who live off rental income we could afford to subsidize – give THEM a thousand a month.
The only banks that would go under from deferring repayment of the money they loaned into existence out of thin air would be any who ignored the 2008 warning, and again got themselves over-leveraged trying to squeeze out a little more profit. But we can be excessively kind to them again: suspend inter-bank loans as well – kick that can down the road again for some future crisis.
worst.
idea.
ever.
“…Let’s say we expose lots of people to the virus rather quickly, to build up herd immunity. Furthermore, we would let commerce and gdp continue to thrive. Even if that were the very best policy on utilitarian grounds, it might not be time consistent. Once the hospitals start looking like Lombardy, we don’t say “tough tiddlywinks, hail Jeremy Bentham!” Instead we crumble like the complacent softies you always knew we were. We institute quarantines and social distancing and shutdowns and end up with the worst of both worlds.
Alternatively, let’s say we start off being really strict with shutdowns, quarantines, and social distancing. Super-strict, everything closed. For how long can we tolerate the bankruptcies, the unemployment, and the cabin fever? At what point do the small businesspeople, one way or another, violate the orders and resume some form of commercial activity? What about “mitigation fatigue“?
Again, I fear we might switch course and, again, end up with the worst of both worlds. We would take a big hit to gdp but not really stop the spread of the virus.
I also can imagine that we keep switching back and forth. The epidemic yoyo. Because in fact we find none of the scenarios tolerable. Because they are not…”
Have a good one 😉
best.
idea.
ever.
“…I propose temporarily stopping time. This means that today’s date, Sunday, March 22nd, 2020, will remain the current date until further notice. This also means that everything that happens in time (e.g. mortgage due dates, payrolls, travel bookings, stock market trading, contractor gigs, concerts, sporting events) will be paused. It also means that all of these events remain on the books, and will continue as planned once time is resumed. Before reacting to this crazy idea, let’s start with a very simple example of how manipulating time is already both commonplace and effective – daylight savings time, a practice that everyone in the US is already accustomed. It’s the impressive unity of action that is significant about this idea of manipulating time, and this feature is key in responding to a global pandemic. We’re spending trillions of dollars to keep time going (e.g. sending every American a check so they can pay their rent, sending airlines $50 billion so they can pay their jet notes, providing billions to banks to cover distressed assets), but none of this really relieves the need to keep going out and working and thus further spreading the virus. How many travel plans, conferences, sports leagues, and other plans have already been cancelled along the way? We should be targeting this massive government money for mission-critical items like expanding hospital capacity, ensuring the food supply, and maintaining distribution networks…”
why the acrimony against Millennials then? You started your career in the 90s and enjoyed those golden years when everyting seemed to be easy, probably ending up buying a house or two (at least) by now. Was it skill or was it luck..? Finding a decent place at less than 5x your annual income must have felt pretty normal back then, wasn’t it?
If anything, I’m even happy the bubble popped, now I can finally jump on the speculator bandwagon this time around and enjoy the same ride you’ve been getting a few times already. Then when I end up being lucky, I’ll take credit and proudly announce to the world that it was because of my skills. And surely I’m gonna keep up the tradition of being dismissive with the generation that comes next, those sore losers!
Because the business go under and so when this is all over there is nobody to hire the unemployed.
Well while us 40 year olds are less likely to die from the virus it will still scar and mess up our lungs making us much more likely to die from pneumonia for years to come.
Death wasn’t the only downside, simply the largest one.
Pelosi killed the senate bill so this won’t happen.
I’m gen X.
you have no future, boomer: if the virus won’t get you, mere time will. Thanks for saving up all those (real?) assets you’re about to pass on to some hated millennial.
unless pension funds are willing to explain their beneficiaries that they’re getting a pension cut (like it’s tacitly happening in Japan), with interest rates at zero for a decade a gigantic amount of capital is going to flow from from supposedly developed nations to positive-interest countries, namely: what currently referred as “emerging countries”. Moreover, with all this new money creation, when the velocity of money speeds up we’re gonna see a tsunami of inflation, especially in commodities. These two dynamics are a huge solid reason to invest in Africa and South East Asia NOW.
Also, in the US and to a lesser extent in Europe, house prices will take quite a hit in the short term: in a few months it will slowly start appearing a window of opportunity to hunt for bargains, better if bought with some sweet close-to-0% leverage, waiting for the aforementioned inflation to kick in in 5-7 years.
The inflation won’t be fought that hard by central banks, since it is necessary to devalue the debt. Without debt devaluation in real terms, we’d be stuck in “present-day-Japan” forever, which no one really wants. So, I guess it’s time to say “keep it real”.
Papa’s music: “… only the good die young…” – i guess not…
Dude that made me choke on my coffee LOL. Good stuff. xD Though, this would be a great time for anyone who truly knows about navigating economics and markets and how trade (not market trading) works to make good income, or at least set themselves up to make good income later.
Suck it Millennials! You thought this virus would wipe out the Boomers but it is going to wipe out your futures!
Trump?
Print that money Fed. Print it good
And here come the desperate schemes:
“… segregating the elderly and letting others return to work. When you run the numbers, as the British did, you find that a lot of young people would die. If we return to work too quickly it could easily happen that 20-40% of the US population gets COVID-19. Suppose 20% of the population gets it–that’s 66 million people. And let’s suppose the death rate is on the low end because healthy, young people get it rather than the elderly, say half of one percent, .005, then we have 330,000 deaths of healthy, young people.
So, we probably can’t segregate the elderly because the more COVID-19 spreads, the less likely we can control it and be affected by it, which is why we were locking down the elderly. A contradiction…”
Why not “just” declare that anyone who is out of work has the right to suspension of all debt payments and rent payments?
Would banks really be hurt by that?
And aren’t most owners of rental property sufficiently well off that they could absorb the loss of income? And if that seems unfair, there are far fewer renting than rentors, so reimbursing them should be much easier.
Sounds like overkill to me, but it is good to prepare.
The regions where the illness has spread is due to local failure. Now that people are more aware, and bureucracies are operating outside-the-box, I am hopeful that these local outbreaks will be quickly caught and shut down.
I don’t expect lawmakers to give any of that money back.
Problem is No businesses put aside money these days. You don’t save money now you just find investors….but if the investors are all broke….
The nice thing about inorganic unemployment, is that, once those orders to shut down end, things may snap right back to normal. At least for the businesses that didn’t go under in the mean while.
woah ho ho… economists vs pandemic policy (pull off the bandage fast or slow edition):
“… Our model implies that people’s decision to cut back on consumption and work reduces the severity of the epidemic, as measured by total deaths. These decisions exacerbate the size of the recession caused by the epidemic. The competitive equilibrium is not socially optimal because infected people do not fully internalize the effect of their economic decisions on the spread of the virus. In our benchmark scenario, the optimal containment policy increases the severity of the recession but saves roughly 0.6 million lives in the U.S….”
Curing people and developing remedies and a vaccine will do wonders for gdp, through the usual channels. The tricky trade-off is between output and the timing of deaths. Whatever number of people are going to die, it is better to “get that over with” and clear up the uncertainty. Policy is thus in the tricky position of wishing to both minimize the number of deaths and yet also to speed them along. Good luck with that! …
and more controversial personality-based infection rates (is this the ‘karma’ effect?) on various European countries.
(see image)
Just don’t forget who sent you a check when you’re at the polls. Please leave the rest of the complex thinking to the grown ups.
If your point is that unemployment claims didn’t increase suddenly by a couple million in a week in past recessions you should understand that current circumstances have NOTHING in common with past recessions. That unemployment was organic and in response to falling demand. The current unemployment is sudden and in response to orders to shut down most businesses and to consumers not to go out. There WILL be a sudden surge in unemployment claims much larger than anything in history. That’s not a prediction it’s already baked in.
ooohhh… extreme political speculation and pandemic uncertainty over-reaction, in one place…
“…Coronavirus Kills Progressive Left
-Elites are most likely to support wealth redistribution when they feel comfortable themselves, and indeed well-off coastal elites in California and the Northeast are a backbone of the progressive movement. But when these people feel threatened in their lives or occupations, or when the futures of their children suddenly seem less secure, redistribution will not be such a compelling ideal…
— The case for mass transit also will seem weaker, because subways and buses will be associated with the fear of Covid-19 transmission. In a similar fashion, the forces of NIMBY will become stronger, relative to those of YIMBY, because people secure in their isolated suburban homes will feel less stressed than those in densely packed urban apartment buildings.
— There is likely to be much more government intervention in some parts of the health-care sector, but it will focus on scarce hospital beds and ventilators, and enforce nasty triage, rather than being a benevolent move toward universal coverage. If anything, it will drive home the message that supply constraints are binding and America can’t have everything — hardly the traditional progressive message.
— The climate change movement is likely to be another victim. How much have you heard about Greta Thunberg lately? Concern over the climate will seem like another luxury from safer and more normal…”
Ok. we need to calm down. Per CDC, as of early last week:
“…So far, the new coronavirus has led to more than 220,000 illnesses and more than 9,300 deaths worldwide. But that’s nothing compared with the flu, also called influenza. In the U.S. alone, the flu has caused an estimated 36 million illnesses, 370,000 hospitalizations and 22,000 deaths this season, according to the Centers for Disease Control and Prevention (CDC). …”
And that’s an average influenza year.
yes, the seasonal flu will diminish over the next 4 – 8 weeks per every year and the coronavirus will not, but do we need this…
“…On Thursday, the Department of Labor will release Unemployment Insurance Weekly Claims. The consensus is initial claims will increase to 750,000, but that is way too low. Based on early reporting from various states, initial weekly claims will probably be several million this week.
The all time high for initial weekly unemployment claims, Seasonally Adjusted, was 695,000 in Oct 82. The high during the great recession was 665,000 in Mar 09…”
Be Calm and Carry on.
Severe inflation or Hyperinflation will be the result. Stocks, Real estate, Gold to the Moon!!