The Senate passed the House relief bill Wednesday, an $8.5 billion package. Stimulus is coming, it’s just a question of when. And how the government is going to pay for it.
A lot of people could use that stimulus right now. Sam Gold is a photographer in New York, where the city is all but on lockdown. Things are not going well.
“All of the shoots basically from today on have [been] completely cancelled or postponed,” Gold said. “I went from having a fully booked calendar for March and April to, now, nothing.”
Multiply this across millions of jobs throughout the economy and that’s what a recession looks like. Gold still has to pay rent, still has to eat. The Treasury Department wants to send $1,000 checks to people like Gold. Congress is working out aid packages for industries and small businesses.
All told, it could easily cost a trillion dollars. Larry Seidman, professor at University of Delaware, said the department should send out checks of $3,000, and the Fed should just print the money.
“The Federal Reserve should be permitted to write a huge check to the Treasury, not a loan but a grant,” Seidman said. “The Treasury does not have to borrow and there would be no increase in our federal government debt.”
But nothing is ever totally free, even free money. According to Kent Smetters, professor at the Wharton School, if you “kept doing that willy nilly, you’re going to cause inflation.”
When there’s too much money in the system, prices go up. When central banks do this it’s called “monetizing the debt.”
“When we see high inflationary countries like Zimbabwe, it all comes from the monetizing the debt,” Smetters said. But, he added, you’re not likely to get that kind of inflation in a recession, short term. And, he said, it may well be worth some inflation in the long term to get people the help they need right now.
COVID-19 Economy FAQs
What’s the latest on the extra COVID-19 unemployment benefits?
As of now, those $600-a-week payments will stop at the end of July. For many, unemployment payments have been a lifeline, but one that is about to end, if nothing changes. The debate over whether or not to extend these benefits continues among lawmakers.
With a spike in the number of COVID-19 cases, are restaurants and bars shutting back down?
The latest jobs report shows that 4.8 million Americans went back to work in June. More than 30% of those job gains were from bars and restaurants. But those industries are in trouble again. For example, because of the steep rise in COVID-19 cases in Texas, Gov. Greg Abbott, a Republican, increased restrictions on restaurant capacities and closed bars. It’s created a logistical nightmare.
Which businesses got Paycheck Protection Program loans?
The numbers are in — well, at least in part. The federal government has released the names of companies that received loans of $150,000 or more through the Paycheck Protection Program.
Some of the companies people are surprised got loans include Kanye West’s fashion line, Yeezy, TGI Fridays and P.F. Chang’s. The companies you might not recognize, particularly some smaller businesses, were able to hire back staff or partially reopen thanks to the loans.
You can find answers to more questions on unemployment benefits and COVID-19 here.
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