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
Pfizer said early data show its coronavirus vaccine is effective. So what’s next?
In the last few months, Pfizer and its partner BioNTech have shared other details of the process including trial blueprints, the breakdown of the subjects and ethnicities and whether they’re taking money from the government. They’re being especially transparent in order to try to temper public skepticism about this vaccine process. The next big test, said Jennifer Miller at the Yale School of Medicine, comes when drug companies release their data, “so that other scientists who the public trust can go in, replicate findings, and communicate them to the public. And hopefully build appropriate trust in a vaccine.”
How is President-elect Joe Biden planning to address the COVID-19 pandemic and the economic turmoil it’s created?
On Nov. 9, President-Elect Joe Biden announced three co-chairs of his new COVID-19 task force. But what kind of effect might this task force have during this transition time, before Biden takes office? “The transition team can do a lot to amplify and reinforce the messages of scientists and public health experts,” said Dr. Kelly Moore, associate director for the Immunization Action Coalition. Moore said Biden’s COVID task force can also “start talking to state leaders and other experts about exactly what they need to equip them to roll out the vaccines effectively.”
What does slower retail sales growth in October mean for the economy?
It is a truism that we repeat time and again at Marketplace: As goes the U.S. consumer, so goes the U.S. economy. And recently, we’ve been seeing plenty of signs of weakness in the consumer economy. Retail sales were up three-tenths of a percent in October, but the gain was weaker than expected and much weaker than September’s. John Leer, an economist at Morning Consult, said a lack of new fiscal stimulus from Congress is dampening consumers’ appetite to spend. So is the pandemic.
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