"Stop wasting money on zombie companies and give the stimulus money to Americans directly"
Congress says the next round of stimulus money should be more targeted, and they are right!
There has been a major deadlock in Congress over the last several months regarding the next round of stimulus.
Just about everyone in Congress (and anywhere else) believes that second wave of stimulus is needed to carry the economy through the immense damage caused by the coronavirus pandemic.
The issues are over exactly how that stimulus should be done.
Venture Capitalist Chamath Palihapitiya went on CNBC recently to give them a little advice on what they should do exactly.
His advice was pretty simply really...
"Give the money to the American people directly instead of injecting it into these zombie companies"
Sounds simple enough and I don't think many American's would argue with this move, but why should they do that?
I'm glad you asked.
He defends it pretty well here:
“We know this economy is always consumer led. It’s consumption that drives growth in the United States. It drives jobs and capital allocation and the more money in individuals’ hands the better they can be to support businesses, buy different products. That’s how we grow ourselves out. Consumer spending accounts for about two-thirds of U.S. economic activity."
"The first phase of stimulus was, you know quite honestly, wasted. A lot of this money got sent to companies. Those companies didn’t allocate it properly. They still ended up laying off tens, if not hundreds of thousands of employees, just literally the day after the stimulus said that they could. The money wasn’t functionally useful.”
"The more money we waste and give to zombie companies, we’re just going to push the can down the road and it’s all unnecessary.”
He's exactly right...
Depending on which metric you look at, you can see that the American Economy is roughly 66%-75% consumer driven.
We are a consumption economy.
Why in the world are we not just giving that money directly to the people that are driving the economy?
Americans have proven over and over and over that they don't really save much of anything. Part of that is because they don't have much left over each month to contribute to savings, but a bigger part of that is their appetite for consumption.
Why not put the money where we will get the most bang for our buck?
Given that kind of econmic backdrop, it technically makes more sense to give Americans the vast majority of the stimulus money as opposed to governments and businesses.
For some numbers sake, the first round of stimulus saw roughly $300 billion go to the American people in the form of stimulus checks.
The totality of the stimulus bill was $2.2 trillion, which means roughly 13.6% went out to the American people in the form of checks.
Though, keep in mind that a big part of the beefed up $600 in unemployment benefits also went out to the American people.
When you factor that in as well, you get a much bigger percentage of the stimulus going to the people, like it should be.
However, even if that percentage jumped to 40%, it's still 100% too low...
(Source: https://en.as.com/en/2020/09/20/latest_news/1600636759_621953.html)
None of this matters unless we get another stimulus bill...
As it stands right now, another stimulus bill does not look likely, especially before the election.
However, this has nothing to do with the fact that we don't need one, just about everyone agrees that we do need one, it's the fact that two parties are so divided that they won't even do their job for the American people just so they can "win" the argument for their party.
The net result is the American people suffer.
My guess is that if they lose/suffer enough, and start taking to the streets (even more than they already are) we will see congress get something done.
Another part of that is the stock market.
Historically when the stock market falls 20% from it's highs, the FED and/or congress acts.
As it stands right now, it has fallen roughly 10% from the highs.
If that metric holds true, we still need another 10% before we see Congress or the FED act.
Unfortunately for the rest of us, crypto is probably lower in that scenario as well.
Here's to hoping it won't take carnage to get them to act and here's to hoping that when they do act they give more of it to the people instead of wasting it on zombie companies like they partly did the first time.
Stay informed my friends.
Image Source:
-Doc
Posted Using LeoFinance
Awesome article. You're right:
What's your opinion about our current measures: mandatory protective masks in stores?
I think it's really the only thing we can do. We can't keep people home forever and it's better than doing nothing at all.
There seems to be mixed science on whether the masks actually block the virus or not, but the numbers going down seemed to indicate that it is helping.
You're right: mixed science on whether the masks actually block the virus or not. and talking about numbers imply the proof for a pathogen so dangerous that we have to wear masks, even though they're not designed to block such small particles, which is an information that can be found in the details of the product.
i have a curiosity: What's the proof?