Targeted aid is a code word for bailout.
If we can pause the economy, preserving all employment contracts, lease agreements, loan agreements, etc, then we're in a much better position for restarting the economy once quarantines and lockdowns can be lifted.
But you would rather let everything burn down because existing contracts must be honoured as-is because won't somebody think of the poor bankers?
Most people need their monthly salary to survive. We already need several hundred billion dollars just to shore up unemployment insurance funds, which just pay for a fraction of people’s salary.
This has nothing to do with “the poor bankers”. Mostly it had to do with small businesses which make up the backbone of the American economy and which are collapsing at an extremely alarming rate.
The government can’t just press a big magical pause button on the DVR. The government can try to pickup some of the bills, or it can loan money out at good rates, or it can fire cash bazookas directly into people’s checking accounts, but even the Fed can’t just print enough money to single handedly keep the entire economy afloat while legally restricting people from doing business.
As long as everyone has stopped buying anything and everything discretionary, businesses will be failing and unemployment will skyrocket. Unemployment is a massive drag on GDP because consumer spending is the majority of consumption.
GDP of -25% is not just a “tighten the belt and we’re gonna deal with this” type of event. It’s not merely a question of “we have to do this to save lives” because shooting the economy in the gut actually costs lives too.
You put people out of work and into financial insolvency, and their general health is very negatively affected, and some of them will die. Look at the opioid crisis, for example.
Beyond that, you have discretionary spending, which can be cut.
And finally, you have essentials: food, medicine, and similar. That's a tiny, tiny fraction. That's what we need to bail out.
Yes, there will be long-term consequences of lost production, which will shrink our economy a little bit. But that's fundamentally different from debt defaults, bankruptcies, and evictions. Hitting a pause button avoids all of that.
Banks get payments 3 months later. They can also get 0% interest loans from the fed.
Why do they fail?
It feels very weird. Why does it matter whether businesses or banks receive the 0% interest loans? It's just a shell game. You didn't solve anything but yet you make your own solution sound better.
If you want an echo chamber, then by all means bump this down to -50 with no further explanation.
It's too simple of an idea. What you are looking for is the time equivalent of printing money. Right now that's magical, it's a deus ex machina event. It's implausible. You have to innovate it, and until then it's a fantasy.
That's correct. We stop everything for 3 months to get rid of the virus.
Or almost everything.
> almost all home and commercial property sales stop
Have you tried buying or selling a house these days? In most parts of America, you can't -- the registries of deeds aren't open for business with coronavirus. This is already stopped.
> What you are looking for is the time equivalent of printing money
It is like a time-equivalent of printing money. By virtue of the time-limit, it doesn't have nearly the same inflationary pressure. We need to relieve a short-term financial crunch, and the stimulus, zero interest, etc. all do that, but when the crunch is over, that stuff explodes into inflation. This cleans itself nicely.
> It's too simple of an idea
What's wrong with simple ideas?
You don't actually need to immediately record the deed to buy/sell real estate. I believe this used to be the norm back when remote towns would batch up all their new deeds and send them to the county seat by horse.
Or are we also expecting that grocery stores provide food on credit that they are not expected to collect on any time soon?
Stop interest on all loans for 90 days. Defer principal on all loans by 90 days. In 90 days, payments start up as before (and just end 90 days later). Same thing bubbles for all contracts. Leases and rents are free for 90 days. Contracts switch from net 30 to net 120 terms. Etc.
You pause the cycle of debt.
It works for home mortgages, small businesses, airlines, and almost everyone else. And it avoids the need for a 2 trillion bailout / stimulus package. It allows much more targeted aid at a fraction of the cost.
It ain't rocket science.