We are entering a financial crisis unlike any we have faced as a country. Whether one agrees or not with the decisions being made in regards to reducing/eliminating most economic activity, the dye has been cast. We are going into an “intentional” recession and cannot rule out a depression. To be blunt, we’ve never shed upwards of 20% of the US work force in 30 days. Not in the financial crisis, not in the Great Depression. The speed is breathtaking and frightening. And any economist or politician that tells you how bad this is likely to be, is lying or misguided. No one knows.
The scale of the problem means any set of solutions will cost in the Trillions of Dollars and while well intentioned the initial legislation agreed to last night by the US Government is but a down payment. The truth is, at this point, we have no idea when we’re going back to work and how much work there will be to go back to. So, we need a flexible solution that gets to the heart of the problem. And the heart of the problem is tens of millions of unemployed Americans.
One-time payments as contemplated in current legislation are a well-meaning step in the right direction, but fall well short. The twelve hundred dollars per adult simply won’t cover the rent, groceries and utilities for many. And then what the next month? And month after? Rent moratoriums sound good and certainly are compassionate. But how does the interest on your landlord’s mortgage loan get paid? OK, we’ll have a moratorium on that too. So, what about the pension funds no longer receiving interest to pay their retirees? It’s impossible to fix all the second order effects of this and other well-intentioned policies that treat the symptoms, not the disease itself.
So, what to do?
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