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Giving Americans Money to Offset Coronavirus Impact Gains Support in Congress

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Re: Giving Americans Money to Offset Coronavirus Impact Gains Support in Congress

#31

Post by ISL »

duxup wrote: post #19

Economics is an interesting field of study with what seems like endless amount of differing views and such. However, it seems that if you're looking for economic stimulus one of the most sure fire ways / proven ways / agreed upon ways to get bang for the buck is to give poor people money. Poor people will spend it, and you can be pretty dang sure they'll put that money into the economy and quickly. I'm all for it.

In this case, it is better than just stimulus. It makes it possible for people to stay home.

Re: Giving Americans Money to Offset Coronavirus Impact Gains Support in Congress

#33

Post by sailfast »

duxup wrote: post #19

Economics is an interesting field of study with what seems like endless amount of differing views and such. However, it seems that if you're looking for economic stimulus one of the most sure fire ways / proven ways / agreed upon ways to get bang for the buck is to give poor people money. Poor people will spend it, and you can be pretty dang sure they'll put that money into the economy and quickly. I'm all for it.

Like high viral coefficients, the marginal propensity to consume at (or even above) 1.0 has a huge multiplier effect that beats the heck out of a tax cut or other spending.

Agreed, and this makes total sense in a crisis like this.

Even better: folks will actually need the money and it will be doing some concrete good, quickly.

Re: Giving Americans Money to Offset Coronavirus Impact Gains Support in Congress

#34

Post by tlbsofware »

koheripbal wrote: post #10
sethammons wrote: post #3

Instead of giving money, why not suspend debt payments and interest growth?

Because then the banks will go under. The government isn't the recipient of loan payments.

Hmm unless they buy the loans and we have to pay the government for that... doesn’t sound like it would work but I’m curious of what the economists here think of that

Re: Giving Americans Money to Offset Coronavirus Impact Gains Support in Congress

#35

Post by 23B1 »

baybal2 wrote: post #9
23B1 wrote: post #2

https://petitions.whitehouse.gov/petition/suspend-mortgage-p... 3 signatures so far. If the housing market, core to our economy, can be insulated from a crash rebuilding will be significantly easier.

I think housing market in USA seriously needs a healthy correction to make housing available to masses again

A 'serious correction' would erase the wealth of the home-owning middle class. A pause on mortgage payments and interest simply extends the mortgage schedule by a year.

Re: Giving Americans Money to Offset Coronavirus Impact Gains Support in Congress

#36

Post by stagger87 »

SilasX wrote: post #22
baybal2 wrote: post #9

Earlier quoted context omitted.

I think housing market in USA seriously needs a healthy correction to make housing available to masses again

If only the problem weren't self-reinforcing where existing homeowners have the majority of their net worth tied to their home and thus double down on fighting any policy that would reduce home values.

Is this actually a problem? Why would people want more of their net worth tied up in their home? Wouldn't cheaper homes make the properly ladder game more accessible? Are people leveraging their current home value enough to need it to be higher?

Re: Giving Americans Money to Offset Coronavirus Impact Gains Support in Congress

#37

Post by minikites »

abfan1127 wrote: post #29
duxup wrote: post #19

Economics is an interesting field of study with what seems like endless amount of differing views and such. However, it seems that if you're looking for economic stimulus one of the most sure fire ways / proven ways / agreed upon ways to get bang for the buck is to give poor people money. Poor people will spend it, and you can be pretty dang sure they'll put that money into the economy and quickly. I'm all for it.

The most important aspect of the claim about spending money is the broken window fallacy. Henry Hazlitt wrote a great book on the subject called Economics in One lesson. The simple example is that we can't go around breaking windows to stimulate the economy. Sure, the window manufacturer and the window replacement companies might benefit, however that money which went towards the window could have gone elsewhere. Eng…

>The simple example is that we can't go around breaking windows to stimulate the economy. Sure, the window manufacturer and the window replacement companies might benefit, however that money which went towards the window could have gone elsewhere.

The "windows" in this metaphor are already broken by the coronavirus. Our only choice now is how soon to fix them and which windows get fixed first.

>Unless they are keeping it in their mattress, that money is deposited in banks, which loan out the money for capital improvements

This isn't borne out by evidence, banks refused to lend during the 2008 recession.

Re: Giving Americans Money to Offset Coronavirus Impact Gains Support in Congress

#39

Post by ed312 »

shartshooter wrote: post #26

As long as the money is given to folks who need and/or will spend it, it feels like this is the exact situation where the federal government steps in for stimulus. There’s no pull yourself up by your bootstraps talk right now and there shouldn’t be. I know the single parent working a couple of jobs will spend every dime they’re given in a time like this, just to survive. A yuppie like me would just park it in my savi…

It is impossible to know from demographic information alone exactly how people will spend a windfall. If we're doing helicopter money, we should do it for everyone equally. Maybe instead of food I buy a bunch of video games or beer or some other good. Still keeping the economic engine running.

Re: Giving Americans Money to Offset Coronavirus Impact Gains Support in Congress

#40

Post by tombert »

shartshooter wrote: post #26

As long as the money is given to folks who need and/or will spend it, it feels like this is the exact situation where the federal government steps in for stimulus. There’s no pull yourself up by your bootstraps talk right now and there shouldn’t be. I know the single parent working a couple of jobs will spend every dime they’re given in a time like this, just to survive. A yuppie like me would just park it in my savi…

I mostly agree; the only caveat I'd give is that it's tough to say how much longer any of us are going to be yuppies right now; I work for one of the many big megacorporations whose stock is tanking right now. If the stock doesn't pick up soonish, there's a non-zero probability of me being laid off.

While I'm not that worried (I've been able to find work in bad economies in the past), I also do feel a bit of paranoia about this.

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