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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

#251

Post by ksec »

PeterStuer wrote: post #71
tombert wrote: post #40

Earlier quoted context omitted.

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…

Can you explain how your job is directly related to the company's stock trading price? Not being sarcastic are something, just genuinely curious?

I guess it is a matter of perception. That is what many Americans companies would do, stock price is everything.

In the UK and EU people doesn't get fired/ layoffs/ or even switching jobs as often.

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

#252

Post by [deleted] »

bsanr2 wrote: post #249
ModernMech wrote: post #226

Earlier quoted context omitted.

Yes, $18,000 has less purchasing power than $100,000, but a lot of people still have this conception that people making $100,000 can't possibly be living paycheck to paycheck.

I generally challenge anyone who claims this to post a detailed budget. SF is expensive, but if it were so expensive that someone making $100k could not cut any expenses, it would not be able to function. Stop contributing to your 401k or something.

[deleted]

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

#253

Post by ModernMech »

bsanr2 wrote: post #249
ModernMech wrote: post #226

Earlier quoted context omitted.

Yes, $18,000 has less purchasing power than $100,000, but a lot of people still have this conception that people making $100,000 can't possibly be living paycheck to paycheck.

I generally challenge anyone who claims this to post a detailed budget. SF is expensive, but if it were so expensive that someone making $100k could not cut any expenses, it would not be able to function. Stop contributing to your 401k or something.

Gross $100k

Net after tax: $74k

Monthly take home: $6166

Rent: $3000 ($3166)

Health insurance + meds: $600 ($2566)

Student loans: $1000 ($1566)

Muni: $196 ($1370)

Groceries: $400 ($970)

Electricity: $90 ($880)

Internet: $80 ($800)

Cell: $150 ($650)

Debt: $300 ($350)

So that's $350 for a family of two at the end of the day to spend on life, in a city where two cheeseburgers can cost $50. A lot of times for me this would be spent flying home for holidays. It would take about 8 years to save up enough of an emergency fund to cover 6 months of expenses if 100% of that were put into savings, which isn't realistic. This is a salary that provides a comfortable life, but like I said, it's paycheck to paycheck. If I had a disruption in my income, I would be out on the streets in short order. None of that can really be cut except cell and internet.

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

#254

Post by ksec »

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…

>Its either taxes, which means that tax money collected can't be spent elsewhere. Or it has to be printed, which is inflation.

I thought the lesson we learned from the largest money printing in modern history is that printing money doesn't directly equate to inflation. Especially in a world with active Global Trade.

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

#255

Post by ksec »

sethammons wrote: post #3

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

I think someone pointed this out in a recent discussion that handing out money is literally 100x simpler than fiddling with debt payment, interest collection and other sort of fianicial tools which may have unforeseeable consequences.

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

#256

Post by erik_seaberg »

hosh wrote: post #24
bargl wrote: post #23

Earlier quoted context omitted.

If you give money (enough to cover debt payments etc). It's the same thing but you can keep taxing people who can pay debt without problem.

Huh, I just realized tax season is coming up soon.

Postponed for federal and some states: https://news.ycombinator.com/item?id=22608290

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

#257

Post by bsanr2 »

ModernMech wrote: post #253
bsanr2 wrote: post #249

Earlier quoted context omitted.

I generally challenge anyone who claims this to post a detailed budget. SF is expensive, but if it were so expensive that someone making $100k could not cut any expenses, it would not be able to function. Stop contributing to your 401k or something.

Gross $100k Net after tax: $74k Monthly take home: $6166 Rent: $3000 ($3166) Health insurance + meds: $600 ($2566) Student loans: $1000 ($1566) Muni: $196 ($1370) Groceries: $400 ($970) Electricity: $90 ($880) Internet: $80 ($800) Cell: $150 ($650) Debt: $300 ($350) So that's $350 for a family of two at the end of the day to spend on life, in a city where two cheeseburgers can cost $50. A lot of times for me this wou…

First, thank you. Now, I'll make cuts according to how people without means would.

Rent: There are studios and 1-bedrooms to be had. Depending on who your +1 is, share a bed or put someone on the couch. $3166->$1500-$2000

Health insurance: Hah. Order your meds from overseas and cross your fingers. Or go without. $600->$0-$200

Groceries: Everyone on HN keeps telling me healthy food is cheap, you just have to be responsible enough to cook. $400->$250-$300

Cell: Budget plan and wifi. $150->$50-$80

Cut a few bucks from electricity by being super thrifty on energy usage, and save a bit of that debt for your tax refund.

Looks like a few thousand dollars a month in "fat," and you still don't have creditors hounding you. Nice.

I'm not saying that it's ideal to make these kinds of cuts. In fact, in the richest country on the planet, it's practically unconscionable that someone would work full-time and not live with the kind of stability, if minor uncertainty, you currently enjoy. I'm just saying that some of us also dropped half their paycheck into rent, at a quarter the pay, and made due. Well, lost ~$150 a month.

With all due respect, there's zero chance I'd be irresponsible enough to be making 6 figures and still be living paycheck-to-paycheck. I say this not as an attack, but as a call for you to maybe interrogate and recalibrate your expectations for your spending and, by extension, your expectations for other people's spending.

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

#258

Post by eru »

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…

> 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.

No, it's still a bad idea as stimulus.

It might or might not be the right idea from a humanitarian point of view. No opinion on that topic.

But if you care about nominal spending in the American economy, the Fed can do the job just fine. Just have them buy assets until total nominal spending (and thus also inflation) is up where you want it. Start with American government bonds, but if that's not enough, expand to other assets as well and keep buying.

You may ask: what if this doesn't work to raise spending nor inflation?

Well, that's the best case! Congratulations: that means the Fed just bought up all the assets in the world in return for some ink and paper. [0] And all that without devaluing the dollar, since we assumed no inflation would result.

Your negative example of people _not_ spending the money they are given turns into the best kind of person you want to be buying assets from, if you are the creator of said money.

Of course, in practice this will raise spending. Especially if you announce the policy in a clear and credible way, spending will increase almost immediately even before you implement anything. Markets are all about anticipating expected events.

No need to enlarge the government budget or the deficit.

Oh, and if you are looking for practical steps to raise spending in the economy and the above programme is too radical for you; then a simple first step is to eliminate positive interest rates on (excess) reserves that banks park at the Fed.

In the Fed's defense, they lowered the interest on excess reserves to 0.1%. But you can argue that they should lower it further, perhaps to -1%. Make banks pay to park money at the Fed, so that they prefer bringing that money into the real economy. Either by spending it themselves, or by lending it to people to spend it for them.

[0] To be more precise: in return for some even cheaper to create numbers in a computer. Nobody prints these sums of money any more.

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

#259

Post by sershe »

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…

Or perhaps stop obliterating an economy and let them actually live.

My sister and I were raised by a single mother in Russia in the 90ies, and we did relatively well compared to many. Mom mentioned once that she didn't really regret not having any hobbies or personal life for 10 years, not only because she loves us, but because she really didn't have time or mental effort required to seriously ponder these things, in almost a decade. That was all, mostly, because of economic mismanagement.

If you look at the life expectancy chart for Russia at that time, and births - both, again, affected by economic mismanagement - it's quite obvious that it would have been much better even in terms of literal years life lost to have a magical smooth economic transition in 1991, followed by a 100% unchecked coronavirus epidemic.

The unchecked covid-19 would have caused far less harm that what the real loss of life was; and that is before you consider lives wasted - the struggle to survive, but also drug use, alcoholism, crime, suicide statistics from the period. Oh and of course the end result - in Russia, most now want stability at any cost, so you have an emperor for life.

This recession is looking like it's going to be bad, and politicians from NZ to Malaysia to the UK are saying it's going to be worse than the last one or 1997 one; the way Fed is handling it here indicates they expect something worse than Great Depression, or they are out of options and are going to run it completely into the ground.

Meanwhile, the damage from the actual virus /so far/ is zero, literally zero, a rounding error. Yes, I know about Italy - the deaths there up until now are still a rounding error. Yes, I know about the exponential growth - the current levels are still a rounding error; they will grow exponentially, but exponential growth runs out very, very quickly when it has an upper bound of the entire population.

It would have been much better to have a one-month-long healthcare collapse where a million people with an average age of 60+ die, instead of a prolonged recession or a depression where tens/hundreds of millions of people in US alone, disproportionately young, children, the poor (not even speaking of the people in developing countries), have their life completely ruined - for many, forever; and many die.

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