Post Inauguration Day (1/20/21) Stimulus “Solution”?
Both presidential candidates have promised lots – including big, pandemic, stimulus bills – “after the election”. What will be this free-lunch formula?
- The government issues another $3+ Trillion in government bonds.
- Smart investors won’t buy these bonds at near zero-percent interest. So, the Fed will print a similar amount of new dollars out of thin air to buy the bonds (through banks as intermediaries).
- This loan from our kids and grandkids will then be sent out to voters to spend and lobbyist clients (financial re-engineers) to bail them out of their zombie investments along with fees.
- How long can you borrow what you think you will earn in the future to consume it now? (and have it again to spend later?)
- Will paying people not to work and allowing them to defer all monthly payments have any negative side effects?
- How many voters are not saving to pay for their deferred payments? Default rates? What problems do the un-payed parties now have? Who will bail them out?
- When Zombie companies are kept alive with junkier bond (re) financing at negligible interest rates, what effects does this have on their competitors and productivity in general?
- Will MMT programs cure the C19 bug and the damage of shutting down the global economy?
- If the Democrats sweep, what will their New Deal and higher taxes plan be? A positive for the economy?
- When central banks print to buy bonds to keep interest rates at a post-inflation, negative rate, who gets penalized and who gets subsidized?
- All currencies that ever existed don’t except for the current ones being debased by their respective central banks; how will this end?
- When will trading partners (or anyone with free cash) lose faith in a currency (like the dollar) that is being debased? Then, what alternative assets will become a store of value?
- Could competitive currency devaluation (a “lower dollar” myopically helps exports) coupled with trade wars cause supply chain problems and allocations?
- Will 11-13 revive the need for distributors’ to be ready with LIFO accounting skills and tactics?
- And, what other defenses against new taxes on all aspects of wealth?
- Meanwhile: the acceleration to digital distribution channels will continue.