Two things about the coronavirus relief checks the government will soon start sending out: First, it looks like they’ll take a while to arrive:
Show Me The Relief Money – No Promises On When Coronavirus Checks Are Coming
About 90% of households — approximately 165 million — will benefit from direct payments, according to the Tax Policy Center.
The $2.2 trillion coronavirus relief package marks the largest rescue package in American history. President Trump announced Wednesday that it includes $300 million in direct payments to individuals to alleviate at least a little of the financial pain caused by the deliberate near-standstill of the U.S. economy.
But despite promises that the one-time funds will be distributed “within the next three weeks,” it will likely be months before the stimulus checks hit bank accounts according to experts.
That’s because the infusion of cash will be distributed by the IRS, so those who have previously received tax refunds via direct deposit will be first in line for the rebate checks. Officials estimate the earliest those payments will go out is three to four weeks after the package is approved.
Alternatively, people who receive tax refunds through the mail will have to hold out much longer.
“I don’t think physical checks will be in the mail for another three to four months,” said Kyle Pomerleau, a resident fellow at the American Enterprise Institute, citing delays in the system in 2008 when the government last issued national stimulus payments under the George W. Bush administration.
Second, $1,200 per adult will cover maybe two weeks of the average family’s living costs. If someone is in trouble, this won’t save them.
So unless the economy goes back to “normal” in the next month or two (highly unlikely according to generally-reliable economist Nouriel Roubini), America’s waiters, bartenders, flight attendants, small business owners, etc., will be in even worse shape when they cash their checks than they are today.
The result? Massive, perhaps irresistible pressure to make the one-time payments a regular monthly thing. Which means the emergency deficit spending now baked into the 2020 cake will become “structural,” i.e., ongoing, for the foreseeable future.
At that point the calls for some version of a debt jubilee will become equally irresistible. For years now, people have been suggesting that the Fed, which owns trillions of dollars of US government paper, can simply eliminate that debt. More recently, presidential candidates have been promising to forgive the $1.5 trillion of outstanding student loan debt. It goes on from there through small business loans, mortgages, state and local debt and who knows, maybe even credit cards.
Just a few steps into debt-jubilee land takes us to Modern Monetary Theory, where governments realize that the whole tax, borrow, pay interest thing is wasted motion when a central bank can just create as much money as the government needs.
This is a very bad place to be (see here for some of the reasons) but it appears that, barring a medical miracle, we’re headed that way fast.
4 thoughts on "Watch The Virus Checks Become Permanent Income"
If you didn’t know what “too many dollars chasing too few goods” meant, you’re about to find out.
Good call. It will become permanent.
Just to add to this thread, at least as long as I’ve been alive there has been this romantic notion that money is somehow primitive and is destined to be “eliminated.” I could understand the sentiment – sort of – but not the particular, like does something replace it or what?
Perhaps the most popular example of what I mean is a line I heard from some character in Star Trek (I think it was Captain Kirk) who humorously reminessed about money once existing on earth. He didn’t say how things worked “now” but I clearly inferred he meant money was primitive.
Perhaps some Treky (sp?) can explain more, but my point is that notion of money being primitive and therefore an unnecessary relic runs deep in the mass psyche. I’m not saying it’s true. It could be a myth like many other concepts, but it’s interesting how actually receptive people and pols will be about currency being “just pieces of paper.”
Let’s face it, many concepts about money and finance and economics have been “suspended”, if not actually invalidated, during the last century or so, and that may be why so many have become inured to bailouts and QE and MMT. Maybe they’re not so wrong or bad. Not that I agree, but here we are in the midst of a social and financial crisis and gold/silver has sold off and the “almighty” dollar is as strong as ever, even in light of mass currency creation to solve all ills coming down the pike. It’s really sonething.
Dear Mr. Rubino, I wish I could say you are wrong but most likely you are correct. This past cycle was the first global cycle I have ever seen. Here is my prediction in September of 2019: https://codgerville.wordpress.com/2019/09/20/it-is-all-about-keeping-a-promise-to-you/
I also have an update to that post on February 24th, 2020: https://codgerville.wordpress.com/2020/02/24/cycle-update-and-what-may-lie-ahead/
The cycle beginning on April 23, 2020 is a very complex cycle. It does not have the intensity of the last cycle but it has more than one peak and slowly sweeps across the globe. I think whatever is coming will make us forget about the corona virus, at least for a little while.
Shalom,
CC