Cash
Yep, that’s six trillion dollars, a six with twelve zeros behind it. Need a visual: if you laid dollar bills end to end at the equator, you would wrap around the world almost 23,000 times. End to end you could go to Mars and back, eight times. It’s almost one third of the total annual output of the United States, the Gross Domestic Product (GDP – $20.54 trillion in 2018). Six trillion dollars is greater than the entire annual budget of the United State government up until 2018 and greater than the entire US debt until 2001. Bottom line – it’s a whole lot of money.
And six trillion is the amount of money that the United States has spent so far this year to prop up the economy during the COVID crisis. The Congress and the President spent three trillion directly in COVID relief: programs like the payroll protection program (PPP) and direct aid to states, hospitals, and other institutions. $1300 was directly sent to many individual Americans, and $600 in supplemental income was available each week to many who were on unemployment.
COVID Relief
It wasn’t just a safety net for individuals who lost their jobs. All of that money went in with the idea that it would be spent, and continue to stimulate the economy. Businesses were propped up so that folks would stay employed, but also so they would continue to produce and buy products and services, and keep “America Going”.
And, for a brief month or two, it was to help Americans fulfill their “duty” to stay home, and stop the spread of COVID. Other industrialized nations committed to long-term financial support for their citizenry. They recognized that COVID wasn’t going to go away, and that money would be well spent to protect society until a vaccine was available. The United States committed to a brief halt, and then tried to return to full life. Who was right? The statistics for national infection and death “tell the tale”: the United States leads by far in both.
But direct aid programs are only half of what the United States is doing to prop the economy.
The Fed
The Federal Reserve is the “Bank of the United States”. The “Fed” controls the circulation of money in the nation, and while they don’t actually print money (that’s the job of the Treasury Department) they do control how much money is in supply. An increase in money available to banks, large businesses, and investors is like fuel for a fire. Put more fuel on the fire, and it burns hotter and brighter.
So the “Fed” has reduced the interest rates to their best customers to ¼ of 1 percent. They want banks and investment institutions to borrow the money, and put it in the investment markets. And so far, it’s worked. The Standard and Poor’s Index (S&P) hit a new high in the past few weeks, and the more familiar Dow Jones is near 28,000, almost fully recovered from the COVID crash.
It’s not just the “Fed” money that’s propping up the market. COVID has been good for some industries. Amazon, Apple, UPS, and all of the other companies that bring things to their customers homes are doing great. Even the Postal Service staged a small financial comeback in the early summer, with COVID deliveries improving the bottom line.
But the Federal Reserve and an additional three trillion dollars is the main pillar holding up Wall Street. And with all the financial legerdemain the “Fed” can pull, ultimately there are limits to what they can do. Even they will run out of money. And there has never been a clearer gap between Wall Street and Main Street. As markets hit record levels, US unemployment is over 10%. That divergence isn’t sustainable for long.
Choices
So what are America’s choices?
We can follow our current course, virtually ignoring the COVID pandemic, and try to go back to “normal”. That will improve our economy, but the price will be continued infections, and increasing deaths. It’s the “cold” moral choice that Americans are making now, the same one that Texas Lieutenant Governor Dan Patrick clearly outlined in April.
“… There are more important things than living. And that’s saving this country for my children and my grandchildren and saving this country for all of us. I don’t want to die, nobody wants to die, but man we’ve got to take some risks and get back in the game and get this country back up and running.”
Americans were horrified at that statement at the time. Now, for many, it’s the “logical” choice, and America’s de facto national plan.
Or we can recognize that COVID is the problem, not the economy, and deal with it. If that means closing things down again to gain control of the infection, than sooner is better than later. The resources to prop up both Wall Street and Main Street are limited and are already being used. If the goal is to keep things going and save lives until a COVID solution is available, then we need to do a lot better job of it than we are now.
It’s not just politics. And it’s not just an economic choice. It’s a moral choice, and a life and death decision for all Americans.
