Yep, that\u2019s 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\u2019s 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 \u2013 it\u2019s a whole lot of money. <\/p>\n\n\n\n
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.\u00a0\u00a0The Congress and the President spent three trillion directly in COVID relief:\u00a0\u00a0programs like the payroll protection program (PPP) and direct aid to states, hospitals, and other institutions.\u00a0\u00a0$1300 was directly sent to many individual Americans, and $600 in supplemental income was available each week to many who were on unemployment.<\/p>\n\n\n\n
It wasn\u2019t 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 \u201cAmerica Going\u201d. <\/p>\n\n\n\n
And, for a brief month or two, it was to help Americans fulfill their \u201cduty\u201d 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\u2019t 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 \u201ctell the tale\u201d: the United States leads by far in both.<\/p>\n\n\n\n
But direct aid programs are only half of what the United States is doing to prop the economy.<\/p>\n\n\n\n
The Federal Reserve is the \u201cBank of the United States\u201d. The \u201cFed\u201d controls the circulation of money in the nation, and while they don\u2019t actually print money (that\u2019s 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.<\/p>\n\n\n\n
So the \u201cFed\u201d has reduced the interest rates to their best customers to \u00bc of 1 percent.\u00a0\u00a0They want banks and investment institutions to borrow the money, and put it in the investment markets.\u00a0\u00a0And so far, it\u2019s worked.\u00a0\u00a0The Standard and Poor\u2019s 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.<\/p>\n\n\n\n
It\u2019s not just the \u201cFed\u201d 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. <\/p>\n\n\n\n
But the Federal Reserve and an additional three trillion dollars is the main pillar holding up Wall Street.\u00a0\u00a0And with all the financial legerdemain the \u201cFed\u201d can pull, ultimately there are limits to what they can do. Even they will run out of money.\u00a0\u00a0And there has never been a clearer gap between Wall Street and Main Street.\u00a0\u00a0As markets hit record levels, US unemployment is over 10%.\u00a0\u00a0That divergence isn\u2019t sustainable for long.\u00a0<\/p>\n\n\n\n
So what are America\u2019s choices? <\/p>\n\n\n\n
We can follow our current course, virtually ignoring the COVID pandemic, and try to go back to \u201cnormal\u201d. That will improve our economy, but the price will be continued infections, and increasing deaths. It\u2019s the \u201ccold\u201d moral choice that Americans are making now, the same one that Texas Lieutenant Governor Dan Patrick clearly outlined in April.<\/p>\n\n\n\n