Has anyone given credit to the coronavirus for exposing the general folly of our time? We’ve yet to find mention of it. Not even on the web. Here we shall do our part to give proper credit where credit is due.
Numerous stimulus proposals are currently being cooked up in Congress. In an election year, with unemployment going vertical, now’s the time to cash in on populist sentiments. The three leading bills, for example, are the Automatic Boost to Communities (ABC) Act, the Emergency Money for the People Act, and the Monthly Economic Crisis Support Act.
With names like that, what’s not to like? The main ingredient for each proposal is a $2,000 monthly stimulus check. The variance between the three is in duration and eligibility.
The ABC Act, which was introduced by Congresswomen Rashida Tlaib and Pramila Jayapal, is the most ambitious. This act is centered on $2,000 monthly payments to all taxpayers – and their dependents – for a payment period that extends one year after the termination of the declared coronavirus emergency…whenever that may be.
So, if we follow, a family of four stands to receive $8,000 per month for well over a year. Incredible! But that’s not all…
There are no eligibility criteria…save the requirement that nonresident aliens have been in the U.S. since December 19, 2019. Plus, an additional $1,000 monthly payment would continue for 12 months after the end of the initial payment period.
The price tag: Upwards of $10 trillion.
Where to begin…
State Sponsored Destruction
The recline and flail of western civilization can be characterized as a series of interim downward steps. Taken together, these downward steps compose the greater decline and fall of western civilization. Day after day. Year after year. More recline. More flail.
By our estimation, these downward steps have been underway since Neil Armstrong first stepped foot on the moon. However, the assassination of Archduke Franz Ferdinand at the hands of Gavrilo Princip may be a more accurate turning point.
By now it’s obvious to any honest observer that western civilization is circling the toilet bowl. The ABC Act of Tlaib and Jayapal, as an answer to state sponsored destruction of the economy, offers a case in point. The solution, you see, is more of the problem.
By and large, the challenges facing the economy have everything to do with central government. Over the last 40 years, as the Fed and the Treasury colluded to rig the financial system in totality, wealth has become ever more concentrated in fewer and fewer insider hands. The effect over the last decade has been a disparity that’s so magnified few can ignore it.
This trend has been further intensified by our current economic depression. Bitterness and contempt for wealthy insiders is much higher than it was during prior business cycles. Without question, this bitterness and contempt will amp up to a fever pitch over the hot summer months.
Discontent throughout the broad population will take a financial crash and an economic collapse, and transform it into a complete societal breakdown. The effect will be helter-skelter. And the central planners have already failed a test of their making.
When the coronavirus panic attacked financial markets in March the central planners at the Fed made a grave error. Rather than employing small government and sound money solutions – that is, rather than letting over indebted corporate dinosaurs go extinct – the Fed flooded financial markets with liquidity.
These bailouts saved the dinosaurs. But they also transmuted them into zombies. Now, with an economy full of zombies, the 18 month depression will extend for a decade.
Tasting the Forbidden Fruit of Free Money
Yet what the Fed wasn’t banking on was that the plebs were on to their mischief. The 2008-09 bailout of Wall Street via AIG had opened their eyes and minds to what’s possible. So as the Fed went into full big business bailout mode, the plebs started asking…where’s the people’s bailout?
What’s more, the people had a moral case to make. Through no fault of their own, state sponsored destruction, in response to the coronavirus, had eradicated their jobs. Hence, it’s only fair that the people get a bailout too, right?
The CARES Act, which included a $1,200 stimulus check and an additional $600 weekly payment for the unemployed, offered many people their first taste of the forbidden fruit of free money. They took a bite and – wow! – they liked it. And now they want more…
A $1,200 stimulus check was nice, and all. But a $2,000 monthly payment is way better. So why stop there?
When money’s free, the supply’s infinite…ain’t it?
There’s something irresistibly magical and intoxicating about the promise of free money. For it promises life without labor…and life without limits. Moreover, once a nation has taken a bite there’s no going back. Free money, you see, is so delicious that too much is never enough.
Who knows if the ABC Act will pass. But some stimulus bill with monthly checks will. And after that another will follow. And another.
Alas, free money is fake money. The Fed’s balance sheet will swell past $10 trillion, as it supplies credits to the Treasury. The national debt will swell past $40 trillion as it sends out monthly payments of fake money.
“There is a great deal of ruin in a nation,” once remarked Adam Smith.
The coronavirus, to its credit, has clarified the source of the ruin.
for Economic Prism