lets also assume that the federal reserve is willing to print as much cash needed to maintain low rates. so essentially q-infinity. as in they will expand the balance sheet to 100 trillion if need be, if our enemies decide to sell us bonds.
so this will weaken the dollar. this will create a lot of inflation. Your job is to make a lot money in the long run.
you can do so by spending to stimulate the economy and taxing them. or just investing the money in a smart manner to hold the value of the dollar. what would you do?
Would you spend the money?
Spend on Infrastructure?
Spend on a scientific pipe dream like colonize Mars.
Spend on Medicare for all?
UBI?
Grants to poors? all classes?
Grants to businesses? Corporations?
More money to public workers? via pensions?
More money to retired people only?
More money to education?
Invest?
Buy up Muni Bonds?
Buy up investment grade bonds?
Buy up Junk Bonds?
Buy ETFs?
Buy Domestic Stocks?
Buy foreign stocks?
Buy Chinese stocks?
Buy stocks that only employ American?
llol i dunno. but 20 trillion to spend/invest is a lot. that is literally the size of equity markets at 30 trillion. bond markets are about 100 trillion.
I think id offer to buy at a discount any stock equity issuance. that should dilutre shareholders and prevent people from issuing a lot. just enough to survive. good companies prolly wont do it. and bad companies will only do enough. this will push stock prices up.
bonds will prolly fall due to expected inflation. and once they fall to the point that cost of equity aka pe is the same as the cost of debt aka the rate. i’d buy up all bond etf at that avg rate. and that’ll prolly take up everything if not more.
then whatever i bought, i will spend only 4% of that per year.
first that 4% is about a trillion and should balacne the budget. then i will spend on stuff i think we need liek coronavirus cure. then stuff that will make us productive like infrastrcuture and education. then if i run out of dieas whatever is excess. id pay it out as a ubi.
Reasonable enough. USA is probably the only country in the world able to print money from the thin air and still not suffer from hyperinflation. FED will eventually retire all those trillions, Powell said it.
Borrowed money is just meant for not going bankrupt. I see those trillions like revolving credit card lines. You will payback at 0 interest, however, if you bear losses in the road, those are on you and no one else.
On the other hand, fiscal spending is the pretty straightforward solution now. Congress must release more resources to fill the gap. Countercyclical fiscal policies is the standard.
In my country we are doing exactly the same like USA except for the printing machine (not good for us unfortunately).
But I don’t like it when we just buy up the bond. Like we give them low rates benefitting current shareholders. I think current shareholders need to be punished hard. Honestly I think they should be wiped out.
Finally, we agree on something! Sadly there’s no chance in hell of this happening. They already gave us the mortgage deferral, we should take it and say thanks.
say you had a family and you had to choose how to give out your money. you have 3 children
you have a high powered investment manger who can generate amazing returns.
an average dude who has a blue collar job and gets advice from others that generate ok returns.
or your other kid who works minimum wage and does not make enoguh to save.
then coronavirus hit.
the invesment manager is still doing well and doesnt need your money
the average dude is doing ok but would be happy to have more money.
and your last kid got laid off and needs the money badly and will prolly die if he doesnt get help.
how would you distribute the money?
