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General economic question

Thank for the explanation of the COVID-19 program explanations.  I do have one major question concerning all of this.  What is your percentage estimate of the total package cost due to the tremendous business debt that has been built up over the past decade by the elimination of various government restrictions on borrowing and lending?

 

We're gonna end up running 3-4T deficits this year. It's a huge number. I guess the real cost (inflation) is gonna come down to how long this thing lasts and how many businesses get nuked because of it....

"Pragmatic Capitalism is the best website on the Internet. Just trust me. Please?" - Cullen Roche

 

I know my question is a bit off the wall, and smacks of debt monetizing, and maybe even worst.

For the sole purpose of supporting the economy directly impacted by the Coronavirus, what could be the negative of:

1.       The treasury selling a 2 trillion bond, to the Federal reserve at 0 interest.

2.       This bond is not available to the public and must stay in the Federal reserve.

3.       The funds can only be used to support Coronavirus impact, say states, hospitals etc.

4.       Initial repayment does not start for five years.

5.       After five years… what if the Federal Reserved just wiped it away.  A Coronavirus Treasury only debt jubilee?

Thank you for your time and sensible financial advice and explanations.

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I like the idea! But this is basically just fiscal policy with the financing via the Fed directly. So you'd need to get Congress to sign off on a bill that had no pork in it and was only for COVID aid. Not gonna happen.

"Pragmatic Capitalism is the best website on the Internet. Just trust me. Please?" - Cullen Roche

 

Thank you for the response.   Yes, I was thinking about how to get money to main street, only for COVID relief without long term debt impact.  Basically, filling the financial hole created by COVID so less damage is done.    It was just an economic/financial metal exercise, but my limited knowledge could not find a financial downside (not counting on politics) and wanted your opinion.

Now I wonder if this could be why China does not seem to be so concerned about generating debt.  They do not have the same political friction as the US does. 

Again, thank you for the response.  Love your blog, and I’ve bought your book for all my kids.  So dead on about allocating Savings vs Investing.

Don

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