Throughout history, societies have faced crises that reveal both weaknesses and strengths. The recent coronavirus pandemic has brought to light the shortcomings in our economic structure and governance. In this piece, we will delve into the proposals currently under consideration in Congress and explore the wider implications of these economic measures.
In the realm of stimulus measures, several proposals have emerged in Congress amid a rapidly escalating unemployment crisis. In an election year filled with populist sentiments, lawmakers are seizing the moment. The three leading proposals include the Automatic Boost to Communities (ABC) Act, the Emergency Money for the People Act, and the Monthly Economic Crisis Support Act.
What’s intriguing about these proposals are their ambitious offerings; each suggests a $2,000 monthly stimulus check. The differences lie in duration and eligibility—details that could significantly impact the public.
The ABC Act, introduced by Congresswomen Rashida Tlaib and Pramila Jayapal, stands out as the most ambitious. This proposal aims to deliver $2,000 monthly payments to all taxpayers and their dependents for an entire year following the end of the declared coronavirus emergency, which remains uncertain at this time.
In practical terms, this means that a family of four could receive $8,000 monthly for more than a year—an astonishing figure. Additionally, there would be no strict eligibility criteria, except for nonresident aliens who must have been in the U.S. since December 19, 2019. There is also a provision for an extra $1,000 monthly for 12 months after the initial payment period.
The financial implications are staggering: costs could exceed $10 trillion.
Where to start in unpacking this situation?
State-Sponsored Destruction
The gradual decline of Western civilization could be viewed as a series of missteps that have compounded over time. This ongoing deterioration seems to have begun as far back as when Neil Armstrong first stepped onto the moon, although some might argue that the assassination of Archduke Franz Ferdinand marks a more precise turning point.
It has become increasingly evident to any objective observer that Western civilization is in a precarious state. The ABC Act serves as a classic example of a misguided response to the economically destructive policies enforced by the state. Rather than addressing the root of the problem, it compounds it.
The issues plaguing the economy largely stem from central government actions. Over the past 40 years, the collusion between the Federal Reserve and the Treasury has led to a financial system designed to benefit a select few, resulting in a stark wealth disparity. This trend has only intensified during the current economic depression, generating widespread dissatisfaction with wealthy elites, sentiments that are likely to escalate in the coming months.
This growing sense of discontent is poised to transform a financial downturn into a complete societal collapse. The central planners, in their attempt to manage the economy, have already proven inadequate.
When panic engulfed financial markets in March due to the coronavirus, the Federal Reserve made a critical misstep. Instead of opting for minimal government intervention and advocating sound monetary policies—allowing heavily indebted corporations to face the consequences—they chose to inject liquidity into the market.
While these bailouts may have salvaged struggling corporations, they also rendered them “zombies,” incapable of independent survival. This creates an economy filled with perpetual underperformers, suggesting that the ensuing economic downturn may last a decade.
Tasting the Forbidden Fruit of Free Money
What the Fed likely underestimated was the public’s awareness of their actions. The financial bailouts of 2008-09 had exposed many to the concept of corporate bailouts, prompting people to ask: where’s the bailout for them?
Moreover, there’s a compelling moral argument here; many individuals lost their jobs due to government-enforced economic shutdowns related to the coronavirus. Thus, it seems only just that they, too, deserve some form of financial relief.
The CARES Act, which included a $1,200 stimulus check alongside an additional $600 weekly payment for the unemployed, was the first introduction many people had to the allure of “free money.” Having sampled it, many are now clamoring for more.
While a $1,200 check offered a temporary reprieve, the thought of receiving $2,000 monthly payments is simply irresistible. Why limit oneself when it appears there could be endless resources?
The notion of free money evokes a dreamlike quality—it suggests a life free from labor and boundless opportunities. Once society has embraced this concept, there is no turning back; the temptation of more is impossible to resist.
Whether the ABC Act will ultimately pass remains uncertain. However, some form of stimulus bill featuring monthly checks seems inevitable, followed by more proposals in succession.
Ultimately, free money is merely an illusion. The Fed’s balance sheet may soon surpass $10 trillion as it continues to extend credits to the Treasury, and the national debt could balloon beyond $40 trillion as it disburses these hollow payments.
“There is a great deal of ruin in a nation,” once said Adam Smith. The pandemic has uncovered the sources of this ruin.
Sincerely,
MN Gordon
for Economic Prism
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