I've heard a handful of economists suggest that this stimulus should be thought of as an investment and that the investment should be evaluated as any other. Their suggestion being that any money that is borrowed to pay for this will be borrowed at ~1% interest given the historically low rates and therefor, the important thing to consider is whether or not the return can beat 1%. Based on this reasoning, they are not concerned about exploding debt because they expect to the economic growth to far outpace the interest on the debt.
This seems to make sense based on my own dealings with financial planning. However, I think we often get fooled into thinking that home finance is analogous to national economies and what's good for our family budget is good for the nation as a whole.
What do you think of this argument? Is it close to the mark or simply a gross oversimplification designed to gin up support?
It depends on whether you think that the US national debt, currently $28 trillion with a T, will ever be paid down. I'm not aware that it ever has been, so probably not. But, as Margaret Thatcher famously said, "The problem with modern welfare states is that eventually they run out of other people's money." Then, instead of borrowing, they simply print money and hand it out. Like we are doing now. To see what always happens next, visit Venezuela.
Isaac, you wrote, ". . . leaving millions stuck in food lines, looking for work, and — whenever the eviction moratorium is up — looking for a new place to live." Surely you meant to say, ". . . looking to catch up on the 18 months of owed back rent that they have yet to pay, despite bringing home more money while unemployed than when they were working."
If only. Seriously, though, any who fail to pay the back rent that they owe, and seek instead a new place to live, are not likely to find one. Landlords do check prospective tenants' backgrounds, particularly regarding payment of rent. Homelessness will rise as a consequence.
I've heard a handful of economists suggest that this stimulus should be thought of as an investment and that the investment should be evaluated as any other. Their suggestion being that any money that is borrowed to pay for this will be borrowed at ~1% interest given the historically low rates and therefor, the important thing to consider is whether or not the return can beat 1%. Based on this reasoning, they are not concerned about exploding debt because they expect to the economic growth to far outpace the interest on the debt.
This seems to make sense based on my own dealings with financial planning. However, I think we often get fooled into thinking that home finance is analogous to national economies and what's good for our family budget is good for the nation as a whole.
What do you think of this argument? Is it close to the mark or simply a gross oversimplification designed to gin up support?
It depends on whether you think that the US national debt, currently $28 trillion with a T, will ever be paid down. I'm not aware that it ever has been, so probably not. But, as Margaret Thatcher famously said, "The problem with modern welfare states is that eventually they run out of other people's money." Then, instead of borrowing, they simply print money and hand it out. Like we are doing now. To see what always happens next, visit Venezuela.
Isaac, you wrote, ". . . leaving millions stuck in food lines, looking for work, and — whenever the eviction moratorium is up — looking for a new place to live." Surely you meant to say, ". . . looking to catch up on the 18 months of owed back rent that they have yet to pay, despite bringing home more money while unemployed than when they were working."
If only. Seriously, though, any who fail to pay the back rent that they owe, and seek instead a new place to live, are not likely to find one. Landlords do check prospective tenants' backgrounds, particularly regarding payment of rent. Homelessness will rise as a consequence.