We’re seeing ripples in the stock market and foreign exchange market at the moment due to a resurgence in Covid-19 cases and more talk about states in America locking down. One of the news stories making its rounds is a story in America about Dr Michael Osterholm, the director of the centre of infectious disease research who is now on Joe Bidens Corona Virus transition team. Osterholm will be advising Joe Biden as president (assuming the results don’t get overturned). He is advocating a 4-6 week complete lockdown which he believes will be great for the country.
He thinks that a lockdown will completely eradicate the disease, even though there’s no proof that a lockdown will do anything, and not only is he a Covid advisor but now he’s also an economic advisor stating that it will be a great way to ‘jump start’ the economy.
This 4-6 week ‘vacation’ he is proposing apparently won’t affect the economy because the government will just write everyone a cheque meaning that nobody will lose out. This is the type of nonsense that is actually happening here, and everyone thinks it doesn’t matter because the governments will pay but of course the Federal government doesn’t have any money, they’re broke.
Democrats love to create a situation where more and more are dependant on government. In a way, this might be a trojan horse for universal basic income. The framework where everybody is getting paid is here. And once this happens how do you get rid of it? People are going to vote for any politician that promises to keep stimulus coming.
So now that the everything is ‘free’ - as long as the Federal Reserve is printing money, why bother work? Of course, nobody even considers where does all this stuff comes from that we consume which needs to be produced.
We got the numbers a few days ago for the October deficit – which is at an all-time record high. In just 1 month $274.5 Billion was added. Not so long ago that would amount for a whole year’s worth. If you compare that to last month, government spending increased from September to October by 4.8%. National debt is now over $27 trillion.
Why? We’re seeing headlines everywhere that the economy is getting better which would imply the government support should be going down. Government revenues are also lower from September to October... Why? If the economy is getting stronger why isn’t tax revenue increasing.
Jobless numbers that get reported weekly are on the decline even with the constant revisions, but we are still seeing huge numbers. Last week we saw 709k jobless claims filed. Again, if the economy is recovering why are so many people still losing their jobs?
If you think about it, if you were in a job that you hated you would jump at the opportunity of a 4-6 week paid holiday. But where is this money going to come from? Nobody is dumb enough to lend to America so the Federal Reserve will have to print money which is foolish to think won’t do any damage to the economy.
Even if a lockdown temporarily curves the infection rate, the virus won’t be completely eradicated, it will still be there. And even if it does safe a few life’s how many more will be lost due to the lockdown and the economic damage that will be caused?
The reality is that most people are shrugging off these massive deficits, reasoning they are simply a product of the problems caused by the coronavirus. The pandemic has papered over an ugly truth – the federal government was getting into near-record deficit territory before COVID-19 arrived on the scene.