As the World economy comes to a standstill, the low interest rates and money printing strategies taken since the 2008 financial crisis are exacerbating the situation in the United States. Local state and city governments have implemented curfews and gathering limits to support social distancing, actions that are quickly causing economic pains to small businesses and their employees.
As is the case in any crisis, Americans are looking to their government for relief, and in this case they are needing financial relief. The politicians are standing tall and ready to write legislation that will send the people money, not their money of course, but other people’s money.
For the average person who doesn’t follow or understand basic macroeconomics, they will be lead to believe that congress is acting in their best interest, fighting each other to provide them with the best possible outcome. In reality, it is vital for people to understand that the government does not have any money. There is not a “rainy day” fund that congress is debating about how much of this stashed away cash they should give out to people. Nor is the government debating on whether or not they should sell major government owned assets in order to raise money to give to the people.
And you can be completely 100% sure that the politicians themselves are not thinking of how they can get rid of their own assets and savings and somehow give it to the people; though a completely clueless person might think this is the case as they watch the politicians pose as heroes, standing in front of television cameras, proudly boasting at the amounts of money coming to the public because of their hard BIPARTISAN work.
So where is this money coming from, and where is it going?
The money is coming from everyone who has U.S. dollars, earns U.S. dollar, or has any asset priced in U.S. dollars. The money could come as a bail-in where they actually would take a percentage of your bank account or retirement funds, but this would make it too obvious that the politicians are taking your wealth and cause all sorts of anger amongst the people.
So instead, the government, through the Federal Reserve, will print the currency into existence and thus devalue the current amount of currency that exists. This backdoor theft isn’t as obvious to most people, and even people that do understand this won’t see or notice this wealth theft right away, but be sure that this will happen in the form of higher costs for the everyday products people buy. Food prices will be surging.
Even more insidious is who benefits the most from these bail out and relief programs. It will be marketed for the poor and even middle class, but in reality it will be people and companies who are in bed with the politicians, and it will go unnoticed through business dealings and backdoor deals. If this wasn’t the case, then what would there be to debate between the two political parties? It would be pretty straight forward:
(R): “lets have the Fed print 2 trillion dollars and send out the checks to everyone who is not in the top 10 percent”
(D): “We want 2.5 trillion, with 50% of that going to the bottom 30% because votes, I mean they deserve it.”
Sure, many people will receive a check in the mail from the Government and thus feel like they are getting a deal. But even more money (currency) will go to bail out companies who, through moral hazard, have been reckless with taking out debt and paying the right people huge bonuses through the years leaving their cash reserves too slight to foresee a rainy day.
Again, this money is not from Government savings, it is from the people. You might think you are getting a gift, but what is really happening is the wealth that you already have is being devalued and you are receiving a portion of the devaluation back in the form of a government check. In the end, the sum is you are losing wealth, while the politicians and their friends are gaining a portion of that wealth that they are taking.