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In reply to the discussion: A Widening Toll on Jobs: 'This Thing Is Going to Come for Us All' [View all]Igel
(37,483 posts)At high-level meetings between governments, that's what's acknowledged. But you don't tell a panicked populace that.
In the end, even those whose jobs can be done by home rely on a lot of people spending money. If half the population doesn't have income, that's half the tax base (or more), either from their taxes, income taxes, or corporate taxes.
Government employees will have to be furloughed; remaining industries won't be able to keep their staff as they cut production. It'll look like a depression as everything winds down.
The option of just sending out money means either the government borrows a lot or eats into what's stored somewhere. It sounds great, "The rich have $30 trillion, take it"--but it's not cash. It's assets, often liquid. If you want to sell 10 skyscrapers in NYC while taxing the people who'd buy them, nobody'll have money to buy them at list price. Suddenly they're not worth what they were. Same for stock. Other land. Anything, really--the government collects 10% of it and tries to sell it, it'll be the very rich who would be buying it ... but they're the ones taking a haircut, so they won't be buying. Assets will depreciate and whoever has cash will buy things up for pennies on the dollar.
That $30 trillion (or whatever it currently is) won't be worth $30 trillion. Government'll chew through capital. Then there won't be capital for getting things started again.
Or the government can just borrow. At some point the interest rate goes up. We pay 8.7% of the federal budget for interest now. A year of having the government continue to borrow to keep things afloat, and we're Greece from 7 years ago. Or, worse, since all governments are doing it there's nobody liquid enough to actually buy the bonds. Then what?
That would leave we just printing the money. But then we're Venezuela. Some people like that--some government folk are well off, but inequality is at a low because everybody's improverished.