Here's how we might get out of this unprecedented economic crisis -- this is highly complex and these are just ideas, but we need fiscal help ASAP targeted at those with fragile balance sheets (small biz, low income Americans, etc) (thread)
1. This is akin to eminent domain of income and solvency -- in the name of public health, a good cause. But when people lose their livelihood, they cease spending, entering a vicious deflationary cycle that monetary policy cannot help.
2. It's not as simple as giving money to those who lose their jobs, because we need to make sure they have jobs to go back to! Meaning we need to address the businesses we have, in the name of public health, eminent domained.
3. "The government can remain bureaucratic longer than you can remain solvent" -- how do we QUICKLY adjudicate which businesses deserve bailouts and which don't? How do we prevent fraud? What about previously failing businesses?
4. Businesses and business owners need the most help with fixed costs -- think rent, equipment financing, etc. Providing a "holiday" for fixed payments simply pushes the pain to a whole other set of businesses.
5. In a world where most businesses have a normalized set of financials (thx QuickBooks+Netsuite), extend credit/grants for certain fixed cost line items. Debt alone is not the answer unless coupled with substantial planned forgiveness.
6. Many, many people will need to be let go/furloughed if businesses are to survive -- having centrally planned zombie companies helps nobody. Combine upsized unemployment insurance with an upsized EITC (Earned Income Tax Credit)...
7. ...to put enough money into these people's pockets to hopefully provide a spark of demand. Or give people prepaid cards with $X on them that must be used by EOY, once quarantine is lifted.
8. Other ideas: eliminating payroll taxes for 3 months would allow small businesses to "cut pay" yet pay their employees the same -- after tax pay becomes the "salary" therefore encouraging businesses to keep jobs.
9. Or: Incentives for weathering the storm -- keep your payroll constant, get a Corona Patriotism Bonus at EOY for X% of your payroll. Helps with risk sharing and some skin in the game.
10. How do we do some of these things QUICKLY? We probably need private enterprise to help distribute these products and benefits. Quickbooks, Square and others could spin up "apply for aid" buttons, SMB lenders could add "govt aid" etc
11. There are many flaws to all of these ideas, and they will all be incredibly expensive. And obviously the health and safety of people comes first. But we have to fight an economic virus that could wipe out most jobs and livelihoods, too
