Where would people get new loans during the period? What about medical expenses, insurance, utilities, etc.?
I am not sure that this wouldn't create a larger group of poor people in the long run.
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Economics question: Would suspending ALL loans and rent help keep the wheels on?
- Thread starter icehorse
- Start date
I am not sure that this wouldn't create a larger group of poor people in the long run.
remember the context is that we might be facing a true emergency here, that might last for a while. We can already see that it's not "life a normal", it's survival!!! So back to the basics on Maslov's hierarchy, we need to make sure that during the emergency people get to stay in their abodes, stay warm, and have plenty to eat. And after the emergency, they should be about to go back to life as "normal" without having lost their abodes in the process.
I just cannot see how bleeding the economy will help. It is not as if there are not other means to achieve the same end, including government emergency intervention.
I am not an economist. I am willing to be shown wrong here. But sometimes even short-term solutions that sound great can be devastating in the long run. Look at the war with Afghanistan and later with Iraq. They were supposed to be mission accomplished in short order.
I cannot say that your idea is completely inviable, but I am dubious about removing money from an economy and wonder if it is sort of like removing blood from the body. The latter is generally not a good treatment to restore health.
Can you say more about "bleeding the economy", I'm not sure I understand.
If you stop the flow of money in the economy by eliminating a big source of it, wouldn't you say that was synonymous to removing blood from the body.
I cannot say that some would not benefit from a cessation of loans and rent, but would it be enough in the right place to have the effect you are looking to result? You are looking at the benefit, but what about the potential negatives? Are there others that have not been mentioned which could have a significant impact? What about subsequent restoration? How would that be managed? What alternative cash sources would be available if banks are not going to loan money or would forcing them to essentially give away money be another part of this? Giving away in the sense of and in consideration of the economy falling that far and recovery being lengthy and unclear. How would all of this impact the value of the dollar? Are you assuming the entire world would be effected equally? We already have one plan in place that is going to cost us far into the future, how might this cost us in the future?
It is a radical idea and radical ideas require a robust body of evidence to support them.
I understand the context. That will not change if your idea goes forward or stops in its tracks. I expect there will be a different world come out of this no matter what we do. It has revealed that the control and position we thought we existed with were practically an illusion. It has shown us that panic can be a large factor and contribute significantly to the confusion. It has shown us that Americans tend to be me focused more than other focused. Not that being focused on oneself is wrong and being focused on the group is right. Over focus on the group can be destructive too.
I would have to be convinced that such a move would have short-term benefits that outweigh the negatives and that long term management would be viable. That there are no other, better alternatives. Your scenario seems to assume this could be done with no resistance to the action. Is that correct?
Heyo
Veteran Member
Traditionally it's the Russians who play chess. The Chinese play Wai Chi and the US Americans play poker. Unfortunately you can't bluff a virus.
Hope you stay safe.
Heyo
Veteran Member
Even if you believe an anarcho syndicalist economy (from each according to his abilities, to each according to his needs) could work in principle (I do), it wouldn't be accepted over night (especially not in the most criminal and most anti social(ist) society on earth). The needs and abilities are just too different.
The second problem is that the market is international. I.e. some companies require money to interact with foreign entities.
"Strawman", eh.
We don't know how long "temporary" will yet mean.
Your income is immune to being suspended & redirected to others.
I favor the Keynesian approach...massive deficit spending
to aid all suffering financially from the pandemic.
Parts of my income are *somewhat* immune, but most of my income I can be fired from.
To lose one's job is a different thing.
You lose the income, but don't have to continue working.
And this is not something ordered by government.
You propose that businesses continue to operate without income.
Terrywoodenpic
Oldest Heretic
Think of it as the entire country going to sleep for the duration.
When they wake the situation would be, to them,t same as when they went to sleep.
The suggestion is to put the economy on hold.
The British system seems to be, to pay everyone except the wealthiest 80% of their wage.
And remove all taxes from people and businesses that comply and keep on staff.
And at the same time ban foreclosures, and throwing people out of their homes.
When they wake the situation would be, to them,t same as when they went to sleep.
The suggestion is to put the economy on hold.
The British system seems to be, to pay everyone except the wealthiest 80% of their wage.
And remove all taxes from people and businesses that comply and keep on staff.
And at the same time ban foreclosures, and throwing people out of their homes.
that's news to me! maybe you should be my financial advisor, i'm currently under the impression that i can't pay my bills if i get fired.
Many businesses are being forced to shut down. The only thing I'm proposing is that people shouldn't lose their homes in the process.
Then how about the fed assisting them?
This broadens both the burden & the assistance.
Didn't we say the exact same things yesterday?
It is good to discuss solution options and possibilities given we have a problem that needs to be addressed even as it unfolds. On first blush, it may seem a good idea, but I wonder about the long term and whether such a solution is merely pushing a problem further into the future and increasing the size of the problem at the same time. At some point, there would be an end to cessation and bankers and landlords cannot afford to just write off the revenue lost during the cessation period. They need that money too. People depend on jobs from those sources.
Now you throw in wrinkles (an underwhelming description of a serious problem) like the collapsing energy market where job loss is not attributed to the virus. Major producers dueling it out to gain market share while ripping the bottom out of the market with the result being that existing US energy companies may fall.
There are a lot of factors at play right now. I am not so knowledgeable in the finer details of economics to feel comfortable with any solution now. I will have to trust the experts and keep educating myself.
What do you mean here with broadening the burden and the assistance? I will look back, since you say this was previously discussed.
Not broad:
Benefit: Suspending rent & loan payments to only renters & borrowers.
Burden: Only landlords & lenders bear this burden.
Broad:
Benefit: Assist all those in need, not just renters & borrowers.
Burden: The fed pays with deficit spending, which is repaid (some day over time) from tax revenue.
The broader solution is not only more libertarian, it's far better.
OK. Thanks. That is generally the solution I favor. What you are calling the broader solution.
Suspending rent and loan payments for all would not eliminate all burdens on employers. They still would have employees to pay, unless they could be convinced to work for free. They would still need goods and services beyond rent and loan revenue. It would be a very short term emergency response that would push the problem into the future, but not eliminate it. And there would be that much less money circulating. At least that is the best I can figure.