Dollars and Jens
Wednesday, April 01, 2020
total stimulus
The recent COVID relief bill that passed congress has been reported, variously, as being $2.2 trillion in size, or, in some cases, as being $6 trillion, as part of the money is to be leveraged by borrowing $4 trillion from the federal reserve.  There are various people who want to report a big number — journalists like a big number in a headline because it gets attention, some politicians like it because it looks like they're doing a lot, and some populist opponents of the bill trumpet it as an enormity, another massive debt that we are thrusting on the shoulders of future generations.

I view it as a bunch of numbers that are added together.

There are three different kinds of things in the bill, and I would really like to see them broken out separately.  Now, there are two kinds of people these days: people with more free time than a month ago, and people with less.  I'm in the latter camp, so this will not be particularly researched or detailed, but here's a taxonomy of dollar figures:

Finally, I'll note that I've largely joined some prominent economists in avoiding calling it a "stimulus" bill; to the extent that it has similar goals to a stimulus bill, it actually feels more to me like a monetary stimulus than a fiscal stimulus.  The loans in particular have that feel; they're intended not to affect wealth distribution, but to get literal cash to economic agents who suddenly need more cash than they had provisioned for.  This is less true, but still fairly true, of the cash being handed out to individuals; of course, this does involve some wealth redistribution, but the scale of the cash payments is a couple of weeks' spending for many people without savings, or a modest increase in savings for those who suddenly wish they'd been saving more; it is on the scale of short-term spending needs, not on the scale of life-time income or wealth, and is much more attuned to alleviating financing constraints than solvency constraints on economic decision-makers.

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