Printing money for some but Coronavirus for all

The world has become an unrecognisable place as we scrabble to understand our place in a Covid-19 world and are challenged to understand what the post-Covid-19 world will look like. What was before isn’t the same today and or will be tomorrow, is the truth of tomorrow is unknown. With many saying that they won’t miss the pre-Covid-19 world and believe that we can build a new and better post Corona world; I find it interesting that we are going about trying to solve this in the same old way.

It is difficult to sound optimistic or not to criticize the response to this crisis especially at such a difficult time which requires unity above all. I must say that unfortunately there will be many crises along the way and things will become worse before it improves. Therefore, I would like to bring some facts and thoughts to your attention. Simple facts and thoughts not altered by fake news or influenced by affiliation to any political party. My aim is to hopefully get you to think for yourself and make you aware that if we wish to build this better post Corona world then we need to have a plan to do so accordingly. It would be sad to end up with the same or worse a few years down the line. The crises that we have experienced during this 21st century have all brought about tremendous economic hardship and suffering for many, millions.

Firstly, our Governments are once again looking after the few – primarily those already privileged – at the cost of the many. Governments are doing their best to convince us that all this printing of money is to save us from an economic disaster. This almost sounds like a Ponzi scheme of printing money that we were told of before the crisis we didn’t have. The unfortunate truth is that many are losing their jobs and soon their homes and finally their hope. The currency which is being printed frantically already in the trillions never gets down to the small or medium sized businesses that employ the many. Why is that you ask? The main reason is that the small are expected to fail, they have no lobby, they don’t run the media and in truth are riskier and less prepared for bank loans than the bigger more robust businesses.

Even though banks will receive money at practically zero interest rates from central banks, once they look at the risk of small to medium sized businesses they simply don’t lend to these businesses or do so at high interest rates with onerous levels of security attached. Therefore, why does printing money, give most of us a warm secure feeling that all will be okay. One reason might be that printing money allows big companies on the stock exchange to once more be bailed out as they have balance sheets and influence, thereby once again artificially keeping up stock prices and giving us all a false sense of economic security, even though we are losing revenue, production and jobs on the ground. Currently, this can be seen in the US with over 16 million new jobless claims, but the stock exchange is moving up. How is this possible if there is currently low productivity and consumer demand will be low due to unemployment and logistics issues once the crisis is over? We also have political and social conflict, with divisions at all-time highs, a vacuum of leadership virtually worldwide. There is still no vaccine available, the real possibility of a second outbreak at any time, a likely breakup of Europe, anti-China sentiment and mass default on mortgages and debt repayments on the horizon.

In this crisis which is a new kind of crisis printing more money might just be a big negative to getting us out of it with the minimum suffering. As we well know that after all the printing comes the austerity packages which once again hurts the majority.

This time it’s a whole new crisis which requires new and innovative solutions with the right type of support from governments and central banks.

The simple truth is that by reducing expenses and commitments it will reduce the demand for funding. This is common sense which should be applied as we are currently not producing thereby not creating wealth thereby unable to give returns or meet commitments.

So, what should we be doing?

– firstly, Government must pay all its outstanding debts to its creditors, focusing mainly on small and medium enterprises. It should also continue to meet its obligations to its employees and suppliers. (Print money for this)

– secondly, we should freeze all our payment commitments with banking institutions for individuals and businesses who have bank loans and mortgages. This would allow breathing space for the many who are currently having sleepless nights on making these payments. These deferred payments would be added to the end of the payment terms. Where any bank receives support at zero or low interest rates, these benefits must be passed on to the borrowers.

– thirdly all business rents should be reduced by at least 20% of their original value. This will allow cash flow to be conserved for getting the business going again once the market opens. Landlords will have to bear the reduction as well, but they too will benefit from the freeze on loans and mortgages. Landlords might even take new loans and stimulate the economy.

– fourthly all future tax and social security payments should be frozen until businesses are once again up and running. Once more to conserve cash flow for getting business moving once markets are open.

– lastly government would support 33% of salaries of the workforce that are currently not at work but employed. This would be a value that would allow people to live through this crisis until the time to produce and work again arrives. (Print money for this)

All these steps would provide businesses with reduced cashflow requirements which ultimately means a lifeline until businesses are ready to be reopen.

Another benefit is that these initiatives could be immediately introduced, and the market would benefit instantly.

Can this be done? The answer is yes, if there is a will there is a way. Before this crisis there was no money for any initiative that benefited the masses. It was impossible to increase budgets for education or healthcare but since the crisis printing money has gone into overdrive. Many capitalist governments that were anti-debt are now acting like socialist ones, building up debt and using it to try and plug unproductive holes, many so that they can remain in power. People should wake up to this as what these governments are doing doesn’t appear to benefit the masses as it doesn’t even reach the masses, it hurts the whole economy when an economy is at a standstill.

The saddest part is that in the end it even hurts the large companies, as due to unemployment, spending power is reduced, and that revenues for these companies come under pressure. After this crisis we are all burdened with having to pay back our countries debt even if we didn’t get any benefit from the spending, we will have higher taxes and possibly also higher inflation. Our future plans and dreams will have fallen apart, and our hope will be vanishing fast. Hope should never be allowed to fade or vanish. How can we allow this to continue?

I am all for the printing of money if we all benefit. I am all for staying at home if all can afford it. I am all for unity as it really strengths us. I am all for globalization if we all benefit from it. The truth though is that it’s not working. We need new solutions if we hope to build that wonderful new world that we are all thinking and hoping for. It’s our responsibility to say enough of the old and we should demand better from our leaders. We have many movers and shakers but it’s time for the movers to come out and lead. I believe there is an Indian saying “It will all be better in the end. If it is NOT better, then it is not the end !!!” Let’s make sure we can influence the end to say “and they lived happily ever after …”

this article was posted at Dinheiro vivo, 13/04/2020

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