4 ms·

I don't think stim money was that big of a deal, but PPP fraud was: https://www.nbcnews.com/politics/justice-department/biggest-fraud-generation-looting-covid-r

I don't think stim money was that big of a deal, but PPP fraud was: https://www.nbcnews.com/politics/justice-department/biggest-fraud-generation-looting-covid-relief-program-known-ppp-n1279664 https://www.nbcnews.com/politics/justice-department/biggest-... "Small business owner receives $2m in PPP, then uses it to buy a second house" is a common anecdote.

postpawl 4y ago
The amount spent on the PPP and stimulus to individuals was dwarfed by the 450 billion the fed leveraged into 2.3 trillion to loan to banks and buy mortgage backed securities + bonds: https://apnews.com/article/municipal-bonds-jerome-powell-financial-markets-virus-outbreak-business-8508af5848939f715622a71a44d3af20 https://apnews.com/article/municipal-bonds-jerome-powell-fin...
- lumost 4y ago
  It really makes you wonder where all that money went. Monetary Theory tends to treat central bank interest rates and government taxes/borrowing as two sides of the same coin. For various reasons the US has leaned more heavily on the interest rate manipulation over fiscal policy for the last ~30 years - but I do wonder if we're missing an accountability aspect of interest rate based stimulus.
donw 4y ago
I think the biggest damage came from effectively zero-interest loans to those with means: high net-worth individuals, financial institutions, etc. Insanely magnified purchasing power for those with access. Consider housing. Blackrock and the Google Squad hoovered up a ton of real estate and converted them into rentals. Normal people can't offer 20-40% above asking for a home, so they were priced completely out of the market. Starter homes have doubled or tripled in price over the past four years. Salaries have not risen to match. Same is true for many other goods, and when combined with deliberate supply chain sabotage at the behest of the ruling class, effectively turned a significant chunk of the population into serfs overnight. The knock-on effects of this aren't going to be pleasant. People take pride in their work when they have a future to build towards. That no longer true for younger folks, or even a lot of people in their prime working years, so everybody is just sort of... phoning it in. Imagine you're a high school graduate today. All you can see down the road for you is an either an infinite series of "gigs", or, if you're lucky, the luxurious serfdom of corporate servitude. In the latter case, you still don't earn enough to ever own property, but you get free food and access to approved activities from your masters in the company hierarchy.
- throwaway19423 4y ago
  What is Google Squad?
- cykros 4y ago
  This, and the amount of newly public companies that received nosebleed valuations despite being pre-profit (and often enough, pre-revenue even) thanks to speculation (and the fact that these companies were impressive if only because they were using essentially free borrowed money...which has now dried up). And perhaps even more problematic, the less newly public but still nonetheless overvalued companies that are actually in the major indexes (and thus, in the average person's 401k), now down 50-80% in some cases. Couple that with the bond market ALSO melting down based on the fact that the Fed was engaging in its bond buying program keeping yields artificially low for the last few years and we had a situation where the average person took on far more risk than was suitable due to having little alternative. Given how much stable companies borrowed to beef up their balance sheets, my suspicion is that the core business environment may not be as badly affected as many suspect, as they have the means available to weather the storm, but that there will be a lot of folks caught out in it when it really hits, likely with quite a few bankruptcies in the tech sector, and as a result, a fair spike in unemployment. That will undoubtedly bleed into consumer spending, but again, given the healthy balance sheets we see in more core industries, I'm not seeing a cascading failure of the whole system on my crystal ball just yet. Guessing a 6-7/10 if we wanna put a number on "how bad".

postpawl 4y ago

The amount spent on the PPP and stimulus to individuals was dwarfed by the 450 billion the fed leveraged into 2.3 trillion to loan to banks and buy mortgage backed securities + bonds: https://apnews.com/article/municipal-bonds-jerome-powell-financial-markets-virus-outbreak-business-8508af5848939f715622a71a44d3af20 https://apnews.com/article/municipal-bonds-jerome-powell-fin...

lumost 4y ago
It really makes you wonder where all that money went. Monetary Theory tends to treat central bank interest rates and government taxes/borrowing as two sides of the same coin. For various reasons the US has leaned more heavily on the interest rate manipulation over fiscal policy for the last ~30 years - but I do wonder if we're missing an accountability aspect of interest rate based stimulus.

donw 4y ago

I think the biggest damage came from effectively zero-interest loans to those with means: high net-worth individuals, financial institutions, etc. Insanely magnified purchasing power for those with access. Consider housing. Blackrock and the Google Squad hoovered up a ton of real estate and converted them into rentals. Normal people can't offer 20-40% above asking for a home, so they were priced completely out of the market. Starter homes have doubled or tripled in price over the past four years. Salaries have not risen to match. Same is true for many other goods, and when combined with deliberate supply chain sabotage at the behest of the ruling class, effectively turned a significant chunk of the population into serfs overnight. The knock-on effects of this aren't going to be pleasant. People take pride in their work when they have a future to build towards. That no longer true for younger folks, or even a lot of people in their prime working years, so everybody is just sort of... phoning it in. Imagine you're a high school graduate today. All you can see down the road for you is an either an infinite series of "gigs", or, if you're lucky, the luxurious serfdom of corporate servitude. In the latter case, you still don't earn enough to ever own property, but you get free food and access to approved activities from your masters in the company hierarchy.

throwaway19423 4y ago
What is Google Squad?
cykros 4y ago
This, and the amount of newly public companies that received nosebleed valuations despite being pre-profit (and often enough, pre-revenue even) thanks to speculation (and the fact that these companies were impressive if only because they were using essentially free borrowed money...which has now dried up). And perhaps even more problematic, the less newly public but still nonetheless overvalued companies that are actually in the major indexes (and thus, in the average person's 401k), now down 50-80% in some cases. Couple that with the bond market ALSO melting down based on the fact that the Fed was engaging in its bond buying program keeping yields artificially low for the last few years and we had a situation where the average person took on far more risk than was suitable due to having little alternative. Given how much stable companies borrowed to beef up their balance sheets, my suspicion is that the core business environment may not be as badly affected as many suspect, as they have the means available to weather the storm, but that there will be a lot of folks caught out in it when it really hits, likely with quite a few bankruptcies in the tech sector, and as a result, a fair spike in unemployment. That will undoubtedly bleed into consumer spending, but again, given the healthy balance sheets we see in more core industries, I'm not seeing a cascading failure of the whole system on my crystal ball just yet. Guessing a 6-7/10 if we wanna put a number on "how bad".