Taking a Different Path

Continuing to observe the Congressional catfight on the Hill regarding the Stimulus Bill, with pork being tossed in on both sides, underscores both dysfunction but also the nature of American legislative orientation - short-termism. Have the members given thought to other approaches that may accomplish more than just a band-aid consumer spend, much like how Fed rate drops are now meaningless? Few seem to discuss the longer term impact of another $3+++ trillion of federal debt, on the dollar and on the economy. So consider this: an approach generally at odds with the Fed government right now. Rather than printing tons of paper (debt) which has to be paid back at a time the government is already bust, I would look to the rentier class to absorb the hit in the interim, yet giving them incentives to do so. Place a moratorium on all payments of interest-bearing obligations. By providing funds in the suggested STIMBILL manner to allow folks to pay their bills is just another way to move money to those that own the rented assets and increase the spread between the haves and have nots, the subject of wealth inequality. Think about it. Receiving access to $2,000 or whatever to pay bills, well who's the ultimate recipient of the funds? A property owning landlord. Same with mortgage payments, just paying the bank, so it maintains. The stimulus exacerbates the system's inequality, further expanding the chasm between wage earners and capital earners, according to Dr. Louis Kelso. But we assume that not only cash flow is interrupted but asset prices (equities, real estate) are being effected, held by the rentiers, though if they hold long enough, such values will hopefully return. Those not benefitting from asset holdings, i.e., those living entirely off his/her current wage, are subjected more to financial demise. So rather than facilitating an in-and-out payment scheme, with such funds going to the asset holder, let's suspend such payments. The wage earner remains largely the same, paying no rent yet still with a roof, the rentier foregoes current income and the government doesn't leverage up further. Yes, the reduced cash flows will hurt, but ask who has the ability to withstand such. Other things also come to mind. I would have education system particularly the billion dollar endowments address the student loan issue, as they ultimately were the beneficiary of the student loan funds to begin with. Maybe pay down the debt, service the interest, but with nearly $500 billion in endowment funds in the US, seems like they have a vested interest. Further, I would suspend state governments, like California, from using state tax revenues to reduce underfunded liabilities of state pensions, which only benefit a few. I would have the mortgage lenders convert their loans into equity participating notes where there value would rise and fall with the property value. Allow their return to be conditioned on the underlying asset they financed. Recall last time the mortgage debt was constant on highly leveraged ownership. The equity got wiped out which may have been the owner's sole nest egg. Allow both sides to play the asset price risk. And as suggested, I would mandate a dropping of rents both individual and corporate. All to provide cash flow relief. So rather than further inflating the economy with little more than spending money (ultimately funded with debt our grandkids will have to deal with) and transferring more cash flow and wealth to the asset holders, I’d slow the transfer of funds and have those with assets absorb the downturn. This is not Marxist, but realist. When things return to normal, the asset values will once again rise. The proverbial quid pro quo of this proposal may be to reduce the capital gains tax on such assets. The government will raise the level of debt with either increased spending or with reduced revenues. In this current downturn, it is experiencing both, writing checks when the receipts are drying up. It is the manifestation of what it is trying to address. Creating and throwing money at this as being demonstrated will only add to the bigger and longer term problem. There are different ways to approach this. As with bringing in medical professionals to address COVID19, or military professionals on Middle East affairs, it seems leaving this level of economic affairs to politicians, is a travesty and irresponsible. This is a time to douse the flame not throw gas on it.