The massive set of stimulus measures rolled out last month by the Treasury Department and Federal Reserve has left many Americans wanting more; and politicians scheming for new ways to dole out additional trillions in cash.
Most taxpayers have already received their $1,200 โstimulusโ payments. However, that one-time payment will do little to repair the long-term financial health of the 26 million (and rising) who are newly unemployed.
And it surely wonโt bail out all the small business owners who were callously deemed โnon-essentialโ and forced to shut down during this pandemic.
A national WalletHub surveyย foundย that 84 percent of Americans want another stimulus check.
The idea of getting free money is understandably appealing, especially during times of extreme economic anxiety.
But ultimately, there ainโt no such thing as a free lunch. All government handouts come at a cost that will be paid one way or another.
A group of young radical leftist Congresswomen โ the โSquad,โ as President Donald Trump calls them โ want to use the current crisis to install a universal basic income scheme.
Squad members Rashida Tlaib and Pramila Jayapal recently issued aย press releaseย pushing the so-called Automatic BOOST to Communities Act.
The Squadโs proposal would โimmediately provide a $2,000 payment using BOOST debit cards to every person in America as critical relief during the COVID-19 crisis, followed by $1,000 recurring monthly payments for one year after the end of the crisis,โ according to the press release.
The proposal also calls for โboostingโ digital payments infrastructure for the new debit card system and moving toward a โdigital public currency wallet systemโ โ i.e., aย contactless, centrally traceable electronic dollar.
With the federal government already on track to run a record budget deficit well over $3 trillion this year, where will the additional trillions needed to fund BOOST payments come from? Tlaib and Jayapal think they have the answer: order the Treasury Department to mint trillion-dollar coins.
That is not a hyperbolic characterization of what they propose. They literally propose that monthly BOOST payments be โfunded directly from the Treasury with no additional debt issued by minting two $1 trillion coins and additional coins as necessary.โ
It may be absurd from a sound money point of view, but thatโs not to say it isnโt clever political marketing. The Squad can sell a multi-trillion-dollar spending program as being deficit-neutral.
Plus, nobodyโs taxes would immediately have to be raised in order to pay for it. The Federal Reserve would bear the cost by โbuyingโ the Squad’s $1 trillion coins minted of platinum and crediting the U.S. Treasuryโs account with the funds.
Ultimately, of course, all holders of U.S. Federal Reserve notes would bear the costs of the scheme. And to the extent that automatic guaranteed monthly payments disincentivizes job seeking and job creation, they would diminish economic productivity and thus add pressure for further devaluations of the currency.
Perhaps these โSquadโ members should study Zimbabweโs disastrous experiment with multi-trillion-dollar currency denominations.
Instead of increasing the countryโs wealth, Zimbabweโs hyperinflationary monetary system, under the latter years of Marxist strongman Robert Mugabeโs rule, led to severe impoverishment โ even though on paper the typical Zimbabwean had become a trillionaire.
The U.S. may be a long way from experiencing Zimbabwe-style hyperinflation in practice. But in principle, our fiscal and monetary policies are becoming increasingly Zimbabwean.
The Fed now openly acknowledges that our monetary system is predicated on an unlimited printing press.
It touts its willingness to run the printing press with reckless abandon to prop up everything from to bank accounts to junk bonds.
Minneapolis Fed President Neel Kashkariโs March 22nd appearance onย 60 Minutesย with Scott Pelley reflected quite clearly the central bankโs Zimbabwean mindset:
Pelley:ย Can you characterize everything that the Fed has done this past week, as essentially flooding the system with money?
Kashkari:ย Yes, exactly.
Pelley:ย And there’s no end to your ability to do that?
Kashkari:ย There is no end to our ability to do that.
Pelley:ย Is the Fed just going to print money?
Kashkari:ย That’s literally what Congress has told us to do. That’s the authority that they’ve given us.
Fed officials no longer even pay lip service to the idea that the Fed operates within a limited dual mandate โindependentโ of politics. If Congress tells the Federal Reserve to buy bonds, stocks, mortgages, or trillion-dollar coins, it will do so.
The less sound U.S. monetary policy becomes, the important it is for investors to seek out the protection ofย sound moneyย in the form of gold and silver. The money metals cannot be debased by an unlimited printing press.
And for that matter, neither can platinum. A typicalย one-ounce platinumย coin wonโt suddenly become worth $1 trillion in the next stimulus package (theย Platinum Eaglesย made available to the public carry an arbitrary face value of just $100).
Nevertheless, platinum may start garnering more attention as an especially undervalued metal that offers unlimited upside potential versus U.S. dollars.
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