I got a call from a client nervous about the stock market. She had a list of questions for me. The one that stopped me was, “What is the worst that could happen?”
On the medical side, the answer was obvious. More sick people. More deaths. People I know and love suffering and dying. A healthcare system overwhelmed. As awful as those things are, I know there is an arc to the virus’ progression. At some point, one way or another, this will play out. The infection will run its course. The healthcare system will recover. New treatments will be used. Finally, a vaccine will be produced.
But she was asking about her financial situation. She is retired and dependent on a portfolio. The world is grinding to a halt. What happens economically? Will we recover? If so, how long will it take?
What is the worst that could happen economically?
If government officials don’t take this seriously; if there is a dearth of leadership; if there is no quick and drastic fiscal policy, then the worst happens. We are hearing about those drastic ideas now. Talk of cash appearing in our accounts to help plug the hole from lost earnings. Surprisingly, no one is objecting to this idea. The only debate is how much. It is good news that policymakers are getting bold and innovative.
Concerning this “instant cash,” some have asked, “But what if people spend it on dumb stuff?” Economically, it doesn’t matter! They just need to spend it to help spur the economy back to life. The quickest approach is to give people money regardless of their income. So get the word out. When the money fairy shows up, spend it!
When it comes to this virus, the best approach is to pull in and avoid contact. When it comes to the economy, the best approach is to throw the money around. Combining the two will require ingenious thinking, but we’re Americans!