by Rick Ackerman
The stock market wafted last week into a psychologically surreal zone somewhere between terror and, if not greed, then at least jittery optimism. How can stocks rally at all when no one can predict whether the deadly spread of coronavirus is about to overwhelm America as it did Italy? The economic picture remains just as murky, since odds the global economy will fall into a full-blown depression are probably no better than 50-50 right now.
Granted, two trillion dollars worth of consumer stimulus is bound to produce short-term benefits and a fleeting bounce on Wall Street. Were you aware that much of that money is in the form of loans that will allow employers to avoid laying off even a single worker? The loans are structured as gifts, and if you borrow a few million dollars now and don’t furlough any employees, there’s reportedly a good chance the debt will be forgiven. This effectively creates a months-long paid vacation for the idle at the expense of those who are working. Or perhaps not; for if those still on the job are not taxed at some point to pay for this epic giveaway, the money will have come, so to speak, from trees. To use another metaphor, it would be the torrent of helicopter money that Ben Bernanke famously asserted could prevent the U.S. economy from getting crushed by deflation.