Bailout

A few days ago Senator Schumer said that the present economic  trouble is so big and significant that private individuals and organizations cannot fix it, and only the government can deal with it. He was right in one sense, though probably not in the way he meant. Only the government can create money out of thin air in whatever quantity it likes. (It has a monopoly on that and guards it vigorously. Anyone trying to run his own stimulus program by running off a few hundred dollar bills on his color printer would be stopped by our public servants and treated harshly.) That is one of the jobs of the federal reserve.  Also only the government can, so far, float debt seemingly without limit.

 The politicians have decided that the danger of a catastrophic decline in economic activity justifies the cost and risk of throwing two trillion dollars of direct payments and guarantees of (often forgivable) loans into the economy.  Whether they are right or not, the passing of the bill illustrates a couple of things to notice. The people running the government tend to prefer the dangers of inflation and debt to the dangers of deflation and credit crisis. They do not want to repeat the 1930s or anything slightly like it.  Also in this very prosperous country there are enough individuals, companies, and state and local governments without sufficient reserves to go two or three months without revenue that officials thought a bailout was needed. Both are useful information  that can help  tell people something about how to invest and manage their assets  and lives going forward.

Of course a scare like this may convince more people and organizations to increase their reserves and build up emergency and rainy day funds. That would be a good thing.  I do think many people will decide never again to be caught with a nearly  empty pantry or only a few days of basic supplies. That would be a good thing too. One does not have to go as far as the Mormons or the survivalists do to admit that they are onto something.