The Celeri Journal #73: $3 Trillion More

Written by Michael

On May 13, 2020

Global Markets Recap

Speaker Pelosi is drafting legislation for a cool $3 trillion more in fiscal spending. Sure, why not.

My math is the Fed’s spent $6 trillion to bail out stock investors & keep banks afloat. But the banks aren’t lending & big companies are firing everyone, so what’s the point. Congress has spent a paltry $2 trillion or so to feed families & keep small businesses open. You may as well even the score, don’t you think. Ah, got you there. Didn’t I.

Actually, Treasury Mnuchin is tacitly behind gobs of additional spending. He keeps telling anyone who’ll listen to borrow as much as you can when money is free. There was a 10-year auction today & investors bought 60 basis points for a decade with all their might. The point: keep spending.

My guess is the payroll tax will be 1/2 of this bill & straight handouts the other. States will get some dough. That’s about right. Everyone will scream & yell, it will go down to the wire; won’t pass: stocks will tank. Been there, done that. We’ll call it TARP VI: The Lockout Era.

Deficit hawks – is that still a thing? – will scream from mountaintops but no one will listen. There’s government generosity, then there’s also the idea of keeping peace in the streets. The quiet subtext here is more latter than the former. Look for passage around Memorial Day.

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