Yet Another Fed President Supports More Free Money and a Covid Lockdown

Mish

Chicago Fed president Charles Evans says a 4-week lockdown could help.

Evans also says More Fiscal Support ‘Incredibly Important’

It’s “incredibly important” the U.S. deliver another round of fiscal policy measures to aid the economy as it weathers the coronavirus pandemic, said Federal Reserve Bank of Chicago President Charles Evans.

“Fiscal policy has been unbelievably important in supporting the economy during the downturn that we’ve been experiencing,” Evans said in an interview Sunday on CBS’s “Face the Nation.”

“That continues to be important because we’ve not got control over the virus spread. I think that public confidence is really important, and another support package is really incredibly important,” he said.

“As you look at the economic outlook there are some negative scenarios and the ones that are most pessimistic involve not supporting state and local governments,” he said. “States have to balance their budgets. They are experiencing reduced tax revenues and so there will be employment reductions.”

Balanced Budgets

States don't have to balance budgets and Illinois is proof. 

Rules allow long-term borrowing to be part of "balancing" the budget. 

That aside, the point is taken.

Hard Lockdown

Evans repeated that point on Sunday and said that a hard lockdown of four to six weeks suggested by his Minneapolis Fed colleague Neel Kashkari might help get the pandemic under control. But he doubted the U.S. government would do it.

“It would come at quite a lot of hardship for small businesses. It would require tremendous fiscal support. If the national U.S. government were willing to do that I think we could knock down the virus spread,” Evans said. “While that could work, I’m not optimistic that that would actually be adopted.”

Third Call For More Free Money 

On August 3 I noted Second Fed President Calls For More Free Money.

Richmond Fed President Thomas Barkin issued a video call today for more free money.

Thomas Barkin joins Minneapolis Fed President Neel Kashkari in the free money call. 

Kashkari on a Lockdown

“If we were to lock down hard for a month or six weeks, we could get the case count down so that our testing and our contact tracing was actually enough to control it,” Kashkari said.

Running Score

  1. Hard Lockdowns: Two Fed Presidents, Neel Kashkari (Minneapolis) and Charles Evans (Chicago) support hard lockdowns.
  2. More Free Money: Three Fed Presidents, Neel Kashkari (Minneapolis), Charles Evans (Chicago), and Thomas Barkin (Richmond) support more free money.

It is a certainly that all or nearly all the Fed presidents are in the Free Money group. 

Kashkari, Evans, and Barkin have made it official.

Gold's Response to Free Money

Gold has responded to these views, and rightfully so.

For discussion, please consider Gold Soars to New High Above $2000 While Managed Money Sat it Out

What about the US Dollar? I am, glad you asked.

For discussion, please see Are the Commercial Dollar Traders Early, Wrong, or Neither?

Mish

Comments (62)
No. 1-22
PecuniaNonOlet
PecuniaNonOlet

What is the alternative to “free” money in a lockdown pandemic?

And before anyone responds with, “send everyone off to take their chances with the grim reaper,” lets assume that is a non-starter.

Russell J
Russell J

These guys are looking out for their friends..the 1%. That's all.

Wake up sheeple
Wake up sheeple

The Fed wants to own it all and they will. They are the cause of everything people. Kennedy asassination, 911, and fake pandemic.

Sechel
Sechel

Well I sort of agree. Virus is out of control. Hard lockdown would work. Can't expect people to stay home if they can't pay bills. Fed is correct to say it's the role of the executive and legislative branches. Economy won't restart while virus rages on.

Augustthegreat
Augustthegreat

For once I agree with his proposal. We must first have the virus under control before the economy can come back to normal. To have the virus under control we must have a real lockdown, do a good test and trace for a few weeks.

Sechel
Sechel

If the United States had done a 100% lock down , followed the CDC guidelines for re-opening and had a national testing and tracing strategy we wouldn't be here now. Just look at Germany and France.

Realist
Realist

Why do people use the phrase 100% lockdown? No country has done a ”complete lockdown”.

Hospitals, police, military, fire, grocers, pharmacy, farmers, food processing, utilities, oil and gas, petrol stations, internet, banks, insurance, emergency response, trucking, delivery, etc etc etc have not been locked down or closed down. Only non-essential and risky areas have been affected. (sports, entertainment, dine-in restaurants, some retail and so on). And many people transitioned from commuting to work, to working from home. No country went to 100% unemployment.

Having said that, the countries who have been successful in controlling the pandemic, have all been following the same basic game plan:

A national strategy, with strong leadership from the top, supplemented by strong leadership by regional and local leaders: all giving the same consistent message together.

The message has been the same one that you hear in the US. We are going to shut down the riskiest parts of our economy until such time as it is safe to re-open them. We are going to social distance. We are going to wash our hands frequently and clean and sanitize to the best of our ability. We are going to test and trace the sh*t out of this virus. Later, they all recommended wearing masks, which soon became a key to being able to reopen parts of the economy.

None of which would have worked if not for the high levels of compliance from the citizens of these successful countries. The leaders have not stopped sending the message and the citizens are seeing the success of compliance as these economies reopen. It is a team effort.

The message today is still the same. And they are talking about the need to maintain this strategy for another two years, as it will take that long for everyone to get vaccinated with an effective vaccine, as well as develop better treatments.

Note that none of these countries is perfect. And no one can get 100% compliance of its entire population. All these countries know that second and third waves are going to happen as they continue to open things up. The hope is that by getting their case numbers to very low levels first, that they can then deal effectively with the inevitable hot spots where cases show up again.

In comparison: what is the national strategy of the US? I guess it is Donald Trump saying; ”Eventually, it will just disappear.”

lol
lol

Here you have a dead rotting corpse of an economy,hundreds of trillions spent (on Wall Street)since 2008,yet the economy has been in virtual collapse mode for 12 years! US is now El Salvador x50,sad!

CautiousObserver
CautiousObserver

Einstein: “Insanity is doing the same thing over and over and expecting a different result.”

We already did the US version of a lockdown, remember? It did not work. What are these Fed presidents advocating that will give a different result this time? Throw people in jail? Hand out big fines for noncompliance? Ignore fire code and weld apartment building doors shut except for one or two that will be monitored by military personnel? People on this thread who think another US lockdown is the answer are not thinking clearly. Also, deaths from COVID-19 in the US are most recently trending down. We should see if that continues before making any more huge changes to the way the system is working.

This is the other shoe dropping at the Fed. Apparently, the stupendously excessive debt in the system is still at risk of imploding and they want political cover to debase the currency even faster than they already are doing. The founding fathers would not approve. I know the Fed works for the big banks, but how about exercising enough caution to make sure you guys do not totally destroy what is left of the US economy and the dollar, okay?

Casual_Observer
Casual_Observer

The Fed has to cover up this administration's poor management of nearly everything. The 5th Risk by Michael Lewis really hits home. We wont get out of this mess until Trump is gone. Biden is right about this being the most critical election ever.

Jojo
Jojo

Here comes a dose of reality for all you clowns that think another lockdown can actually work. Sheese.

"Make Decisions Based in Evidence

The idea of closing down society with draconian lockdown policies is an experimental concept that is not based in reality. They are tools to be considered to slow the spread of cases so that hospitals can prepare and should not be viewed as a way to eliminate the virus. Never before has any pandemic been countered by shutting down all of society. The problems associated with such a policy quickly outweigh any of the marginal benefits. Furthermore, preventing cases is far more difficult than preventing deaths. In fact, it may be near impossible given how contagious the virus is and how lockdowns have had little effect while decimating society. A better response would be mitigating deaths and severe cases by focusing on increasing hospital capacity. That is something that we can actually control. Attempting to control a force of nature is not something that can be done easily, if at all. Support a proper response by empowering the healthcare sector, not politicians and bureaucrats. It is foolish to attempt to solve a medical problem with politics."

Jojo
Jojo

How many of you mask wearing fools use the scarf or gaiter around you neck that you pull up as you walk by someone? Guess what? They don't work!

Researchers created a test to determine which masks are the least effective
By Alaa Elassar, CNN
Updated 9:06 PM ET, Sat August 8, 2020

Herkie
Herkie

It would help for a little while but as soon as the lockdown ends the virus will be back. New Zealand just reported one month without a single domestic case of Covid, but the PM still warns people not to let their guard down. So what good does it do to beat it if you can't let your guard down once it is over? Because all it will take is one infected person to start the whole thing over again.

Six000mileyear
Six000mileyear

The US needs a lock-OUT for several years once a lock-DOWN has brought COVID19 under control. Globalism certainly has made COVID19 worse than it could have been.

Alexll
Alexll

This is all criminal insanity in my opinion. There are possible treatments for this virus that when used early (within 1 to 5 days of symptoms or infection) can eradicate this virus from a persons body. At worst they do nothing to the person. We need to end this immediately.

Bam_Man
Bam_Man

We were all wondering what the inevitable “terminal phase” of our unbacked, debt-based fiat monetary system would look like.

Now we know.

RonJ
RonJ

"Chicago Fed president Charles Evans says a 4-week lockdown could help."

The lockdowns failed. They suppressed attainment of herd immunity and thus the number cases rose dramatically, as the states reopened their economies.

Jojo
Jojo

Here's an interesting lockdown related chart:

COVID-19: Government Response Stringency Index

The Government Response Stringency Index is a composite measure based on nine response indicators including school closures, workplace closures, and travel bans, rescaled to a value from 0 to 100 (100 = strictest response).

pvguy
pvguy

Lockdown during harvest season. What a good idea, NOT. If you intend to exempt agriculture and all of its support activity, then all you have done is close what few restaurants that are left.

aqualech
aqualech

Sorry guys, but from where I sit I still can't see the mortality situation being anywhere near bad enough that it would justify another shutdown. However, that would certainly help to expand the Fed balance sheet and establish it in the Savior capacity even further.

Herkie
Herkie

Jeez I wish they would hurry up and get inflation to 2% because I needed paper towls today. The last lot I bought was at the Safeway in Medford Oregon, I almost did not buy them because a dollar a roll was just too high no matter the marketing on the outside of the package that said NEW IMPROVED 8 rolls = 18 rolls. They only put that sort of fraudulent slop on packaging so the BLS will use it as an excuse to hedonically reduce the paid price of the goods. Well I now need paper towels again and they are $15.59 for a 6 roll package (their largest now) and that is $2.60 per roll. Meaning from late winter last year till today - about 9 months - the price has risen 160% and it is typical of MANY items in the stores today. It is flat out gouging.


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