Governments should take on coronavirus with dramatic fiscal stimulus — views

Surprisingly, China’s stock market “is the world’s best performer, thanks in part to massive fiscal stimulus in response to last year’s trade war and this year’s virus epidemic,” David Goldman observes in the Asia Times. The U.S. and other G7 nations should bring out their cannons with massive fiscal – not monetary – stimulus, such as immediate suspension of tax payments and social insurance payments, he urges.

Yes, the Fed should cut rates substantially, but mostly for the psychological impact, because lower rates “won’t increase borrowers’ ability to post collateral or bankers’ willingness to make loans.”

While politics could interfere, Goldman thinks “it would be awkward for the Democrats to oppose a Trump Administration initiative to put money in the pockets of the poorest Americans and to aid small businesses, who employ the vast majority of Americans.”

“Natural disasters delay economic activity but do not change the economy’s long-term growth potential,” he writes. “The economic impact of Covid-19 stems from preventative measures, which temporarily suspend economic activity. Governments should step in and provide a fiscal bridge. This is no different than storm or flood damage.”

https://seekingalpha.com/news/3546894-governments-should-take-on-coronavirus-dramatic-fiscal-stimulus