Give Everyone a Loan

$10,000 15-year, $0 interest loans  (written 9/20, updated 12/20)

A new phenomenon has hit the US since the Covid 19: minivans filled with families are lined up for blocks asking for food.  They are driven by families used to be making $100,000 a year, and now they don’t have food for their kids.  Their businesses have been shut down; businesses have run out of customers; and workers are laid off from their jobs.  Citizens have no way to make a living.  In the meantime, the bills keep coming: the mortgages, the car payments, the health insurance bills.

In a social paradox, many “poor” families in the country don’t have the same problem.  They have financial security, even though it is only enough for their basic needs.  They are in government financed housing; they get food stamps; they have Medicaid;  they get welfare cash on their credit card each month; and the live in urban areas where they don’t need cars.

Another paradox with the present free lunch program is that people who don’t need the money, still get $1500 gifts from the government, paid from deficits, paid back by our kids.

One way President Trump and his fellow geniuses are dealing with situation is by following President Reagan’s philosophy: Deficits don’t matter.  That is, give out free money, charge the national credit card, and let the kids handle it in the future (when all us geniuses are in nursing homes or in the grave).

That is, kick the can down the road and forget about what could happen tomorrow.  We can call this political philosophy Screw the kids  philosophy.

Loans for everyone

Here is RG’s policy:  (He’s another political genius.) Hand out millions of $10,000 loans to individuals and businesses to be paid back 15-year $0-interest payments, not to start until after a vaccine is produced and activated, that is, until we have herd immunity, until we have defeated the virus.

Granted, many loans won’t be paid back, but this is infinitely better than handing over trillions of dollars more of debt to our kids.

But instead of loaning money, the government is shoveling out cash, as if they can print any amount they want without inflation.  Many intelligent and mature (but irresponsible and immoral) citizens believe that we can borrow as much money as we want and never have to pay it back.  Often those who want to borrow the most money– and give it to the needy — consider themselves to be the most moral.

Here’s some math:

For every $1 trillion given out to businesses and individuals, the government could have lent 100 million people $10,000 each. (1)

There are approximately 150 million taxpayers in the U.S.  The government could lend each taxpayer $10,000 for $1.5 trillion. (2)

If the economy needed more money, the government could lend each person another $10,000 each for $1.5 trillion.

Of course, these are just round figures, and the policy could be flexible to add as much money the economy needs to avoid depression and inflation, as well as to provided loans to people in according to their needs.

For every $10,000 borrowed, the individual, or family would have to pay back around $60/month -an easy payback plan -for 15 years, or pay the $10,000 in bigger lumps. (3)

In this way, the government would get most of the money back, hopefully the economy would be more stable, and individuals and businesses would be abler to use their reason and creativity on how to deal with this crisis on an individual level.

And adult citizens will be in a debt, which they can handle, rather than our innocent kids.

 

Notes

(Granted there would be large numbers of non-repayment, but this number would be infinitely lower that the number of zero repayments, in the case of grants.

However, these loans could be unforgivable (unless proven to be impossible, or very difficult, to pay back), and thus it would probably be worth it, for one’s credit, to pay the loan back.

This policy could be very useful in controlling the economy.

It is irrational for citizens to expect future taxpayers to pay victims for every natural disaster that happens.

1) $100 million x $10 thousand each = 1 e8 x 1 e4 = 1 e12 = $1 trillion.

(2) 150 million taxpayers x $10,000 = 15 e7 x 1 e4 = 15 e11 = 1.5 e12 = $1.5 trillion

(3)  $10,000 / 15 years / 12 months = $55/month