Trump's Corona Virus Plan - even more money transfered to the rich

Donald Trump has just succeeded in getting his $2 trillion stimulus plan voted through both houses. Normally, I should be rejoicing, because it should mean that people in the US have a better chance of surving the Corona Virus Epidemic.

However, before leaping for joy, let me just remind you what this means, given that the US government will just borrow the money. You might think that when the US Treasury goes to the Federal Reserve and asks for $2 trillion, that this is one part of government borrowing from another part of government. But, in reality, this money will be added to the already enormous amount of public sector debt - debt that incurs interest charges that cost US taxpayers a fortune.

I just downloaded all the latest data from the US Treasury's highly informative site  where you can find historical data for the level of Public Sector Debt, as well as the latest numbers to the level of a penny. You can also find the amounts of interest paid on that debt every year. I've put the numbers in a Google Sheet that you can find here and used the numbers to generate the following table.

You can see that debt has soared to over $23.5 trillion, with over $3 trillion more since Trump took office (well, he had to pay for all those tax breaks for millionaires and corporations). Last year, the amount that US taxpayers handed over in interest charges broke all records, soaring to $574.6 billion.  The total amount paid out since 1988 has reached over $12 trillion - effectively well over half of the total debt.

Now, I presume that to finance his Corona Virus package, Trump will just borrow some more. That's the bottom line of the chart, where I added $2 trillion to the tab, and estimated that with the current interest rate (2.53%), this will mean that in one year, US taxpayers will pay over $646 billion to investors and bankers. That's around $2000 for every man woman and child in the country.

Isn't this absurd? Why on earth borrow money, when the US government could simply decide to change the system, and effectively print the money. After all, it is now well known that when governments borrow from banks (and the Federal Reserve), they can effectively create the money out of thin air.

I just received the latest information letter from Stan Jourdan from Positive Money Europe entitled "Is coronavirus leading to a revolution of the system"?

The letter includes an excellent list of things to read. It looks like there is increasing momentum building that could mean that maybe the castastrophe that is the corona-virus pandemic could have a silver lining in the end. I very much hope so.

• The virus is an economic emergency too and governments must act now to avert a depression, warns Martin Wolf, chief economics commentator at the Financial Times

• Coronavirus has shattered the myth that the economy must come first, writes Adam Tooze in The Guardian

• The ECB Must Finance COVID-19 Deficits, writes Paul De Grauwe in Project Syndicate

• Coronavirus: the moment for helicopter money - a great article by Martin Sandbu in the Financial Times

• The ECB’s Pandemic Emergency Purchase Programme is a big deal, suggests Jens van 't Klooster

• COVID-19 Is an Opportunity for Europe, argues Lucrezia Reichlin, a former director of research at the European Central Bank

• Helicopter Money “would provide strong stimulus without increasing the public debt burden”, writes Adair Turner 

• Higher public debt levels will become an economic feature and be accompanied by private debt cancellation, Mario Draghi, former ECB President writes in the FT

• Italy will be Europe's canary in the coalmine for the post-Covid economy, opinion from Marchel Alexandrovich, The Guardian

• “Though the ECB is rightly aiming at addressing the coronavirus crisis, there is a risk that fossil fuels free-ride on those measures gain even cheaper financing to maintain their activities,” our Stan Jourdan told Climate Home News
   And their Quote of the month
  Quote of the month
  “Another option would be for fiscal support to be financed by a permanent increase in money supply, created by central banks, which could substitute for debt-financed programmes. This approach should not raise fears of inflation as long as growth remains below potential, and central bank independence is respected. And it would reassure markets about the capacity of governments to support the economy.”
  Laurence Boone, Chief Economist at the OECD
  Added 27/03/2020. 
  You may have seen that yesterday, the G20 countries have agreed to pump a total of $5 trillion into their economies to help cope with the corona virus epidemic. Ask them where they plan to get the money from. I hope it's clear - they will just borrow more from the banks - who have the ability to create as much money as the governments want. And since the great thing about lending to governments is that they can always get money by taxing you and me, it's zero risk.