US proposes $2 trillion rescue plan, doomsday doctor questions its effectiveness

The U.S. government and congressional representatives have made preliminary progress on the Wuhan coronavirus economic relief bill, aimed at mitigating the devastating impact of the Wuhan coronavirus pandemic globally. The package is expected to inject $2 trillion into the U.S. economy in the coming months. However, doomsday economist Nouriel Roubini believes that most of the funds will only flow to large and medium-sized businesses, making it difficult for grassroots employees to receive real assistance.

US Government Proposes $2 Trillion Aid Package

The White House and Congress representatives reached a preliminary agreement this past Saturday on an economic relief plan for the COVID-19 pandemic. Chairman of the National Economic Council, Larry Kudlow, stated on Saturday that the proposed relief funds are estimated to be around $1.3 to $1.4 trillion, with additional loans to be repaid, totaling to about $2 trillion in economic impact, equivalent to 10% of the US Gross Domestic Product (GDP), with the possibility of further increases. Additionally, the aid package includes $1,200 checks for most US taxpayers.

Due to the restrictions in place to curb the spread of COVID-19, many people are unable to work, numerous businesses are either restricted in operations or completely shut down. With the pandemic spreading, this situation is expected to worsen, leading to a rapid increase in unemployment. President Trump stated in a White House briefing:

"This economic measure aims to keep companies intact while safeguarding the income of their lower-tier employees, enabling them to sustain their livelihoods."

However, the economic relief plan is still in the proposal stage, with negotiators having differing opinions on the details and a full agreement has not been reached.

Dr. Doom Questions the Effectiveness of the Aid Package

Upon the release of this news, opinions on the bill vary. Dr. Doom, Nouriel Roubini, pointed out that the $2 trillion aid package would not benefit the majority of Americans as most of the funds would flow to large and medium-sized enterprises, which have abundant cash and have used previous aid for stock buybacks. Very little of the funds will actually reach lower-tier employees.

Trump now speaks of a $2 trillion fiscal stimulus. But a lot of it is smoke & mirrors that doesn't help the average American. Too much of it is going to the large/middle sized firms, many that are cash rich & used previous bailout for share buybacks. Not enough going to workers!

— Nouriel Roubini (@Nouriel) March 22, 2020

Furthermore, the US economy consists largely of part-time, gig, freelance workers, and small businesses with fewer than 10 employees, with over half of Americans lacking formal employment contracts. Therefore, these individuals are ineligible for unemployment benefits and other relief programs. Nouriel Roubini stated:

"Soon, these individuals will be unable to pay rent, utilities, and will not have enough dollars to buy food and other essential goods. 40% of Americans have less than $400 saved for emergencies. They will soon go hungry and riots will erupt in the streets."

Nouriel Roubini concluded by emphasizing that to address the imminent economic downturn and financial crisis, it is crucial to temporarily suspend the debt obligations of these lower-tier employees and allow them to defer payments to help them get through these challenging times.

On March 23rd Taiwan time, James Bullard, President of the Federal Reserve Bank of St. Louis, predicted that due to the implementation of quarantine measures, the US unemployment rate in the second quarter could reach 30%, with GDP dropping to an unprecedented 50%.

Bitcoin Faces Stress Test

Bitcoin was born out of a financial crisis, and the global economic crisis triggered by COVID-19 is the first major macroeconomic turmoil it has encountered since its inception. Whether Bitcoin can withstand the stress test and prove its attributes as a hedge asset or will plummet alongside the global economy remains to be seen.

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