Is Everyone Getting ,000 From The US Government? (Helicopter Cash Bailout)

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So right now the markets are down massively overall and most people’s portfolios look something like mine now i invest in individual stocks so as a result i’m seeing more of a dip here but overall i am down about ten thousand dollars or thirty four percent on a money weighted return now i personally live in new york state which has become a hotbed for this virus

And there were some very drastic actions that were taken place yesterday which is spurring a lot of talk about this helicopter money so what we found out yesterday is that restaurants bars gyms and movie theaters would need to close their doors by 8 p.m. on monday bars and restaurants were allowed to do takeout or delivery only and as a result millions of service

Workers are going to be without work and this just so happens to be a part of the population that is not well-off financially to begin with as many of these people solely rely on tips for their living so as a result if they’re not able to work and have people coming into restaurants what exactly are they going to be doing to have money to pay their bills especially

At a time when schools are closing and they have to be watching their kids and they may not have access to school lunch programs and things like that now many states including new york have also asked non-essential businesses to consider a voluntary closure and they also said that this may be an involuntary closure down the road where essentially businesses are

Forced to close their doors so the types of businesses that are asked to remain open are things like you know convenience stores and pharmacies but non-essential businesses like coffee shops for example are being asked to consider voluntary closures which again is going to put more service workers out of work giving them no real options here for income now here’s

One local example of this for me the rivers casino in my area announced that they would be shutting down as part of this plan by the new york state government and about 900 employees are being sent home with two weeks pay but beyond that it is very uncertain about what these workers will be doing for pay and that is why we are seeing talks about this potential

Helicopter money strategy or giving everybody essentially a cheque giving them money to go out there and buy their groceries and essential items for their survival so mitt romney came out yesterday proposing this idea that every american would receive a $1,000 check to support themselves in their families during this crisis time and this has a lot of parallels

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To an idea proposed by former presidential candidate andrew yang known as the freedom dividend where every american over 18 years of age would receive something called a freedom dividend in the amount of $1,000 so a lot of people are excited about this potentially or wondering whether or not it will actually happen so let’s get into that right now and talk about

The likelihood of us all getting a check for $1,000 from the us government now this idea of helicopter money is considered to be an alternative to something known as quantitative easing which is what we are seeing happen right now and if you don’t know what that is guys don’t worry we’re going to break it down right now quantitative easing happens during a time

Of crisis and this is when the federal government steps in and purchases large amounts of treasury bonds and mortgage-backed securities in order to free up liquidity for the banks now the biggest problem here with this quantitative easing is that the money that is used to purchase these assets essentially comes out of thin air also known as the government printing

Money and i’m sure we have all heard of this before how governments can print money since we are no longer backed on the gold standard and of course the problem with printing money out of thin air is that this drastically increases the supply devaluing each dollar that every one of us have in our wallets and in our bank accounts now quantitative easing has been

Used successfully in the past during times of economic crisis but we have seen examples in history of when it was taken too far and had catastrophic effects for example this is exactly what happened in world when germany decided to leave the gold standard and basically print massive amounts of money to fund the war effort well this drastically increased the supply

Of this country’s money and essentially dropped the value substantially also known as a period of hyperinflation so quantitative easing is a useful tool in the tool belt of the federal reserve but if it is used irresponsibly it can have catastrophic effects so essentially this idea of helicopter money is an alternative to the quantitative easing of the banks and

Instead of giving money to the banks it would be given directly to the people as the government prints more money to free up liquidity for business to continue and for people to continue spending money stimulating the overall economy now we found out on sunday night that this quantitative easing was already taking place and the federal reserve was going to be

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Printing 700 billion dollars of money in order to free up liquidity for the banks to allow them to make loans to small businesses as well as consumers and the best way to understand this quantitative easing is to think of it as the federal reserve swapping assets with the banks they give the bank’s 700 billion dollars of cash or liquidity and in exchange they take

Those treasury notes and mortgage-backed securities now the overall effect this had on the market we saw yesterday it resulted in the worst day in the stock market since in 1987 as this largely panicked investors and made them think you know why is the government pumping money into the economy what is the bigger picture and what is going on now during a economic

Recession the government essentially has two different tools in their tool belt that are largely used number one is the quantitative easing which we’ve talked about already aka printing money and the second one is lowering interest rates to lower the cost of borrowing money for consumers and businesses so the federal reserve also cut interest rates to zero which

Essentially means they don’t really have any tools left in their tool belts other than just continuing to print money and if we end up in a recession and the government is unable to basically get us out of that through quantitative easing this is referred to as a liquidity trap because there’s no real good option to stimulate the economy other than negative interest

Rates which is a totally different topic for a different video so essentially by cutting interest rates to zero these federal reserve has used their biggest tool and their tool belts already and if there’s more action necessary beyond this they would have to look beyond cutting interest rates and additional quantitative easing which is why this idea of helicopter

Money is being tossed around so should we all expect to get a $1,000 check from the us government i would say it is highly unlikely for the following reasons first of all this is what you would consider to be a last ditch effort after quantitative easing and interest rates cuts failed to do their job and we really haven’t given it enough time to see how this will

Affect the overall economy second of all there’s a number of large problems with the helicopter money strategy and that’s largely why it has never been implemented even though it has been talked about during times of economic crisis during the stock market crash of 2008 it was tossed around but never implemented and japan also talked about this strategy in 2016

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But again it never actually came to fruition because there’s a number of massive problems with just sending everyone a check for a set amount of money and the biggest problem here is that with quantitative easing this action can be reversed because essentially what is happening here is the federal reserve is swapping assets with the banks they give them a supply

Of money to free up liquidity and they take on the treasury notes and mortgage-backed securities however down the road when the economy is good they can swap back have the money given back to the federal reserve and give the bank those assets back if the federal government simply gave everyone a check for a set amount of money there’s no way that action could be

Reversible in the future because nobody’s going to send the government back their thousand dollars because they’re going to have spent it already on something else another big question surrounding helicopter money is whether or not people would actually spend the money because the idea here is to give people a thousand dollars to buy supplies and to spend to

Stimulate the overall economy and many people would probably not spend the money instead they would hoard it in their savings accounts defeating the purpose of stimulating the overall economy so are we likely to see it the answer is probably not what we’ll probably see instead is potential tax breaks for businesses or individuals which is essentially accomplishing

The same task of helicopter money freeing up money and liquidity for the overall economy and increasing the money supply or we may see stimulus packages directed to certain industries like the service industry but the idea of everyone getting a check for a thousand dollars while it sounds nice on paper when you actually dig into it there are some massive holes

With this plan so anyways guys that is the end of this video let me know what you think down in the comment section below and if you enjoy these current event type videos please drop a like on this video just so i know and i will try to do more as i see interesting topics to cover if you want to see me doing a series here of building up my dividend portfolio from

Scratch i will link up to that down in the description below and please subscribe if you haven’t already thanks so much for watching guys and i will see you in the next video

Transcribed from video
Is Everyone Getting $1,000 From The US Government? (Helicopter Cash Bailout) By Ryan Scribner

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