Do We Really Need More Stimulus to Print More Millionaires & Billionaires, Enrich Fraudsters, Balloon the Trade Deficit? Consumer Data Says, “No We Don’t”

People who need support, should get support. As for the rest? On my soapbox, wildly wagging consumer income and spending data.

By Wolf Richter for WOLF STREET.

Weirdest economy ever, powered by stimulus money, and the now expired extra unemployment money, and money from rents-and-mortgage-payments-not-made, and money from cash-out mortgage refis of at record low interest rates. And folks “in aggregate” – all mixed together, with all inequalities papered over – are spending record amounts on goods, a lot of which are imported, but they’re not spending on services – not because they don’t have the money but because they have Pandemic-reasons for not buying those services.

Personal income from all sources in September ticked up a tad from August, to a seasonally adjusted annual rate of $19.8 trillion, according to the Bureau of Economic Analysis today, having falling 6.0% from its wondrous stimulus-and-unemployment-money spike, but up 6.2% from a year ago:

Free money and Earned money.

Earned money. Personal income from wages and salaries alone – what people earn from their jobs or self-employment activities – rose 0.8% in September from August and  edged past the year-ago level, to $9.38 trillion (annual rate), but was still down 2.9% from February:

Free Money: Income from unemployment insurance (UI) had exploded from $28 billion in February to $1.40 trillion in June (“annual rate”), powered by the $600-a-week in extra unemployment benefits. In August, with the extra $600-a-week payments fading out, income from UI plunged by half to $631 billion annual rate. In September, it plunged by nearly half again, to $365 billion annual rate (blue area in the chart below).

A lot of Free Money: Stimulus payments exploded from nothing in March to $2.8 trillion in April (red in the chart below). But careful, all these figures are “annual rates” a hypothetical concoction of what it would look like if it got paid for the entire 12-month period, which obviously isn’t happening – here is my gripe about the distortions of “annual rates,” as used in the GDP figures yesterday.

These stimulus payments came on top of the regular and steady welfare and other government payments (let’s call them “welfare payments” for short) of around $530 billion annual rate (meaning about $530 billion for the 12-month period) before the Pandemic. Stimulus and welfare payments combined hit an “annual rate” of $3.38 trillion in April, then tapered off, and by September were down to $964 billion annual rate.

Unemployment, stimulus, and welfare payments combined (top black line) hit a peak of $3.87 trillion annual rate in April and have since declined to $1.33 trillion annual rate:

Personal income from other sources, compared to February:

Supplements to wages and salaries – employer contributions to employee benefits, pensions, and social insurance – at $2.13 trillion (annual rate) are down just 1.5% from February.

Interest and dividend income fell by 4.3% from February – thanks to the Fed’s rate cuts and corporate dividend cuts – to $2.86 trillion (annual rate).

Proprietors’ income (farm and nonfarm) rose by 8.4% since February, to $1.91 trillion (annual rate).

Rental income rose by 1.3% from February to $813 billion (annual rate).

Government transfer payments via Social Security, Medicare, Medicaid, and Veterans’ benefits rose 5.8% from February to $2.78 trillion (annual rate), including a 13.3% jump in Medicaid payments, a 5.6% jump in VA payments, and a 5.4% jump in Medicare payments, likely to treat Covid-19 patients, as the costs of Covid-19 are piling up. These payments are counted in personal income because individuals are the beneficiaries though the money went to healthcare providers. Social Security payments ticked up about 1.7%.

Consumers go nuts over Durable Goods, avoid Services.

Total consumer spending in September rose 1.4% from August to $14.58 trillion (annual rate), and was still down by 1.4% from February:

Spending on Services – the biggie, accounting for about two-thirds of total consumer spending – ticked up 1.1% in September from August, to $9.66 trillion (annual rate), but was still down 6.3% from February.

Services include rent, health care, insurance, plane tickets, cruises, lodging, cellphone services, cable TV, broadband, electricity, sewer, haircuts, auto and home repairs and maintenance, etc. Even during the Great Recession, spending on services held up fairly well. But during the Pandemic, spending on services collapsed, and even in September, despite the bounce-back, spending was back only to July 2018 levels.

Spending on durable goods spiked – “thank you,” said China, Germany, Japan, Mexico, et al. – as consumers are chasing down everything from laptops to furniture and pickup trucks. In September, spending on durable goods jumped 3.0% from August, to another record of $1.79 trillion (annual rate), and is up now 15.5% from February to form an increasingly crazy spike:

Spending on nondurable goods rose by 1.5% in September from August, to $3.13 trillion (annual rate), nearly matching the record empty-shelves-March-spike, and was up 3.7% from February and up 4.7% from a year ago:

None of this income and spending data is adjusted for inflation. While some prices have inched down, such as rents, others have surged, including a historic price explosion in used vehicles.

Just how overdone was the stimulus and extra UI?

Income from wages, salaries, and self-employment fell by an annual rate of $730 billion from March to April. During that time, stimulus and unemployment payments exploded by an annual rate of $3.33 trillion – over four times the decline in wages. And this disconnect has continued over the months since then, though it has tapered off.

This massive amount of free money that did a lot more than just replace lost wages explains in part the explosion in consumer purchases of goods – many of which are either manufactured in other countries or are stuffed with components that are manufactured in other countries, leading to the worst-ever “net exports” that dragged down GDP results yesterday (imports are a negative in the GDP calculation).

On my soapbox.

Spending on services is down not because consumers didn’t have enough money left over, after they got through with their binge on goods, but because they don’t want to fly, stay in hotels, or go on cruises. Or if they want to, they can’t because of travel bans in many countries, the cancellation of cruises, the closure of theme parks, movie theaters, bars, concerts, sporting events, and other venues.

Some consumers have stopped making rent payments, made possible by eviction bans, and rents are part of services, and not-made rent payments reduce spending on services. The interest portion of mortgage payments is added to spending on services, but about 6% of all mortgages are still in forbearance, and those not-made interest payments also lower spending on services.

People are still reluctant to use the healthcare system unless they have to, and this is a hit to services. There are a million reasons why people aren’t spending as much on services as they did before the Pandemic, and it’s not due to lacking stimulus, but due to the various issues arising from the Pandemic, which is now in full and spectacular bloom once again. And more stimulus money isn’t going to increase spending on these services.

The stimulus payments and extra unemployment benefits have done more than enough to drive retail sales to record highs.

Regular unemployment benefits need to be extended for people who have lost their jobs. And people who need support, should get support. Money needs to go to people who need it to live.

But these trillions of dollars in borrowed money, that taxpayers are ultimately responsible for, thrown out there by the government to enrich fraudsters or people who were never meant to get this money, or who don’t need this money, and to enrich companies and their shareholders and bail out their bondholders, is a bit much – and certainly doesn’t need to be repeated with even more stimulus.

Millionaires and billionaires have been printed with these trillions in taxpayer mullah, and that’s not necessary. These folks don’t need to be fattened with taxpayer money, directly or indirectly, to get richer during the Pandemic. This includes manufacturers in China, Japan, and Germany. And the money doled out was, as we can see in the figures, way overboard, not targeted, enriching those that didn’t need it, while at the same time leaving some of the neediest out in the cold. The last thing we need is another huge stimulus package to print more billionaires and millionaires.

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  204 comments for “Do We Really Need More Stimulus to Print More Millionaires & Billionaires, Enrich Fraudsters, Balloon the Trade Deficit? Consumer Data Says, “No We Don’t”

  1. MarMar says:

    Is the stimulus package creating the millionaires and billionaires? Because I’d say that’s more coming from the Fed’s monetary policy that has been driving up asset values.

    • RightNYer says:

      To a point yes, but if we’re actually talking about earnings and not overvalued stock price, the stimulus payments went to Apple and Amazon’s profits

      • rhodium says:

        It’s a one way street too, so it’s mostly just going to stay there. I am actually glad that Bozos is at least blowing his fortune on blue origin and creating jobs for engineers. If you’re rich af, I don’t understand why you wouldn’t blow it on something cool like you’re own personal nasa.

        Even robber barons built libraries. I think a lot of these guys must actually think technology is going to allow them to live forever, otherwise I don’t understand how they apparently think the most exciting thing to do with their limited time on earth is sit on a yacht and pay someone else to buy off Congress. Where’s the human creativity? What does a Walton dream about? The sad thing is most of us are just addicts to more.

    • leanfire_Queen says:

      When are REOs resuming and forbearance ending?

      I want to see cheap housing ASAP. Imho much more important than healthcare, which is all politicians seem to talk about Zzzzz…

    • Old School says:

      It’s interesting looking at the personal income chart and good growth from 2016 to virus crash. We were at the tail end of an expansion in 2016, but the current administration did cut regulation and with tax cuts and large deficits stimulated the economy at near full employment and pulled additional people into the labor market without inflation. It was against traditional economic thinking as it leaves you running massive deficits during the next recession which we are now in.

      Of course the latest thinking is mmt and that deficits don’t matter. But I will believe 95 year old Charlie Munger who basically says is impossible to know how much you can get away with, so you better not walk up to the edge in the dark or you might fall off. People have to believe your money is good or it’s all over for it.

  2. Trinacria says:

    The Fed is a perpetual debt as well as inequality machine. They like to “print” in various form for those close to the spigot of cheap money, but want the masses to keep consuming since consumption is what holds up the house of cards. Fed wants to keep asset prices elevated because a home that is valued at say $700K with a $500K mortgage does no good when the value is now $400K….they don’t like the sound of jingle mail. This is just a few items. Self imposed austerity is the way to go with a good stash of precious metals. Soon, it will feel like most of the country and world is prepping for the dreaded colonoscopy…it’s on the way, gird those loins, clean up your life and practice some restraint and mild austerity.

    • Petunia says:

      One of the credit card companies just sent out a notice, imposing same as cash withdrawal rules, on all purchases of PM. They even called them cash equivalents. I guess people must be stocking up.

      • cas127 says:

        P,

        That is interesting, I’m going to have to look into it.

        Come to think of it, any particular asset that the Fed/banks have a “problem” with probably bears looking into.

        Nobody knows better than the Fed/banks just how big/energetic a hot air machine they’ve built…and how vulnerable it is if large numbers of people start preferring real assets (vs. Their monopoly fiat) and use the hot air machine itself to obtain them.

        So there will become classes of assets that become no-no’s in terms of collateralized lending, since those assets work against the continued operation of the hot air machine.

      • Brant Lee says:

        On Precious metals? OMG. They are cash equivalents for sure. Here comes confiscation of anything with physical value.

        Yes, they are stocking up. 2020 is going to be a record year for PM purchases. Exactly what the U.S. gov should be doing while possible, print and buy gold.

        • Cas127 says:

          “Here comes confiscation of anything with physical value.”

          But DC has to come up with a phony baloney pretext first, for CNN to retail.

          My money (ahem) is on, “Gold Spreads C19!! Send all of yours to DC for disinfection!!”

        • Joe Saba says:

          why would you buy PM with CC unless you don’t have $money to pay for it
          PM sellers charge 3% to use CC and now banksters want some of it also

        • Old School says:

          Gold has a pretty good longer term correlation to tips, roughly 0.5 but you have no counter party risk if you hold the gold yourself. It’s probably a decent holding if Fed tries to financially repress savers for a long time. If you compare 130 year history of gold to house prices you could make a case it’s close to average value, not cheap or expensive.

        • Brant and Others, the Fed has been warning about higher inflation going forward. Very unusual for this gang of micro-managers and jawboners to be open and transparent, too politically correct terms today. They warn because they know that endless printing of fiat money, a tsunami of Dollars, will send the greenback to the depths of devaluation.

          There will be another Stimulus load after the Election, but I am hoping that it strictly deals with Unemployment because of the inequality of the Fed’s and Uncle Sam’s actions to date as Wolf has bravely pointed out.

          But the Fed has put the hex on the Dollar, and the Precious Metals have been know for 2000 years to serve as very fungible and direct substitutes for failing currencies, esp. when the Sheeple get wind of overt efforts to push debt servicing costs lower with a lower domestic currency.

          Gold and Silver going to the moon, and don’t worry about confiscation. Most of these holders have stashes of lead also. Just the reality of being prepared for such an event.

        • Trinacria says:

          If I recall correctly, last year the Basel 3 accord reclassified gold from a tier 3 asset to a tier 1 asset on the balance sheet of central banks. From my view, a compelling clue as to future attractions. Prepare accordingly !

        • Tony22 says:

          Joe Saba
          said “why would you buy PM with CC unless you don’t have $money to pay for it?
          So you can convert credit line into PM that might skyrocket in value so you can pay off CC, or, more likely, so you can have a hypothetical credit line turned into physical that you never have to pay for when the Bi-depression really gets going and there’s massive cc defaults?

        • polecat says:

          I have a feween the mokes won’t go for ‘CONfiscation this time around …

          They will fly that big bird freely!

        • wiley says:

          Correct!Heard somewhere else,possibly Canadianplan referencing seizing assets ifyoudon”t get forced vacc,forced isolation,digi$,all kinds of Horror.Youtube has videos ofparliamentmemmber who is since ousted,asking pointed ?s re.intermentcamps-why’how many people capacity?who is to go there and for how long? He got 00000 answers!

        • Argus says:

          I have a pitiful little stack of PMs but would lay my head on a block that I have more than the Canadian government. They sold off every last bar some years ago and, unlike the U.S., don’t even pretend to own any gold. What will back the Ca$ in the future?

      • Mora Aurora says:

        In that case Petunia, complimenting physical PMs with quality gold producers that are rapidly increasing their dividends and cash balances due to higher $US gold prices is worth noting. Much like Homestake Mining Co. did in the 1930’s.
        Today, low AISC / oz Au (All In Sustaining Costs per ounce of Gold) produced, especially in stable countries like Canada and Australia is the hot metric in the industry, resulting in a severe shortage of known quality potential gold properties in these countries. New quality gold discoveries are even hotter!
        In short, dig up $US valued product and pay costs and wages in lesser valued local currency.
        PS: The bulk of silver production / opportunity is in relatively much less stable countries.
        Retired gold geologist here,
        Cheers.

        • The Jrs haven’t really responded yet. The US dollar may have bottomed, (not good for bullion). The Aus (nation) dollar is in bad shape. W Aus gold mining? I consider Mexico stable, and Silver in this monetary enviro has the upside potential. CA and MEX have closed borders with US at the moment, and that implies a more isolationaist US. We will see after Tue. I love the PMs but have a few issues, the long term rise is based on excessive monetary expansion, what if that trend reverses?

        • Mora Aurora says:

          Ambrose Bierce,
          All of your points certainly to be considered.
          – As far as PM stocks go I mostly avoid the juniors. I have worked for many. The old ratio 1 in a 1,000 properties makes a mine seems high. Knowing this, the modus operandi is highly tilted to marketing a sizzling story, set stock options, resample a glory hole, distribution of stock followed by the inevitable rollback(s). Having said that, I really like that 1 in 1,000 and am lucky to have been around for a few. Another old adage, explore where there was production for it increases the odds.
          – Yes, the US$ and gold is measured in it. I at least partially understand one half of that equation, so I stick to what I know.
          – Western Australia, excellent place for gold exploration and mining, especially with the currency arbitrage, however, Kirkland Lake’s Fosterville in Victoria State ticks all the boxes for me.
          – I like physical silver, yes, lots of potential upside and Mexico is blessed in that regard. Just an extra layer or two of ‘opaqueness’ to deal with.
          – Always there is politics and political ‘change’ to deal with. A seasoned and successful geologist is by definition also an accomplished ambassador.
          – The long term rise in gold, well, I’ll stick with history’s value lessons. It has always been worth something and highly prized: Egyptian splendor; Roman debasement and hoarding / hiding from taxation; coin clipping; armies paid in gold; empires thirst and destruction for it; beautiful Vienna paying Napoleon gold at the City’s gates; huge migrations for it; the ’49er gold and the Civil War; the Klondike mania; the Weimar Republic and its many economic and social similarities to today; FDR and executive order 6102; Britain’s WWII payments to the US; Germany’s gold repatriation; London’s confiscation; garimpeiros of the world clinging to a living; and today’s absolutely critical gold high tech properties and applications.

          Gold and silver are very well worn veterans of human affairs and emotions, something I tend not to bet against, so I’ll stick with the long term rise.

    • Winston says:

      For the right people, the Fed’s MMT-based policies produce a beneficial bubble/bust, two steps forward, one step back sequence. Imagine the bargains that can be scooped up during the bust phase. It also allows pols to promise far more than they can fund using tax revenues.

      SO, that is why that MMT nonsense remains dominant: the people who benefit from it don’t want it to change and they are the only ones in a position to force it to change.

    • Old School says:

      I kind of see things sometimes as government vs. the individual. Individuals have a lot of rights in the US but in a crises those rights tend to be diminished. It’s kind of the same with wealth and money. The individual has the right to do his economic calculations and try to manage his affairs, but when there is a crises you find that what you understood to be the rules are modified to your detriment.

      So the long term economic impact of the virus has not yet played out. It’s going to be a challenge for individuals who are retired or near retirement to play it correctly so as to not pay too much of a price for the lost economic activity. Going to be easy to make a mistake as the rules we usually depend on change in the crisis.

      Also I did see that Hussman is finally having a good year up 15% I think. He got the last 12 years so wrong because Fed went to extreme policy for such a long time. I am glad to see him doing well because he is obviously a brilliant person that believes in real capitalism not Fed inspired speculation.

  3. 2banana says:

    There is only one way out of this.

    End the lockdowns. Open the economy.

    • Wolf Richter says:

      2banana,

      There is only one way out of this: people getting smart (instead of being reckless) and avoiding infecting each other, meaning: masks, social distancing, hand hygiene, avoiding mass-spreader events such as bars, etc. No lockdown needed.

      If people get massively infected, they stop doing stuff because people don’t want to die or get horribly sick with long-term consequences. I don’t either. Simple as that. As long as there are a bunch of reckless people running around out there, I’m going to spend less on travel and other things where I’d be exposed to these people.

      • sunny129 says:

        +100%

      • TimTim says:

        Wolf,

        It’s simple psychology, really, isn’t it?

      • TimTim says:

        … from chapter 1 of the book called ‘The Bleeding Obvious’

      • TXRancher says:

        You cannot avoid the virus spread.

        Even if you have a flu shot you still can get the flu (corona virus), your symptoms are just less pronounced.

        Yes the age old methods of hand-washing and avoidance are still golden. Mask are only a feel good option. Ever notice how glasses fog up from leakage around the edges when wearing a mask?

        And notice how carefully everyone wears their mask? /s

        And your chances of death from the Covid virus are statistically minuscule unless you are unhealthy to begin with.

        • Ed says:

          Masks are only a feel good option?

          Think of all the medical professionals who have warn masks for years and years now when faced with a risk of infection.

          That a mask isn’t perfect doesn’t mean it’s cool to forgo it and help increase the infection rate.

        • IdahoPotato says:

          North Dakota has the highest COVID death rate per capita in the world right now (as per the Institute for Health Metrics and Evaluation at the University of Washington) and a very low rate of mask-wearing.

        • Wolf Richter says:

          TXRancher,

          “You cannot avoid the virus spread.”

          Oh lordy.

          Japan has contained the spread fairly well, no lockdown, but 100% masks all the time when in public, social distancing when possible, and reduction of some activity. They have about 500 new cases a day. The big cities are incredibly crowded with packed mass-transit system. Masks all the time. There is a lot of social cohesion on this, and everyone is doing it to protect others.

          Taiwan has 2-5 new cases a day, no lockdown, but masks and social distancing.

          In the US, we now hit 90,000 new cases in one day, thanks to people with your reckless anti-masker attitude. Masks are cheap and VERY effective when they’re worn by EVERYONE. See Japan. There is no longer any argument about this. It’s a communal patriotic thing to do to protect others and yourself. I have no idea why this anti-masker crowd still doesn’t get it.

          It’s because of people with this reckless attitude that the economy is in trouble. Pandemics impact consumer behavior and business behavior. It doesn’t take a genius to see that.

        • Brant Lee says:

          Man, go visit some hospitals with the staff battling this horrid virus. It’s not a joke. I don’t even want to think about what this Winter is going to be like. Much less the impact of a potential lame-duck president’s wrath.

        • Crush The Peasants! says:

          Also remarkable about Japan’s COVID experience is the very low death rate, in spite of the large elderly population. But Japan also has extremely low obesity rates.

          The rights of your fist end at my nose. No one has any right to infect another, especially as there are solutions, like masks, to minimize this assault. If you will not wear a mask, then do not go out in public. If you want to smoke a cigarette, either keep all of the smoke in your lungs, or exhale in your home, not around others.

        • Implicit says:

          True. Most countries are showing the regression analysis R factor over 1 meaning arithmetic acceleration.
          It is not going away. Even the countries having success will not get rid of it.
          Herd immunity and weakening mutant strains over time will allow under control conditions over time

        • Dave says:

          TXRancher,

          I am an ICU RN and I worked in the covid ICU unit at Temple University Hospital(treated the most patients in PA and also involved in clinical trials for covid treatment) for the duration of the 1st wave. If there is a 2nd wave I will be back in the lock down covid ICU.

          I did not see one coworker not masking up. And it sucks wearing an N95 for 12hrs.

          Are the face masks 100% perfect, hell no. Do they aid in reducing transmission in conjunction with other common sense precautions…. HELL YES.

          It makes my blood boil when I see people resisting mask wearing. Not wearing a mask in public during a pandemic is the height of stupidity in my opinion

        • Know personally someone who died from flu, with underlying, after being vaccinated. Now if you consider that cause not to take precautions god help you. The death rate is around 5% of those infected, the infection rate is where you have some control. If you consider 1/2M US deaths miniscule you better not run for office. That is a lot with huge economic repercussions. What happens when you take the current provider out of the family and you do it 1/2M times?

        • Mr. House says:

          The reactions i read here are more scary then the virus.

      • I agree but please let people make their own decisions without the state imposing its will. If you are concerned about COVID-19, do not fly, do not go to a bar but please do not infringe on my rights if I choose to do so.

        • IdahoPotato says:

          If you don’t want to wear a mask or cannot avoid going to super spreader venues, please do not put the lives of doctors and nurses in danger by going to the hospital if you cannot breathe.

          Thank you for understanding.

        • sunny129 says:

          NO ONE ‘lets people make their own decisions without the state imposing its will’ in a world wide PANDEMIC!

          Did they do it during influenza pandemic during 1918?

          This is a HEALTH crisis affecting one and all, your relatives, friends, co -workers++

          We are here NOW, b/c this kind of short term thinking and mask shaming!?

          MD (retired)

        • economicminor says:

          In an area of restricted air flow, a person who is ill with Covid can infect a lot of others. A mask can stop your illness from spreading. Best explanation I’ve read is that not wearing a mask is equivalent to dumping your sewage into a water reservoir that other people drink from. A government and people that think personal freedom is more important than public safety is mentally ill.

        • MarkinSF says:

          So you have the right to give me COVID-19? And at the same time you believe you have the right to be protected by the state? Are all libertarians narcissists?

        • Brant Lee says:

          People in the 1970s used to say this about seatbelt laws. “Oh heck, they taking my rights away.” Well, same as then. Make sure you have someone to clean up the mess when you go through the windshield.

        • Mark says:

          You really think it’s fine to kill people, whether directly or indirectly? Just because you want to express your freedom in your mind to do so? That’s fine? You’re a psychopath if so. I’m conservative and believe in the death penalty for murderers, psychopaths aren’t mental just like others in pain and dying. Hannibal Leckter expected society to understand him as you do of society too. Which is why in prior times you’d be the one not allowed to be around longer and subject to the ultimate punishment.

        • Escierto says:

          Fine. We won’t infringe on your rights but when you get infected, you can practice some rugged individualism and cure yourself. Probably you will survive but maybe you won’t. If I run a private business it is my prerogative to reward mask because as you say, this is my right. Enough businesses feel the way I do, good luck buying anything you need but then again, you are a rugged individualist and completely self-sufficient.

        • Earthman says:

          Do you think it’s wrong for the government of the people to impose a speed limit in an elementary school zone? Do you think you are such a good driver that you can drive 100 mph down that street and you won’t hit any children? Do you think the kids should just stay home if they’re afraid of being ran over by you? Same thing with anyone else who has to drive or walk down that street to buy food or go to the doctor. Sounds like you think your “rights” are more important than the rights of anybody else.

        • Paulo says:

          Nonsense.

          Gee, I feel like shooting my rifle into the air in celebration…..uhh? Or, I want to drive my new car 150 mph down the hwy. Or, sell this house with all the deficiencies. I want the freedom to walk naked in the park????? Play my music in the apt at 120 Dcb 1:00am.

          What a freaking false choice on the bar. You can buy a bottle and have a drink at home any time you bloody desire. This is a pandemic. Surely people can put others first for a few months. Or can you?

          It’s always me me me and my my my rights. We live in a Village and have responsibilities to belong and stay safe in the collective.

          Here’s an option. Go buy a desert island and invite a few libertarian friends to visit. Get them to help you build a bar. And stay there until the pandemic is over.

          Your comment reminded me of the guy that always says he hates cops, until his garage is broken into or he gets mugged. Then, the first call made is to…. Tell your Mom or Dad, comatose on a breathing machine, how much you enjoyed your drink at the bar. A Bloody Mary.

          rant over

        • Dave says:

          Your “rights” END when you endanger others. A simple libertarian concept you seem to not grasp.

        • Jdog says:

          You are not a libertarian, and you insult true libertarians by pretending to be so.

          The first principal of libertarianism is that of non aggression, and the understanding that the individuals rights end at the point where they infringe on the rights of another individual.

          Real libertarians wear masks, because they do not want to take the chance of making someone else sick, if they can prevent it, in the event that they are a carrier, as that would be an infringement on the rights of others.

          It is impossible to have personal rights without the recognition of the need to respect the personal rights of others. To refuse to do the minimum reasonable things to slow, or prevent the spread of a potentially deadly virus is irrationally selfish, and ignores the rights of other individuals.

          Unless you can prove beyond any doubt that wearing a mask would not not help, then it is incumbent upon you, regardless of your personal opinion, as someone who is supposed to believe in personal rights to wear one.

        • Happy1 says:

          Im also libertarian at heart, but this isn’t about your rights, it’s about your behavior endangering society at large. Save the lib argument for things that truly don’t affect other people.

        • Kurtismayfield says:

          I am sure you will take full responsibility for your actions, and not go to the doctors when you get sick so you won’t infect others.

          I will not wait for your reply.

      • Cas127 says:

        The timing of the latest wave (which is getting close to exponential, especially in Europe) really, really looks correlated to schools re-opening.

        Two weeks thru mid Sept – slow rise from low base as first student infections revealed

        Two weeks thru end of Sept – Solid growth as students infect each other.

        October to date – start of exponential growth as students infect parents, who then infect co-workers.

        The political opposition to masks (which as a conservative – see below – I find foolish) is really just a measure of how much distrust US governments have cultivated over decades, due to deceptive and failed policies that have lowered the standard of living for the median American.

        The tragedy is that erring on the side of caution (wearing the mask…incremental “cost” small, potential benefit large) is essentially a conservative trait/attitude.

        But the well-earned suspicion of wide-spread government manipulation (see money supply, intelligence agencies, entitlement programs, medical inflation, housing boom/bust, asymmetric outrage at absent masking, etc.) has led to a virulent, immediate distrust of almost any word that comes from DC.

        The baseline assumption is that the G is simply continuing to act with the Pharaonic duplicity/incompetence/corruption that it has become known for.

        Unfortunately, lack of masking is an easily accessible way of giving the finger to the increasingly hated G.

        It is terribly counterproductive.

        But is a measure of the accumulated distrust/hate.

        • IdahoPotato says:

          Thank you Cas. I have family members in the medical profession who are close to breaking point trying to save the lives of narcissists who refuse to do the barest minimum to protect themselves and others.

        • Thomas Roberts says:

          IdahoPotato,

          That is one of the main roles of a doctor/nurse/surgeon. Lotta people out there in general, don’t take care of themselves, massively overweight (or smoke) and if they get one of those scooters, they are done. For those at risk from CCP-19, did you really expect most of them to treat this with a high level of urgency? Americans didn’t get this unhealthy, because, they are health conscience.

        • TimTim says:

          In london there is, perhaps, one of the most widespread CCTV networks in the western world.

          So, if someone dies from COVID-19 that has a life insurance policy, why should their insurance company not be allowed to run an analysis of whether that person complied with local mask wearing requirements?

          You know, fair’s fair.

        • RightNYer says:

          TimTim, most life insurance policies only exclude deaths that occurred while during the commission of a felony. Not obeying mask mandates wouldn’t qualify.

        • VintageVNvet says:

          Good summary C-10, and agree totally with your last sentence,,, but I disagree with your statement, ”due to deceptive and failed policies that have lowered the standard of living for the median American.”
          Plain fact is that most people in USA, but especially we of the manual laboring classes , have done much better since I started being a ”helper” for laborers, then carpenters, electricians and plumbers back in the late 1950 early 60s era.
          Maybe some are still stuck in relative compensation levels from then, but almost all the now senior folks I know have done well, own outright homes, farms, even a ranch or two, something that was not even a faint possibility where I began in late 1950s.
          Most of the older men I was working with then did not even own a car, and were picked up by company vehicle, as I was, and taken to and from work sites, etc., etc. Much different today, and that includes farm workers in CA’s Salinas Valley at least, who now commute in their own vehicle most of the time.

        • Happy1 says:

          Regarding linking case increase to school, this is unproven. There is strong evidence that elementary schools are not a risky environment for C-19. Evidence for middle and high school is that it is more risky, and college is clearly high risk.

          Cold weather and indoor adult activity seems to be more important. Bars, weddings, family gatherings, etc.

        • Thomas Roberts says:

          TimTim,

          That definitely wouldn’t make sense, because, masks are about protecting others, not yourself. Properly produced N95 masks, properly put on, in carefully controlled environments like hospitals with Alot of other precautions can protect yourself; but, regular masks only reduce the chance you infect others. The whole point of masks is that if everyone wears them and enough other precautions are done properly, eventually, CCP-19 won’t be able to infect others fast enough to not die out.

      • MCH says:

        Technically, the infection is at 3%. So, it’s already pretty bad. Plenty of service related opportunities and other stuff are potential superspreader events… cruises, movies, theme parks, bars, protests…

        It still isn’t stopping people from being people.

      • Jenny H says:

        You need a Like button on your comments ;)

      • Shiloh1 says:

        I predict a massive surge in mask wearing tomorrow.

      • Data Analysis says:

        And yet, the biggest mass gatherings are the rioters in various cities, which no political or health official will condemn.

        • Wolf Richter says:

          Data Analysis,

          The protestors walked right by our place, and we looked down on them from a few floors up, and they were all social distancing. You can see that when you look down on them from a higher floor. Between 6-10 feet apart. And they were all wearing masks. And they were outdoors.

          There were some looters in a caravan of cars that drove by one Sunday night and looted the Walgreens down the street and all other drug stores nearby. They drove from store to store and looted. That was organized and had nothing to do with the protestors. It was just about money.

          There were some “rioters” (causing property damage) in other parts of town. I didn’t see any. Our mayor condemned the rioters in no unclear terms.

          Three different groups of people. Three different goals.

        • Cas127 says:

          Wolf,

          Here I will have to disagree.

          Across the nation, there have been some (not all) protests where distancing was poor to non existent and masking was far from universal.

          Democratic politicians not only failed to condemn these, but rather endorsed them as of “historic import”.

          There is a long tradition of establishment media and politicians subjecting conservative views to a double standard and dumping “sacred protections” when it is politically inconvenient (see Twitter and NY Post).

          It could not be contested in the pre-internet, metro paper monopoly, three network oligopoly days…but it can now.

        • Happy1 says:

          Outdoor activities are lower risk generally. Protests or riots not particularly high risk.

          The media narrative of “99% peaceful protestors” was extremely disingenuous though. If 1 in 100 people is shooting or looting, that’s 100 times the crime of any normal gathering.

          And the media garbage that right wing groups were mostly responsible for the rioting is even more dishonest. We can see the video!

      • Tynningo says:

        Watch sweden

        • 728huey says:

          Actually, watch New Zealand, Australia, Taiwan, and Vietnam. They have all but contained the virus. Yesterday in Melbourne, Australia, a city with at least two million people, there were zero reported new COVID 19 infections while in Vietnam, a country with 93 million people, only 36 (yes 36) people have died as a result of COVID 19 since the pandemic began.

        • Happy1 says:

          @728,

          Yes, some island counties and authority respecting Asian countries are doing very well. So what? What does this have to do with the US? Look at the EU, we have way more in common with the EU than Korea.

      • Nate says:

        One bright spot in this pandemic is it has made it a lot easier to tell who the sociopaths in our society are. I’ve always known they were there but now it’s obvious.

        • Jdog says:

          There are plenty of sociopaths at both ends of the spectrum. Some disregard public health, and some assault, loot, rob, and destroy other peoples property. Neither can be excused.

        • Happy1 says:

          Yes, looting stores.

        • 91B20 1stCav (AUS) says:

          Happy-on the other end, looting the taxpayers. (also known as ‘socialism for the wealthy and corporations’…).

          may we all find a better day.

      • Lisa_Hooker says:

        Masks are a good thing. The absence allows you to identify the intellectually disadvantaged from a distance.

      • Timothy Kita says:

        Well said. There are reckless people in every human issue, ie driving, guns, stealing etc.. I complain to my wife continually about doors and locks. Can’t carry the groceries in the house because of all the barriers. If reckless people wouldn’t steal, I would not need locks. We would not need strict dui laws if people used alcohol responsibly. Guns are still without boundaries. My Wife is a COVID RN. Some folks suffer greatly when infected. It’s a bad virus. People should be able to behave responsibly but a few don’t. Keep up the insightful articles and thank you.

    • Petunia says:

      They should have never closed it down. Big mistake.

      • sunny129 says:

        So you want it OPEN !? It is a health crisis affecting every one! Get real!

        If not, you have to face similar to Belgium here!

        Belgium Announces 6-Week National COVID-19 Lockdown To Avert “Collapse Of Health-Care System”

        ZH

        • Petunia says:

          Yes, I want the economy open. If you are risk averse by all means stay home, suit up, do whatever makes you comfy.

        • sunny129 says:

          @petunia

          When one’s irresponsible behavior in health matters , affects the health of the others, your right has a limitation. That’s the reason there are 89K infected today and over 225, oo have died!

          World wide it 9 Millions infected and over 1 Millions died.
          Guess it means little you folks, apparently allergic to science.

          All the best for you and yours!

        • Thomas Roberts says:

          sunny129,

          There are a lot of really fat people who get bigger cars and then drive dangerously, they in particular don’t like to turn their heads before switching lanes/making turns. These same people often have obese children. Of course, there are plenty of skinny people driving cars much bigger than they need to as well. If nothing can be done about stuff like this, how can a passing pandemic stand a chance of forcing others to take in account, others health.

        • MCH says:

          Point… as Wolf says, one of the problem with the situation is the unwillingness of everyone to wear masks which keeps a majority of the economy closed down.

          Certain activities are unfortunately by necessity not possible without enhancing risk. But those activities have occurred any way, some encouraged deliberately, and it happens across the board by those seeking power.

      • Jdog says:

        It depends. It would be nice if there was no need for shut downs because everyone was acting in a responsible manor, but I am afraid that behavior is a product of culture, and we are a country of several very different cultures.

        People like to use Sweden as an example of the results of no shut downs, but it must be realized that Sweden has a very different culture, and what works there probably will not work somewhere else.

        I hate to say it, but Americans are for the most part, very selfish and egocentric. They are both ignorant of the facts, and unwilling to accept responsibility for their own lives, much less the safety of others.

        The fact that the US leads the world in COVID deaths is because the people of the US refuse to even take responsibility for their own health, and lead the world in obesity, and effects of it. We have a national sickness of wanting to do whatever we please, and then expecting the medical community to save us from the results of our irresponsible behavior.

        Many countries around the world have used shut downs effectively to slow the spread of the virus to manageable levels, and others have not needed to use it because their people and culture reinforce responsibility. Unfortunately we are not the latter…

    • Seneca’s Cliff says:

      Fighting COVID is like landing on the moon. You have one chance to get it right like Taiwan. But if you blow it and crack up on landing you can scuffle around in the lunar dust trying to fix things and conserve water, but none of it will really help you. Opening up Willy nilly is like climbing in in to your lander and pushing the “liftoff” button even though your craft is tilted and your tanks are leaking. The only thing you will accomplish is to make your situation much worse .

      • Thomas Roberts says:

        This is partly true, but, it really is about lowering the number those currently infected will infect, not, current number of infections. Small countries like Taiwan and South Korea who did put in the effort needed, also, had a major advantage in that there is a limited number of cities, the sizes of their populations, and much more.

        Australia, despite being very big, has a small population in a limited number of cities spread far apart. Australia is one of the most ideal countries for containing infections. Houses and cars over apartments and mass transit also help.

        In America and the schengen zone, there are too many people, constantly traveling too far, too often, to contain something like CCP-19 without dire consequences outweighing the benefits. At the time of the outbreak, Taiwan was also in a better situation, because, the CCP was telling Chinese, not to travel to Taiwan, because of politics. In America and Europe, though by the time the severity of CCP-19 was known, it already had spread out. Taiwan having a manufacturing base for certain everyday items like masks also helped.

        • Mark says:

          The arrogance of Americans and Europeans merely reflects the invulnerability and superiority and above the law and beyond social norms attitudes of people rich on borrowed non-existent “money’ borrowed from thin air and the labours of those producing all their stuff.

        • Happy1 says:

          Respect for authority in Asia and experience with previous pandemics makes these countries completely different culturally and thoroughly well equipped for pandemic response. Not to mention most of these countries are islands or island equivalent (Korea).

      • Paulo says:

        This is also to MCH’s comment.

        I live on Vancouver Island, population approx 1 million. Yesterday we had no new active cases. There are 3 active cases under surveillance in Victoria area (pop 6-700K), 2 mid Island, and 3 north Island in a First Nations community brought back (self introduced). I think there is only one case in hospital, and all hospitals conducting normal procedures including full diagnostics and surgeries, etc. My sister in law runs a grocery store. Occasionally an employee is exposed and is tested. They immediately go home and book a test. Results are available the next day.

        That is what wearing masks and social distancing does. Normal life as much as possible and mostly normal commerce.

        Yesterday I went and bought new tires. I had my mask in pocket but all folks in front end were distant. It was safe. In the hardware and grocery store I wore my mask out of respect for the front line employees. Easy peasy.

        Construction work sites operating normally. Logging and mill operations full operation. Fish boats working. Why and how? The virus is under control. Yet, we are all limiting even more at home social interactions because our health officer has requested we do so. If the virus is controlled, the economy goes back to work. The solution is simple, put others first. You are also an ‘other’. Someone is putting you first. Win win win.

    • RightNYer says:

      What’s with this “open the economy up” nonsense we see in every forum, in every thread? The economies are open, and largely have been for months. Demand is down. You can’t MAKE people spend.

      • Phil says:

        Stupid people are everywhere, frankly. Harsh reality.

        • Nate says:

          When I was taught about the bell curve in statistics I suddenly realized that explained a lot about average intelligence – half are below the average!

          As an aside, this pandemic has made it a lot easier to tell who the sociopaths are. I’m not convinced the two are related tho.

        • Tom S. says:

          In fact, in America, you can’t even make people who have tested positive for the virus stay home in isolation. You would need to track their locations and enforce with police.

          So what are we shutting down at this point (in Illinois), “non-essential” business? Or would a more proper term be “mom and pop businesses that don’t buy enough lobbyists”?

          The major driver is that this is the weakest most self serving Federal Government in US history. People know they are being lied to and they are scared. On top of that, the media has been blaring the worst case scenario for the pandemic since the day impeachment ended. There is no legal way in America to shut-down this virus away. We are not an island and we don’t have martial law. So what we need is straight honest talk from the Federal Government, and so far all we’ve gotten is money printing and political banter.

      • Cas127 says:

        “You can’t MAKE people spend”

        But the G can punish them for saving.

      • tom20 says:

        Home construction related in flyover country. We will run the excavation equipment until winter shuts us down. The calls have not slowed down. No lockdowns out here. If there were, no one to enforce it.

    • wiley says:

      Exactly!Been emailing heaLthdepts/medicalnews sites regarding PCR cycle thresholds.It”sNOT about cases,it”s about Proper interpretation of valudresults.PCR isNot very accurate if steps not followed properly.Epidemiologists generally agree that 25-35cycle threshold range is good.CDCsupposedly recommending40=ManyFALSE+!35+ cycle will pick up viral fragments/artifacts,u r notcovd+,contagious!!!

  4. Stephen P Walsh says:

    As much as all of this is true, the powers that be who want to destroy the middle class will use the same statistics to NOT help the needy. Some articles are best not written.

    • Thomas Roberts says:

      Partly true, but, it’s the complicity of the majority of the middle class (especially the hippiie generation), who, don’t want to risk anything they feel entitled to, that forces this to happen. As long as they think the status quo will keep them where they are, they will viiolenty oppose any change.

  5. PNWGUY says:

    Good riff.

    Key issue is the government support isn’t targeted at the people suffering. I think it’s the same issue we’ve had since 2008. Interest rates and QE are sledgehammers.

    Honestly, I think digital currency might be the fix we need. True, the risk or abuse/bad decisions by TPTB is high…

    But the potential to target those in need is so much greater. We can finally have a usable public record of who got how much, where is government support going … Won’t the “visibility” benefits of digital currency outweigh the risk?

    • TimTim says:

      Well, OK,

      But risk with Country digital currencies is they may become too tempting a tool for governments to use to target their captive population for political aims.

      More so than the current mechanisms of official population behavioural control, I suspect.

      At that stage, we all become constrained and easily manufactured into becoming ‘needy’.

      I, for one, do not relish country stable coins for that reason.

    • Implicit says:

      The Fed shouldn’t have the power that they have, but with digi dollars it would be a lot worse- Instant financial tyranny. Money owed for taxes to the IRS, traffic fines from the cameras on the the streets and at signal lights, local and state taxes etc… would be taken out on a daily basis, and it would be difficult to dispute. Total control of the money supply by the banks, Jefferson’s prescient nightmare would be fulfilled
      Please never!

      • Cas127 says:

        Agreed.

        “We can finally have a usable public record of who got how much”

        Yeah, nothing could go wrong with *that*…it isn’t like the G hasn’t been printing huge sums over the last decade “because of “insufficient” demand/inflation or the “hoarding” of personal savings…”

        With electronic currency as PNW conceives it, the Fed won’t have to print to dilute the value of accumulated savings (savings are anti-Keynesian dontcha know), instead the Fed can simply put a ticking clock on savings…which if not spent within a mandated period…get erased.

        Self destructing money/savings has actually been proposed by Keynesians/MMT’ers in the past.

        Yep, no danger of abuse/screwups there…

        The advance will come from electronic money that the G *cannot* confiscate thru printing…the stability of *honest* money increases propensity to spend even as inflationary confiscation undercuts it.

        You would have thought that 20 years of Fed failures under ZIRP might gave highlighted this for DC and given birth to an inch of course correction.

        But DC is so financially compromised by its own enormous accumulated debt (the legacy of huge policy failures and unsurvivable at non ZIRP rates) that given the tools to steal, it will.

        It already has.

        • Implicit says:

          So many people are complicit with, or don’t care one way or the other, surrounding the elimination of paper currency. It looks like the banks will get the tyrannical dictatorship that they desire.
          “End the Fed and break up the big banks” is what my protest sign read 12 years ago, and it becomes more necessary every day.

  6. Petunia says:

    One thing the stimulus accomplished, that would otherwise have gone unnoticed, is the rot in the systems we rely on for help during a crisis.

    The inability of California, the home of Silicon Valley, to mail out unemployment checks, to this day, stands at the forefront of the long list.

    • Cas127 says:

      P,

      The inability to manufacture paper masks in a country of 330 million also stands out…

      To stick to the G, the inability of the CDC (which once had one of the best “reputations” in gvt…and 80 billion in funding over the preceding decade) to formulate an accurate C19 test or have in place (since 1919 apparently) a nationwide plan for rolling quarantines…also stand out.

      It isn’t until they are stressed that we actually find out how “Sovietized” our heralded bureaucracies (both gvt and corp) actually are.

      Until actually invoked, those highly funded entities can get by on a shoeshine, a smile, and blowing smoke up our collective *sses.

      In the gvt realm, spending *oversight* has nowhere near the sway of spending *power*…because the policing of spending doesn’t generate kickbacks to politicians.

      • Petunia says:

        The CDC has been dysfunctional for decades and therefore irrelevant for a generation. Their inability to either approve or reject a drug in a timely manner has been showcased throughout my lifetime. It is just another bureaucracy the voters don’t trust.

        I’m old enough to remember how they dealt with AIDS and the Swine Flu. The real epidemic they avoided and the fake one they wasted billions on.

    • Zantetsu says:

      We in silicon valley have a very low covid infection and death rate. People behave well, wear masks, observe proper protocols, at all times as far as I can tell. Children have been doing schooling from home since March. Worker have been working from home since around that same time.

      Bureaucracies exist everywhere, silicon valley has nothing to do with it.

      You are the one a few posts above advocating that there never should have been lockdowns.

      You will understand if I consider your opinions irrelevant.

      • Petunia says:

        Maybe the low death rate is because covid is just a bad flu and people are avoiding hospitals.

  7. sunny129 says:

    If people remain ‘stupid’ re the virus spread, we will face what’s happening in Belgium:

    Belgium Announces 6-Week National COVID-19 Lockdown To Avert “Collapse Of Health-Care System”

    ZH

    • sunny129 says:

      ‘Don’t tell me what to do’ is the attitude unlike in the Eastern Countries (where they had already undergome SARS) will do more damage to people and the economy in the months to come!

      Is this kind of thinking American ‘exceptionalism’ compared to rationale thinking folks around the globe?

      • Ed says:

        The non-mask-wearers endanger others. It is far worse than not wearing a seat belt. It’s more like ignoring and speeding through cross walks.

        (But it is okay because you only hit the old and infirm pedestrians!)

  8. sunny129 says:

    S&P got a miraculous boost at the support level around 3237, 15 minutes before the close and pulled it to almost 3270! Wow!

    What about next week and the week after? Fundamentals matters little, right? Got to keep the bubble floating, right, Mr. Powell?

    Mkt is addicted to ‘easy-peasy’ money!
    10y yield up to 0.876! Even bonds got the gitters!

    More fun in the coming weeks!

    • Joe in LA says:

      What was that? And why in the last 15 minutes?

      • sunny129 says:

        S&P at 3237 is the support level. Once it breaks thru that, more selling begets more selling!

        Still could happen in next or later weeks. FEAR has come and replacing FOMO. No 2nd stimulus, Covid not going away, election uncertainty and stocks are still in the over valued zone. Absolutely no fundamentals except for debt on debt fed and supported by Fed!

        2008 will look like a walk in the park!
        (Been in the mkt since 1989!)

        • Joe in LA says:

          So, just algorithmic buying not CBs? I was puzzled by the 15 minutes of it all. It was an explosion of volume.

        • sunny129 says:

          @ Joe in LA

          It is the CBers via their various primary dealers who deal algorithmic trading (all over the world!) . This NOT the first time. This is an open secret – PLUNGE PROTECTION TEAM!T

          How many out there know that NY Fed has a trading desk ( location apparently is secret) and also a stock analyst!

          fyi:
          The Working Group on Financial Markets (also, President’s Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631, signed on March 18, 1988, by United States President Ronald Reagan.

        • Anthony A. says:

          Joe, it must have been the “machines” buying up what they have sold off this week via a set algorithm.

          Humans don’t buy that much so fast.

        • sunny129 says:

          @ Anthony A.

          If it was just ‘machines’ they would it fall thru saupport level and SELL more. It is the humans behind those devices prompted by PPT!

          FED and CBers are terrified now! FEAR has gripped the investor sentiment unlike any time since March ’09!

          Look at the reality:
          Covid 19 still reigning with more infections, more hospitalization with increasing on the Nation’s HEALTH system including already over worked doctors and nurses!
          Stocks still overvalued. Election uncertainty next week and dragged alway to Dec (!?) just like 2000. civil unrest.

          Rents are due on Jan 1 for many renters! More unemployment ahead. Housing bust 2 to follow in late 2021+++

          All the best for those who want to stay invested in 2020!

      • MarMar says:

        Could be short-covering going into the weekend.

        • Implicit says:

          Short covering definitely part of the reason. Likely a plethora of reasons with ppt algos a late alpha conductor.
          It took 5 minutes to technically change the doji candle from negative to positive, something that the tech analysis algos act upon.. Perhaps neural networks
          have learned to collude for mutual benefit.
          Legal hacking

    • Bet says:

      It’s called short covering into a Friday close

  9. Brady Boyd says:

    It’s important to keep feeding the globalist billionaires $$$$’s or they will get bored and instead sit around devising the “next” World War for everyone else to fight.

  10. Bobber says:

    My sister was put on furlough and received stimulus benefits. She said she made more money from stimulus than she would have earned on the job.

    Suddenly, a new iPhone 10 appeared in her hands around June, straight from China.

    My neighbor didn’t get any stimulus directly, but with tech stocks shooting straight up after the pandemic hit, he decided to buy a yacht and slip in July.

    The delivery trucks are delivering something to my block every 15-30 minutes. Delivery truck driving is the only area of job growth right now, it seems. I suppose a lot of Uber drivers are branching out. Some of these guys are renting vans to do it.

    I agree. The stimulus was overdone, mishandled, and misdirected.

    • nick kelly says:

      About 50 dollars stays in China.

    • Old School says:

      You could make the case that if you have the things that you need and have extra money that you should purchase some gold or silver and store them in a safe place at home. Unlike nearly anything else it has no ongoing carrying or maintenance cost.

      It’s obvious we are in new territory with central banks and government debt. The Fed is telling you they are going to inflate away your savings so why not spend some of it on a long term store of value instead of a consumer good.

  11. Endeavor says:

    No stimulus if Trump wins. Republicans will only subsidize corps. Biden wins, none until after January, if at all. By then austerity will be 2 months old and they will continue it. Empire needs a strong dollar and that’s all that counts. Buckle up.

  12. AlbieOK says:

    Stimulus was badly designed and or corruptly administered. Hoover’s, out in rural NY, just 100 miles from Gotham, I’d say the stimulus was not used to buy many yachts, new smartphones or baubles. At least among the locals. It’s helped people living marginally to make it through. Too much elitism in some of these comments.

  13. David Hall says:

    They were not arguing about if there will be new stimulus, but how much new stimulus there will be.

    Texas rural clinics have been trying to send severely ill patients to city hospitals, but have been slowed by lack of spare capacity. There are downside risks involved with no rules, no face masks and large gatherings.

    Korea has about 100 COVID cases a day. They are open for business with a strong economy. They have strict quarantine laws. They wear face masks.

  14. sunny129 says:

    Sane people seek advice from medical doctors and scientists for medical problems including during HEALTH crisis and not the self promoting politicians!

    Can Fed and the US Govt afford to bailout every one (Corps, businesses, workers++) throughout this pandemic, running, how long?!

  15. Yort says:

    A blue wave could bring a lot more stimulus, direct to the consumer, than was sent in 2020. For example, the child tax credit goes from $2,000/child to $3,000/child. Also, a 17 year old qualifies, it is not cut off at age 16. Thus a family with three kids ,one being age 17, would get $5000 more next year if the blue wave passes the new law. Another perk is getting a nominal 26% tax deduction for all 401k contributions, versus your highest income tax rate. That could easily be $500 to $1,000 per couple who have a base rate of say 22%. If you make over $400k, not so much.

    There is also talk of free college for anyone making less than $125k/year, $10,000 per year(for 5 years) of college loan forgiveness for govt and non-for profit careers, $10,000 one time college loan forgiveness across the board, etc. We are talking gigantic stimulus if that passes. A lot of the proposals seem too good to be true so who knows what actually gets passed. Even if just a few pass, it means more money in consumers pockets. 2021 could be “even weirder” than 2020 as I think there will be a whole lot more “free money” sprayed at consumers. Thus we will finally get that fantastic 3-5% inflaton rate J-Pow dreams about nightly, which is great because I for one really dislike buying things on sale (sarcasm) , and ultimately despise price stability (sarcasm)…

  16. Randy Oldman says:

    Please enlighten me, I always thought that if I were to start counterfeiting currency in my basement that my gain would be distributed to the many in the dilution of the value of their hard earned dollars and my only cost is the possibility of going to prison. So I think this is very similar to what the Fed is doing, then what is all this BS about the taxpayer being on the hook?
    Pardon my naivete, I only took Economics 101 in college.

    • Wolf Richter says:

      Randy Oldman,

      The taxpayer IS on the hook when the government borrows. The taxpayer GUARANTEES the debt. That taxpayer is me, and part of those taxes that I pay go to interest payments on that debt. So don’t tell me that I’m not on the hook. I don’t mind paying to support people who’ve lost their jobs. I do mind paying to enrich billionaires.

      When the Fed creates money to undertake asset purchases, it has a different effect, and in my opinion, an even more insidious effect (destruction of the purchasing power of the dollar with regards to assets).

  17. Michael Engel says:

    Consumers spending between Jan 2020 to Sept 2020 :
    1) On Durable Goods :
    Jan/1.58, Feb/1.56, Mar/1.38, Apr/1.2, May/1.55, June/ 1.69, July/1.74,
    Aug/1.75 and Sept/1.8 for a total of :14.25. // 14.25 : 9M = 1.58/M.
    2) On Non Durable Goods :
    Jan/3.02, Feb/3.01, Mar/3.13, Apr/2.7, May/2.9, June/3.5, July/3.09,
    Aug/3.08 and Sept/3.13 for a total of : 27.56. // 27.56 : 9M = 3.06/M.
    3) From Nov 2016 until Jan 2020, consumers spending on Durable Goods
    were rising nonstop, with one stopping action in 2019, peaking in Jan 2020 @1.58. // Jan 2020 peak and the average are the same. 2020 was wild, totally crazy, tasteless, too emotional and out of control with sharp spikes.
    4) From Nov 2016 until Mar 2020 consumers spending on Non Durable Goods were rising non stop, with one stopping action in 2019, peaking
    in Mar @ 3.13. // The average is slightly lower. 2020 is totally crazy, but
    the man at the top, without air in him, supported the unemployed who needed the most. For him money is a tool, not a target.
    5) His biggest reward came when 20K people started screaming “we love you”, “we love you”…bringing tears to his eyes.

    • sunny129 says:

      One has to watch where did the stimulus money went by observing the chart of ETFs XLY (Consumer discretionary- AMZN is part of this ETF) and XRT ( Consumer Staples) .

      They all SHOT up to the sky and NOW, with no 2nd stimulus in sight, they are slowly tanking.

      Nice ETFs for option play (up or down)

  18. Michael Engel says:

    Radio Moskva shutdown Trump speech in Rochester MN.

  19. AbstractSyntax says:

    If you didn’t know there was a recession and simply looked at personal income and durable goods, you’d think that America won the lottery.

    This is anything but a normal recession– it’s no wonder the markets have responded in kind.

  20. Randy Oldman says:

    The Fed must be the most audacious wolf in priest’s clothing in the history of humanity!

    • sunny129 says:

      Wonder why they are able get away with their actions inspite them creating TWO boom-bust cycles in this century?

      It is reflection of how little financial literacy among the average population!
      It is well known fact Fed is the cartel for Banksters since 1913. No wonder they don’t want get audited! No accountability and no outrage. People want more stimulus, QEs and what not?!

      WE have found the enemy. Look in the mirror!

  21. MonkeyBusiness says:

    I think the Fed, and the upper class wanted to break the record for the Gini Coefficient. Perhaps, one day we will reach a value of 0.9 and above.

    United Shoppers of America for the WIN!!!!

  22. timbers says:

    And all thru the Pandemic, the entities that absorbed the brunt of the cost of shutdowns and fighting Covid – state and local governments – were largely shafted by stimulus. And that wasn’t a bug but a feature.

  23. fred flintstone says:

    One of the things some folks have not considered.
    If you work in a building that has no central HEPA filter…..sitting in an office with your door closed is no reason to take off your mask. The air recirculates thru the air conditioning or heating systems and comes right back at you from the folks several floors elsewhere with unknown disease.

    • VintageVNvet says:

      Not always ff:
      Unless the same company operates on all floors, it is almost certain that the air will not circulate, even if everyone in the building is relying on the same ”chiller” or source of heat.
      With electricity being as expensive as it is, each separate company will almost always these days have separate air handlers, (AH) and sometimes many AH per floor if large enough, and air will circulate to and from each AH.
      Certainly varies widely, but your point about wearing a mask in any indoors situation is right on the money.

  24. The government should just keep making millionaires and billionaires until we are all one or the other.

    None of us asked to be born. It’s never made much sense to me why we all have to work so hard just for being alive. Maybe if we got to work without having to pay so much to live the world wouldn’t be so out of whack.

    There seem to be two directions which lead to success

    1) Loans and bankruptcies and bending everyone over so that you can be a wealthy landlord who never created a decent business but lives off the work of others and then you can enter a life of politics or influence

    or

    2) Ignore everyone’s wise advice and just play Dungeons & Dragons, read comic books, create games, code on computers for fun and maybe accidentally become a billionaire

    One thing for sure, I wouldn’t waste my time again on the go to college, get a job, work hard, and then lose it all in 2000, then again in 2008, then again in 2020 while slumlords and lucky nerds take all the profits.

    • MonkeyBusiness says:

      You didn’t remember sitting with Creator designing your life? I mean, I still remember the questionnaires:
      1. Do you want to look like Tom Cruise? Yes
      2. Do you want to look like Tom Cruise just taller? Yes
      3. Do you want to look like Tom Cruise just taller and have the brains of a rocket scientist? Yes

      Guess how many of that I got?

      The thing is though, a bunch of people worked hard to create Dungeons and Dragons, comic books, games, etc.

      The problem really is that too many people are working hard doing something crappy like stock trading, private equity, etc. The world seems to be rewarding activities that are morally and socially dubious.

    • Zantetsu says:

      Are you kidding me? Just by virtue of being born, you are given food, shelter, clothing, entertainment, love, medicine, transportation, etc etc etc 10,000 times over. You did not invent any one of the millions of devices, processes, ideas, stories, plays, movies, recipes, etc, etc that make your life worth living. And yet you get to enjoy all of it, it’s been given to you for free by the world you were born into.

      We are all benefitting from thousands of years of sweat, toil, and effort by prior generations that have built a world that is very comfortable to live in.

      Try going out into the woods with no clothes or tools, and see if you could last even a month before starving to death or dying of exposure. That’s the life you actually *earned* by being born. All of the rest of the comforts that you enjoy, were given to you.

      You are *not* “working hard just to be alive”.

      • That’s a whole lot of assumptions you own there Zan. The funny one is that anyone would be allowed to go out into the forest without clothes…you must live in some sort of anarchist utopia where free range humans are allowed. I could go on, but I’m too familiar with Mark Twain. Enjoy that blessed life of leisure, my friend. You deserve it.

      • Lisa_Hooker says:

        I am not one of those that was “given food, shelter, clothing, entertainment, love, medicine, transportation, etc etc etc 10,000 times over.”

        I must have missed the request for my attendance.

    • Anthony A. says:

      “One thing for sure, I wouldn’t waste my time again on the go to college, get a job, work hard, and then lose it all in 2000, then again in 2008, then again in 2020 while slumlords and lucky nerds take all the profits.”

      If I had known what I know now back 40+ years ago, I would have found a cushy government job instead of pounding my head against the wall in college for years getting an engineering degree.

      • Lisa_Hooker says:

        I would have sold all my dot-coms in 1999, sold all my real estate in 2006, and would have sold my equities last month.

  25. MF says:

    The concept of a “deserving” poor needs to be discarded. Means testing creates 2nd class citizens in that it officializes poorness. You might as well stamp people with “poor” on their forehead.

    If you want to fix inequality, the only way is to hand out money to the general population in the same proportion it was handed out to the wealthy welfare queens, then tax it back from the upper classes.

    • Obviously I’m crazy – but it just seems to me that if you took the richest guy and you distributed all his wealth above the number two guy to everyone on the bottom and then did the same thing with every other person on the top 1000 wealthiest list – they could all maintain their lifestyles and lots of other people wouldn’t die from lack of food, clean water, healthcare, or exposure to the elements – and you just kept doing that every year – just stair stepping the top 1000 down one step each year (and #1000 could keep one dollar more than # 1001) – then everyone would be taken care of, all the richest people would still have their rank as the richest people and – yeah, never mind, obviously I’m crazy to even consider it.

  26. Wolf Richter says:

    For your visual enjoyment: Design by Kitten Lopez for videographer Daniel Mondragón (MondragonCartel)

    • Careful Wolf. People might think you are doing some sort of Mondragon Collective promotion and trying to subvert capitalism with some sort of holocracy. :)

    • kitten lopez says:

      yay! thanks, Wolf. (i actually prefer the uncleaned up version with pencil and white out because it’s REAL) what Wolf left out is that it was inspired by his $100 he gave to me from Anonymous Sweetheart. / Blackletter is a Mission thing that i’ve never known how to do and this is my first attempt.
      x

  27. Ron Kallhoff says:

    If we look in the mirror the common working person is the problem quit feeding the pig 401 k this is biggest ponzu scheme ever created we faithfully pay in every 2 weeks and create the millionaires and billionaires wake up America we’re being scammed

    • Petunia says:

      It is a pool of money they can skim, tax, or confiscate whenever they want. In the meantime, because you have savings, they charge you more for taxes and healthcare. What a deal.

    • C says:

      Agreed it’s a risk but how else can I shelter 49.5K (I think this year) from a waist full Government. If I were a Billionaire I could run my fortune through a foundation and forgo all tax today for retained earnings tomorrow but I’m not. Now there’s the scam!

      Just an honest question…..how else can an average guy shelter money!

      • Anthony A. says:

        You can start your own foundation, or start a tax exempt charitable organization. Or, if you are really clever, start a church. There’s all kinds of ways to skin an IRS agent!

  28. Jenny H says:

    Maybe the Fed should set up a CLV, Charitable Lending Vehicle, to fund the organizations that are actually doing the work of caring for the needy. Same deal as business gets — forbear the loans for a year, then forgive them if the borrower shows the funds were actually spent on care. The Fed is already doing the work of a spineless and ineffectual White House and Senate; what’s one more lending program?

  29. Lynn says:

    It’s called “looting”

    At least that is what everyone on the street calls it. People may not know economics 101 but they are really pissed. People are scared and angry. The distractions are only going to work for so long.

    Anyone can see that food and shelter are getting more expensive. Maybe rents are going down in very expensive places, but are going up everywhere else. There are not charts or indicators for anything outside of heavily populated urban areas, but it has a very real effect on people. Some of my friends will loose their housing as UI and forbearance ends. All of their money went to rent which they could barely afford before Corona. Their next purchases may be used vans.

  30. Old School says:

    My region in central NC seems pretty hot. People who want jobs seem to be able to get them. People in corporate life that I know are doing financially well, but don’t have much of a life outside of that as work is draining. Real estate related industries are providing a lot of jobs it appears. It could change fast, but we are currently getting a net inflow of people and jobs.

  31. Dave says:

    Wolf-
    Can you please write an article on how you think the next stimulus should be done? It would put yourself out there, but your analysis is brilliant and many of us would really be interested.
    Thank you-David

    • Wolf Richter says:

      Dave,

      It would be a one-line article: No stimulus. No bailouts. No extra federal unemployment top-off money (such as the extra $600 a week). Just extend regular state unemployment benefits. And free Covid-19 treatments (already in place, I believe).

      I would favor that big infrastructure package that has been talked about for 12 years and has never happened. Our infrastructure sucks. But this would have to be carefully planned and implemented and will take many many years and will have no impact on the economy over the next few months.

      • RightNYer says:

        Wolf, I agree in principle, but the problem is that each states doesn’t provide even close to the same unemployment benefits. If the federal government is picking up the cost, then everyone in each state should get the same relative to their income. In other words, while Florida maxes out at $275, some states give close to $800/week. If the feds are paying it, more (proportionally) shouldn’t go to the states that had more generous benefits in the first place.

        • Wolf Richter says:

          Yes, that is an issue. But I think the various costs of living muddle the debate. In California, the max is about $450 a week. But if you’re unemployed in San Francisco, that won’t even pay your rent in most cases. In Tulsa, Oklahoma, $450 a week can go a lot further. So paying the same per week across the country wouldn’t work either.

          But UI benefits should be capped. The purpose is not to replace a $300,000/year salary, stock options, and benefits. The purpose is to provide a basic safety net.

  32. fred flintstone says:

    Sorry,,,,,,,Fed what we need is a very very serious recession. I realize the pain this will cause to so many people.
    I cannot calculate the pain you will cause by delaying the cleaning process into the future. A far greater amount. The actual existance of the republic could be in question. You are risking it all with this crazy experiment in no pain economics. The imbalances that have built up and the cultural destructive lessons we are teaching will follow us around like anchors and may cause the foundations of this country to shake or break.

    • sunny129 says:

      +1

      None of the structural problems in the US & Global banking system, which caused the GFC in 2008, NEVER got addressed!. They all got ingeniously covered with more debt. Barnake was called a hero!

      The criminal Banks who never followed ‘fiduciary duty or due deligence’ in doling out other people’s money got bailed out. NO one went to jail. S&P shot over 300% since ’09.

      The newbie investors ( mostly 45y or below) thought the stock investing is so easy and assumed stocks always go up. Fed is and was complicit in providing ZRP, QES, stimulus, twist and also suspension of mkt to mkt accounting standard. Price was actively suppressed. The good ole, genuine American Free Mkt capitalism got replaced by CRONY capitalism. There has been the abusrd financialization of the economy favoring FIRE industries over others including organic growth productive economy.

      The top 1% own nearly 50%, top 10% own nearly 90% of Wall St wealth. The bottom 905 own less than 7%. Trump equates stock mkt with the health of the economy – speaks a lot about his knowledge of finance and the economy.

      The world is awash in DEBT of all kind( public & private) . Using debt has become a panacea for all our financial problems.

      Then came the Covid 19. The Fed and CBers cannot think anything except the same old – DEBT on debt, again! They have tried replace the usual ‘cleansing’ business cycles with insane credit cycles.

      WE know the architects of impending disaster – the same gang which brought his two boom bust cycles already in this century. They created the current, 3rd largest ‘everything’ bubble as a cure to previous two.
      The leading politicians, Congress-both parties and the WH policymakers are deeply complicit in this.

      The future generation will wonder, what were we thinking?
      (Been in the market since ’89)

  33. Kasadour says:

    Some of aggregate data reflecting consumption is skewed itself as it combines data from the top and bottom wage earners. In my opinion, this data needs to be further broken down into sub groups to get a clearer picture of what is going on. That’s not to say those who don’t need stimulus should not get it. I’m undecided about that. Helicopter money harms the labor force.

  34. Gaius Marius says:

    A very small group of families have spent the past 50 years gathering all the wealth and political power into their hands.

    This has been accomplished by paying minuscule bribes, disguised as “Campaign Contributions” to DC Politicians.

    Now, what is the one thing every Politician from the far left, to the far right, from George Wallace to Donald Trump, and from George McGovern to Joe Biden all have in common?

    They never suggest that perhaps the only way to Restore the Republic to the average Joe and Jane is to get the money completely out of the political process!

    And the same thing applies to all the various political pundits from the past to the present.

    From William F Buckley to Don Lemon, they never even hint at that solution, because they make a great living as Chronic Complainers.

    In the case of William F Buckley and Pat Buchanan they have spent their entire careers doing just that.

    Now, in conclusion, with the concentration of wealth in America at all time highs, I think that perhaps, and quite soon, even the dumbest of the dumb electorate will realize what has happened to America and then, the solution will become increasingly obvious.

    • Lisa_Hooker says:

      Good lord man –

      “A very small group of families have spent the past 50 years gathering all the wealth and political power into their hands.”

      The same group of families have been gathering since 1622.

  35. Heinz says:

    Excellent Wolf analysis of what Covid stimulus of all kinds has manifested in terms of a consumer spending melt-up.

    What about an encore?

    Will the mortgage/rent payment forbearance continue into 2021? Will lenders continue to recklessly offer cash-out mortgage refinancing on bloated housing prices (backstopped by Fed/agency guarantees, of course)?

    Will the nascent UBI experiment continue with more stimulus checks (and coming soon- digital wallet moolah from Fed)?

    Will interest rates continue indefinitely and relentlessly trash the value of money and time?

    All this and much more is likely to come in this place we call the Twilight Zone of the American Dream.

    • Heinz, You’ve nailed something that should have been obvious all along. This really is the first large scale UBI experiment. It will be fascinating to see what sort of creative and innovative output emerges from those who have suddenly found themselves with more time and less worry about paying their bills. It will be fascinating to look back at 2020 in a few years and examine technical innovation, music, literature, art, theater, sport, and other areas where people traditionally don’t have the time to focus because they have to ‘earn a living’. There is a chance that there will be no noticeable difference in output – but that’s not where I would wager. In fact, I would go out on a limb and suggest that this massive UBI experiment will result in nothing less than a modern day renaissance.

      • MonkeyBusiness says:

        Disagree. There won’t be any utopia. You give people X dollars, services, etc will be raised X + Y dollars.

        • I agree with you. I don’t think there will be a utopia but I think there may be a huge creative output that has been throttled by employment. Or maybe I’m just idealistic and the lazy bums won’t do anything but sponge off the system…either way the results will be interesting.

        • MonkeyBusiness says:

          All things serve to amplify/impede rather than change a person’s true nature. Creativity like all things also has its pros and cons. There are many “creative” derivatives out there. An atomic bomb too is a creative application of physics. If everything has pros and cons, then by definition overall progress is impossible.

      • Lisa_Hooker says:

        I wager we will see nothing less than more competent game players and beer drinkers. Many people find focusing and learning quite difficult if not painful. But hang in there, we need all the optimists we can get.

  36. MountainTime says:

    I want to share my observations from the small Intermountain West tourist towns. I live in what was an early hotspot with essentially no tourists during a lockdown from March through May, and low tourist numbers through the summer. The regular tourist season is about eight months, heavily concentrated in four months. Not one previously successful business in town shut down permanently, and the only owners who experienced real hardship were the newest most heavily mortgaged lodging developers with empty rooms. Their employees made an effective $10,000 extra in unemployment for having been laid off at exactly the right time, more than many have made in a season in their low-income careers. Others were unlucky enough to get the much lower PPP deal, and the amount of PPP money coming into our town was substantial. The less mortgaged business owners of small family businesses whined a lot but still came out with their salaries protected. We were a big red isolated dot on the hotspot map, unlike the the following examples.

    In a larger and famous tourism town nearby, laid off young and childless adventure guides scored the best on unemployment and duly bought newer vehicles, tons of pot, and high-end gear. It was three months of Christmas until they were rehired and tourism came roaring back. Undocumented immigrants, the backbone of the underground economy in hotels and restaurants, got nothing. The response to their plight was deafening silence, save a little extra food aid. I don’t know the individual responses of their slumlords during the spring shutdowns.

    Another small town now known for housing the workers of an ultra-wealthy ski town forty minutes away lost all its newer eateries, probably due to unsustainably high initial debt. The town was still dead mid-summer. A similar community serving the same area was slightly more young and hip and the restaurants stayed afloat on the underemployed under-35 seasonal employee and slacker crowd. It was still busy during the severe restriction period.

    Severity of early local outbreaks, the amount of prior indebtedness and newer businesses, and the amount of trust fund babies living year-round in town affected these outcomes. The stimulus did not go to the people who needed it most, and essential fast food and retail workers got hosed. In the bigger tourist towns (not mine) real estate went through the roof and rents and housing availability got tighter. Stimulus and city escapees drove up housing costs further.

    Sometimes I think that the stimulus was designed by both parties to make the bottom fifty percent resent each other and fight over the scraps due to the gross unfairness of it. Risking your health to ring up groceries for the officially unemployed in their brand new Patagonia jackets and new used Sprinter vans doesn’t make for a cohesive community. We were never all in this together.

  37. Andy says:

    The 1% keep on divvying it up to themselves:

    Cares Act $2.3trn, of which:

    $450bn to Fed, geared 10 times so $4.54 trn – goes to big business.
    $1.25trn goes to business support “alphabet” programs.
    $600bn goes to worker/unemployment payments.

    Total package is $6.3trn, including Fed’s geared $4.5trn,
    So,
    less than 10% ($600bn) to the needy
    Greater than 90% to the wealthy.

    The wealth divide is killing the US, along with healthcare, defense, college and Govt pension plan costs.

  38. Mad Dog says:

    There is a lack of clarity in this area regarding mask wearing guidelines. The local government officials in the DC areas are responsible for spreading the confusion and misinformation to the public. Believe it or not a radio public service ad provides a clear narrative of what the public should be doing and takes its cue from CDC guidelines. Wear a mask in all indoor public places, like grocery stores, banks etc. Outdoors, wear a mask if you cannot socially distance more than 6 feet. If you are sick, stay home. Otherwise, if you are outdoors and away from crowds and others you don’t have to wear a mask. Masks are very uncomfortable, and don;t provide foolproof infection prevention. and no one should be forced to wear them when wearing them outside is not contributing to mitigating the spread of the virus. What they should be doing is staying outdoors, getting exercise, building their immune system through a healthy diet, and vitamin suppliments such as Vitamin D if necessary. I was at an nursery, nearly alone, 300 feet from the nearest human looking for a tree to plant in my front yard to replace a dead one. A dude from the staff came over and yelled at me to put a mask on. I put it on, got in my car and left, never to return.

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