Stimulus Number 3 and the Cornholio Virus

The deal is done. Last week, it sounded like a good thing. Indeed, increasing the Child Tax Credit, eventually putting a floor on the EITC and opening the door on a higher minimum wage by opening Pandora's Box on a higher weekly unemployment benefit are all things I have been supporting for a long time. The question is whether this is that time.

Sadly, this Administration does nothing without an ulterior motive. That the point person in negotiating both the second and third bailouts is all you need to know. His motives are not exactly pure.

One of the main components of household spending is housing. Mnuchin made his bones as the notorious "Foreclosure King," scooping up properties lost in the Great Recession and through the Reverse Mortgage Scam. These schemes targeted seniors who did not really know that they were giving away their legacies while racking up huge fees. They were the ultimate legacy of the 1986 tax reform, which turned homes into ATMs.

The Clinton and Bush tax cuts on capital gains, compounded by the Tax and Job Cuts Act, gave speculators a huge tax advantage for dealing rather than working, as well as huge incentives, through low marginal tax rates, to hold wages down (blaming this on health insurance premiums), while getting huge bonuses for doing so. Mnuchin helped negotiate the last bit, while not filling vacancies in the Office of Tax Policy. They usually have the role of honest broker. Not this time.

What had been single-family homes were now rentals, which usually put maintenance responsibilities onto the owners. To capitalize on his holdings, Mnuchin and his cronies leveraged the mortgages into AAA mortgage backed securities. Tell me if you have heard this song before.

Along comes our super bug. Suddenly, social distancing becomes the norm. People are played off and added to the unemployment roles. No wonder Trump became a COVID denier. His reputation as a demented fool gave him the perfect cover to downplay the crisis, hoping people would keep working.

When governors started heeding the advice of his medical disaster team, other options were required. In rides Secretary Steve on a white horse to work a deal, actually two deals, to assure that renters can keep paying. Meanwhile, as a backup plan, the Federal Reserve starts buying bonds. Wait until they look inside.

The bailouts are now passed. All seems right with the universe. Industry even got a piece of the action, while small businesses do too, both through loans and because most are really employees without benefits or automatic tax withholding.

The bailout provided even small businesses that were lax in paying self-employment taxes that would have made them eligible for unemployment compensation. They can keep servicing their debts.

The bailout pays for itself on paper Industrial loans will be paid back. Unemployment premiums go up. Tax benefits are paid back as an advance on 2020 tax refunds, but if you get money back, like the poor.

Families can do little else with the money. Money is not really the ephemeral thing that the Federal Reserve can create with a keystroke or the federal government can manufacture with a tax cut.

Money is a demand for the labor of others. Goods are simply past labor, from extraction to distribution. Future labor is debt. Current labor is what is available now. The bailout pays the latter, while the supply of goods and services is diminishing day by day. Shortages are beginning to occur.

On Amazon, you can buy toilet paper from Europe and Japan now to be delivered in May, although for a higher premium you can get expedited delivery in mid-April. We now have a futures market for it. This is not an April Fool's Joke.

Unless you can find a source, we are all Cornholio, or rather, you are. My six rolls arrive as early as Monday. It is probably the best $29 I have ever spent. It is worth, per sheet, more than any dollar being deposited in the bailout. I am not threatening you. This is now our lives. Welcome to Venezuela.

Trump is not so stupid. At Wharton, he studied economics. The main topic in that era was fighting inflation. Reagan, not Volker, killed inflation by giving the wealthy a tax bonus by lowering marginal rates. He knows what hyper-inflation looks like. Happy Easter.