PART 3 – How COVIDNOMICS Works – Liquidity

Get Your Liquidity On

“It is always sound business to take any obtainable net gain, at any cost and at any risk to the rest of the community.” – Thorstein Veblen

1 – LIQUIDITY

On March 26, 2020, during a week when most countries were just beginning to go into COVID driven lockdown and quarantine, the G20 announced that member nations would inject more than $5 trillion into the global economy to limit job and income losses and “do whatever it takes” to tackle the pandemic. The next day, March 27, CNN Business reported that $7 trillion was being spent by G7 governments and central banks to “save the world’s economy.” 

Federal Reserve Bank, Houston, TX (Image courtesy of Random Sky at unsplash.com)

By April 29, the Center for Strategic and International Studies calculated that the G20 were on track to spend not $5 trillion, but an upwardly revised total of $6.3 to $7.4 trillion in stimulus, noting that the “…largest component of fiscal support is intended to provide financing to businesses and loan guarantees.” (See note 1)

In the US, the IMF “stimulus tracker” listed $3.1 trillion in fiscal stimulus that was publicly known at that point. The stimulus comprised $483 billion for the Paycheck Protection and Health Care Enhancement Act; $2.3 trillion for the Coronavirus Aid, Relief and Economy Security Act (“CARES Act”); $8.3 billion for the Coronavirus Preparedness and Response Supplemental Appropriations Act; and $192 billion Families First Coronavirus Response Act.

On April 15, 2020, the Washington Post reported that in addition to the $3.1 trillion in fiscal stimulus. “[T]he Federal Reserve’s efforts…are harder to measure but seem likely to blow past the $4 trillion mark.” 

These early estimates quickly went out the window as money continued to flow. 

As of June 18, the Committee for a Responsible Federal Budget reports $3.6 trillion in direct US fiscal stimulus and more than $5.8 trillion in monetary stimulus from the Fed. The total to date is a minimum $9.4 trillion, with trillions more under discussion.