Hacker News Reader

Comment by prepend | Hacker News Reader

Examples I witnessed are friends who never lost their job got like an extra $8k (couple working with two kids). So they bought stuff with it.

I have multiple friends in tech who switched to remote and literally used the extra stimulus cash to trade with Robinhood and crypto.

I doubt this is representative. But people making $100k who ended up saving money from no longer needing to commute did not need thousands of dollars in stimulus. Of course, it was neat getting the money, but it resulted in a lot of extra cash.

Comically, I also have friends who just paid down debt and didn’t buy anything.

But my anecdotes are lucky in that I didn’t know anyone who lost their job or got seriously ill.

View on HN

I feel it’s worth pointing out that saving people from financial ruin was only part of the intent of the PPP legislation. The main point of a “stimulus” is to stimulate the economy. If your friend received money and then spent it on something, the legislation essentially worked as intended.

The PPP was the Paycheck Protection Plan.

It was not sold as a stimulus, it was to allow businesss to pay furloughed employees (in a bizarre ill-thought-out privately-run unemployment insurance scheme) to continue to pay ongoing expenses.

What didn't make sense, of course, is what those people were supposed to be buying, since the reason they were furloughed was because.... people weren't buying things, because of lockdowns and such. Hence, inflation when aggregate $ exceeded stuff worth buying.

> The PPP was the Paycheck Protection Plan.

> It was not sold as a stimulus, it was to allow businesss to pay furloughed employees (in a bizarre ill-thought-out privately-run unemployment insurance scheme) to continue to pay ongoing expenses.

Can you clarify what's your rationale for believing that a program designed to "allow businesss to pay furloughed employees (...) to continue to pay ongoing expenses" does not correspond to an economic stimulus program?

It was not to pay furloughed employees, it was to avoid having to furlough or lay off more employees than they did anyway. Furloughed employees did not get paid, but retaining a certain percentage of pre-pandemic headcount was a requirement for the loan to eventually be forgiven.

Source: I was furloughed April 2020 while my employer at the time received over $2m in PPP. Furloughed employees were explicitly told to collect UI.

If they spent the extra money on secondary-market financial investment (like stocks or crypto), propping up asset prices, then that seems like it goes against the stimulus that the program wanted, which was to keep steady sales for otherwise reliable businesses.

It certainly stimulated GameStop stock.

I think the criticism is that the stimulus worked too well and we’re suffering inflation and whatnot now.

Inflation is hitting most countries aggressively now. The US may actually be on the conservative end of inflation which may have been buffered using government subsidies/influence, but the net takeaway is the rapid expansion in the world can't be explained by simply looking at the US's free-money-keep-buying scheme.

Not Japan, for instance: http://gregmankiw.blogspot.com/2022/05/an-inflation-puzzle.h...

The graph shows until this Feb. JPY has been plunged about 13% recently, and even without it import energy/food/everything price is increasing for obvious reason. Let's see whether salary catch up (I doubt).

Most countries adopted the same loose fiscal and monetary responses, with the same predictable results.

> The main point of a “stimulus” is to stimulate the economy.

Yet, at the same time, they were forcing parts of the economy to shut down. Nothing like hitting the gas and the brake at the same time.

If someone got a stimulus check they didn’t need, and put it all in GME, then it seems like everything has worked out great.

Someone who did want the money (enough that they were willing to sell some GME stock to get to) got the money instead.

And now the person who didn’t need the money hasn’t got any money.

Justice served?

Maybe. but like crypto scams where everyone keeps stealing from each other and paying yeild farmers to get leverage, it's really hard to see what the net net of all the money flying around is.

> Examples I witnessed are friends who never lost their job got like an extra $8k (couple working with two kids). So they bought stuff with it.

And what's wrong with that? Aren't we talking about an economic stimulus program? What do you think is the whole point of an economic stimulus program, other than stimulating the economy?

What’s wrong with it is a few things:

1) there could have been more money for people who actually needed it and were negatively impacted by losing their job or getting sick or whatnot

2) buying lots of “luxury” items drove up inflation. This is bad for a whole slew of reasons we are seeing now.

If we wanted to stimulate the economy, we could have done it in more effective ways that didn’t hose us.

The economy was tanking, how long would it have taken to filter the deserving people? How many thousands of people would have fallen through the cracks? How much money would have gone to laid off white collar people while 'essential workers' still had to go into work and earn minimum wage in the middle of a pandemic? This is politics, can you imagine the outrage if such an already polarizing figure decided to pick and choose who got the funds and who deserved more? I am very much not a fan of the Trump administration but in this situation I think they played a bad hand pretty well.

First, I’m not a professional economic policy person so I assume they will have much better ideas.

But we could have put rules in place that were enforced retroactively. Something like “you get $600 if you lost your job. Everyone who asks gets it. But when you file your taxes if you didn’t lose your job and you took the money, you have to pay it back.” Stuff like that.

I worked for a consulting company that had a pretty smart expense approval process. They approved everything and audited you severely when you went up for partner. It wasn’t perfect, but it was pretty close as people were really nervous and conservative even though they wouldn’t be audited until years later.

There was also a lot of stuff where unemployment paid more than working so there were perverse incentives to not work and make more money. I had a family member who normally made about$2k/month. He got $600/week in unemployment so took a long time to go back while making an extra $500 per month. Stupidly, he bought a car with the extra money (but he’s been able to keep making the payments).

Just having some cap that paid 80% of your salary in unemployment would have been super simple to implement.

Or some programs ran for over a year. So the emergency stuff could have phased out after 3 months or 6 months.

There’s lots of ways they could have designed interventions much better.

> There was also a lot of stuff where unemployment paid more than working so there were perverse incentives to not work and make more money. I had a family member who normally made about$2k/month. He got $600/week in unemployment so took a long time to go back while making an extra $500 per month. Stupidly, he bought a car with the extra money (but he’s been able to keep making the payments).

On an instinctive level I prefer hearing a story like this to the kind of story that would have been more common/worse without the very broad aid that was given, but perhaps this sort of event is quite damaging as well. I'm not sure it's possible, but it would be interesting to see attempts at quantifying the difference.

> Just having some cap that paid 80% of your salary in unemployment would have been super simple to implement.

There is nothing super simple about government unemployment insurance programs, especially in recent years. What about Uber drivers, per diem nurses, people whose employer was dependent on events in Wuhan so their pay was cut?

Even if there are easy answers to these questions, UI is administered by the states so there are going to be more than 50 versions of each answer.

> It wasn’t perfect, but it was pretty close as people were really nervous and conservative

How is that close to perfect? I assure you that some people who would need and actually deserve that payout wouldn't apply for it just out of the irrational fear that it will cause them problems later.

> buying lots of “luxury” items drove up inflation

How so? buying stuff cures inflation. Are you referring to supply chain shortages making non-luxury stuff not get produced?

Buying stuff drives prices up and contributes to inflation, not cures. There’s the same amount of stuff but more cash, so prices go up.

COVID relief was not an economic stimulus program. It was intended specifically to ease economic pain and displacement, not to stimulate an economy experiencing slack demand.

Reply on news.ycombinator.com