Fiscal Firepower

Monetary policy becomes toothless as rates approach 0%, but fiscal policy can shine. The government can cheaply borrow to: increase unemployment benefits to those recently laid-off, offer paid sick-leave to those without it who have Covid-19, give zero-interest loans to small business that may fail and lay off workers, offer free daycare to parents if schools are closed, and buy more medical supplies. These policies would lessen the virus downturn.

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