If there were any doubts about whether more federal helicopter money would be falling from the sky, those doubts should have been erased by several major events that happened last week.
The latest event—which likely sealed the deal—was the December jobs report, which showed the economy losing 140,000 jobs, the first drop in payrolls since last April. If Congress needed another reminder of how many people are still suffering out there and that more help is needed, that should do it.
The second event was the Democrats prevailing in the special elections for Georgia’s two Senate seats, giving the party an effective majority in that body to continue holding on the House. On paper, of course, both parties have 50 seats in the Senate. But let’s not forget that Vice President Kamala Harris will hold the tie-breaking vote.
But her vote probably won’t be needed in the current political environment. While the Democrat majority seems razor-thin, if existent at all, we can be fairly certain that votes in favor of more stimulus will be much greater than that and bipartisan, thanks to the riot on Capitol Hill on Thursday. In light of what happened, how many Republicans do you think will be brave enough to vote against the Democrats on just about anything, particularly more stimulus checks, which many of them already favor?
It’s hard to believe that soon-to-be-former Senate Majority Leader Mitch McConnell will stand in the way of more stimulus checks like he did last month, especially after his wife, Transportation Secretary Elaine Chao, resigned from the Cabinet last week in the wake of the riots. (I bet you didn’t know that McConnell and Chao were married; talk about a Washington power couple).
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And of course, while all this is going on, the news on the Coronavirus front just seems to be getting worse. While it’s a good thing for the economy that there hasn’t been a major shutdown like there was last spring, the fact is that more people are contracting the virus, and more people are dying. Meanwhile, the rollout of the various vaccines seems to be going a lot slower than previously anticipated.
If all of those things don’t argue for more stimulus checks, and as quickly as possible, I don’t know what does.
Late last year, you remember, soon-to-be-former President Trump urged Congress to increase the $600 stimulus checks to $2,000, a suggestion that was immediately seconded by Democrat leaders in Congress, probably the first time they had agreed with Trump on anything in the past four years. So with the Republicans likely to be cowed into submission in the face of the riots in the Capitol building last week, the Democrats strutting as if they have a 25-seat Senate majority and President-elect Joe Biden champing at the bit to sign a stimulus bill, another direct deposit by the secretary of the Treasury will probably be making its way into your bank account pretty soon.
Not that anybody cares anymore, but who is going to pay for all this, you ask? Why, you and me—and no one. Biden is also itching to undo Trump’s tax cuts and raise taxes on “the rich,” who always know how to avoid taxes. And corporations just pass the cost of them on to their customers. In the interim, the Federal Reserve stands ready as always to swallow up all that government debt and pump more money into the economy from the monetary side.
Inflation got you worried? Right now, given the weakness of the economy, there doesn’t seem to be any kindling to ignite inflation in the near future, no matter how much money the government is spending. And even if that unlikely event were to occur, the Fed has already assured us that it is prepared to ignore higher inflation for at least a few years, 2023 at the earliest. Meanwhile, the largesse from Washington will continue apace.
So if you think last week’s chain of events was a bad thing, you’re looking at it the wrong way. On Wall Street, bad news is good news and vice versa. So relax and enjoy the money. You earned it.
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INO.com Contributor – Fed & Interest Rates
Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.