Michael Osterholm is one of the doctors advising Joe Biden on the coronavirus. He has said the US needs to impose a complete lockdown for four to six weeks. Osterholm claims this won’t be a problem because the US government can just pay everybody. In other words, Uncle Sam would give every American a paid vacation.
In his podcast, Peter Schiff explained why this proposal is ridiculous.
Osterholm has actually suggested that the lockdown would be good for the economy in the long run.
Shutting down the economy for four to six weeks, according to this guy, would really let us jumpstart the economy because we’d really eradicate the disease — even though there’s really no proof that a lockdown is really going to do anything. But what this genius is proposing is that, well, it’s not really going to hurt the economy, because according to this guy – I guess he’s not just a COVID advisor, I guess he’s an economic advisor too – but what he’s saying is, ‘We’ll just have a federal government pay everybody.'”
In effect, everybody takes a paid vacation and the government writes everybody a check.
This is the type of nonsense that actually gets discussed now. Because everybody thinks, well, it doesn’t matter, because the federal government is going to pay for it. Now, of course, the federal government doesn’t have any money. The federal government is broke.”
Peter noted that the federal government just ran a $284 billion deficit in October – the highest October budget gap in American history. Spending was up 4.8% over September.
If the economy is getting better, why does the government have to spend even more money? You would think that if we were really recovering the government would have to supply less support to the economy. That fact that the government is even spending more is indicative of a weak economy that is in need of more government support, as if the government support actually works.”
More telling is the fact that revenue is dropping. If the economy was really improving, the government would be taking in more tax revenue – not less.
If anything, it shows you there is no recovery – that the economy is relapsing.”
Meanwhile, more than 700,000 people filed unemployment claims according to the latest weekly report issued Thursday, Nov. 12.
If the economy is recovering, why are so many people still losing their jobs?”
So, where is the money for this paid vacation going to come from?
Well, we’ll just borrow it. Who is going to be dumb enough to lend it to us? Nobody. That’s why the Federal Reserve is going to have to print all of this money. As if all of this money printing isn’t going to do any damage to the economy.”
Peter said all of that money printing would do far more damage to the economy than any damage caused by COVID-19.
Even if the lockdown ended up somewhat bending the curve and saving some lives, is it really going to be worth the cost? In fact, who knows how many more people may die as a result of not only the lockdown but of the economic damage done by all the money the Fed has to print to support the lockdown.”
Then there is the practical reality that not everybody in the entire country can just stop working. Somebody has to continue producing food to eat. Somebody has to provide medical care. Somebody has to pick up the garbage.
To think that we can all just stop producing — nobody has to help produce goods. Nobody has to provide services. Yeah, we can all get paid as if we were still working. Well, where is all the stuff going to come from?”
From a political standpoint, Peter said this is perfect for the Democrats.
They love to create a situation where more and more people are dependent on government. In a way, this might be an end-run into the universal basic income, because we’re really starting the framework where everybody is going to get paid.”
And once that happens, how do you get rid of it?
Once you start getting this check, you’re going to vote for any politician who promises to keep the checks coming. And that’s exactly what the Democrats want. They want to buy their votes, and this is the way they do it. But now that everybody thinks that everything is free, that as long as the Federal Reserve is printing money we’re getting all of this government for free, so why bother to work? Of course, nobody even considers where does all this stuff come from that we consume? It doesn’t just magically appear. People have to produce it. That means you have to go to work.”
In this podcast, Peter also referenced an article we published about the growing debt burden on American retirees. He said this is just a sign that we have a huge bubble economy completely supported by debt.
It shows you how weak the economy is. Because if we actually had a strong economy, do you think 70 and 80-year-olds would have to go into debt? No! Why are so many older Americans being forced to take on debt? Because they’re broke. Because they can’t afford to survive without the debt.”
Most people are focused on the economic issues created by the government response to COVID-19, but the growing debt burden on older Americans has evolved over the last two decades. It’s not something new caused by the pandemic.
Of course, a lot of this debt will never be repaid. A lot of debt held by older people will get discharged upon their death.
This is a huge ticking time bomb for the lenders who are not going to get repaid.”
But it goes beyond an issue of retiree dent.
It also shows you that all this talk about this vibrant, booming economy is a bunch of nonsense.”