MORTON J. MARCUS: Where does the money go? | Opinion

MORTON J. MARCUS: Where does the money go?  |  Opinion

This money is only an electronic entry in the ledgers of the Federal Reserve System. There is no increase in conventional debt and no interest to be paid to holders of such debt. “Won’t the U.S. have to raise taxes to pay off this new debt?” demands a college student in New Albany. “We’re going to have to pay it back, with interest, some day. It’s putting a future burden on my back.” Pay it back to whom, when? From whom was this money borrowed? No foreign country or domestic investor lent this money to the US Treasury.

“Won’t it cheapen the dollar abroad?” asks a woman in Sullivan. No. The world is in a massive recession. Our dollars will be welcomed by nations exporting to us and greeting us as Covid-safe tourists. Our stimulus will perk up their economies. “This new stimulus money will be wasted on frivolities,” comes a cry from Hobart.

Oil prices are a different story. They’re dependent on the needs and whims of a few nations with price increases following severe price declines. “It will just reenforce laziness, undermining virtuous labor,” proclaims a shadowy figure from Greenfield.

“Housing! Timber! Gasoline!” counters a gentleman from Toad Hop. Yes, housing demand jumped when some people started working at home. They wanted more or different space and were able to afford mortgages with low interest rates. This demand for new structures or remodeled existing homes caused timber prices to rise. It’s evidence the initial relief funds did as intended; it helped many workers to get or keep jobs. “We are in danger of a massive jolt of inflation,” declares a participant from Monticello. Where’s the evidence? Stimulus round one didn’t give us economy-wide inflation, except in limited corners of the economy.

I suggest to the group we now leave this session and our preconceptions, turning instead to what we observe personally, not just gossip disguised as news. As a last resort we might see what the available data tell us. “It’s a Communist plot to undermine Capitalism,” insists one conspiratorial voice. The next visionary Zoomer affirms, “It’s a Capitalist plot to increase consumption and undermine Socialism.”


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