Free Money
Another thing that's likely to be forever altered is the way that governments give away money.
The implementation of things like helicopter money, suspending mortgages, and other free handouts from the government are now being considered very seriously by many of the biggest countries in the world. The idea is simple, if people are sick, they should at least have the ability to stay home. As well, people who've lost their jobs due to the virus shouldn't have to go into financial ruin, not when the government can help them out until the economy gets back on track.
These are two very different circumstances that politicians seem to be conjoining at the moment.
Regarding the first, we have to realize that just giving people money will not necessarily make them stay home. Also, that not everyone who is contagious will necessarily feel sick, so they almost certainly won't want to sit on the couch, especially not with all that money in their pocket. So, unless the government is willing to enforce lockdowns using martial law and the military, then this tactic won't be particularly helpful and the virus will continue to spread for a very long time forward.
As far as those who've recently lost their jobs, and sorry if you're among them, we really don't know how many people are in this category just yet, nor how long the economy will be in the pits. I mean, if the virus goes away quickly then we'll be in a good place, but what if it takes years before restaurants, bars, and theaters can open safely again? Will the government simply implement Universal Basic Income for that entire time?
The thing is, these type of policy tools are kind of like Pandora's Box. You can't put Pandora back into the box. Once they've been implemented once, for whatever reason, they're much more likely to be used again and again.
We saw a great example of this in 2009 with Quantitative Easing. At the time, it seemed a necessity. By 2019, even a small hiccup in the repo market had the Fed injecting billions. I mean, why would Powell not use a tool that was available to him? Especially, when faced with a choice between use the tool and watch the stocks rise, or not use it and face mass criticism when the stocks fall.
Very soon, UBI and helicopter money will most likely be very commonplace in many countries.
This of course, would most likely lead to large levels of inflation. The value of a fiat currency is often purported to relate to the total amount of working hours that the country produces. So, if you have a lot less work hours and a lot more currency floating around, the value of the currency will more than likely come down.
