(There are a lot of different ways to look at the effect of that money injection, but this is one way to try to simplify it into a cost measure that doesn't require thinking about the effects on the economy)
That's the really disturbing thing... the bond market hasn't been liquid this week! Lots of no-bid.
It’s absolutely a bailout.
Repo's are overnight borrowing collateralized by the US Treasuries. Basically it is borrowing to maintain capitalization requirements in these high volatility times. From the perspective of the US government they have literally 0 risk (you are guaranteed to get back either USD denominated money or US treasury).
You should compare it to a payday loan that is collateralized . And then where the collateral happens to be insufficient because a glut of that item just came on the market (analogous to the sudden rush of banks needing to convert their Treasurys to cash).
For the ordinary person, "Sorry, can't help you, you just have to deal with the fact that everyone else is selling that product too and so it doesn't provide the value you want and you have to take a big loss or an interest rate corresponding to higher risk."
For banks, "Omg! You can't sell your bonds at par because everyone else is trying to sell before maturity? You poor thing, let me buy them up for you with new money!"
 Sometimes referred to as "title loans", as you might e.g. put up your (remaining equity in your) car as the collateral.
If the Fed wants to keep the 30-day interest rate down, they can just buy the bonds directly themselves. They don't need to wait for the banks to buy the bonds and then repo them.
And guess what, medical bills are the number one cause of bankruptcy in the US, insurance companies are refusing to guarantee coverage for Coronavirus treatment, and the Trump administration just blocked states expanding Medicaid to do the same.
Might need to think about systemic risk a little differently.
The real problem is that if they did this it wouldn't actually have any real short-term effect other than making the things seniors want to buy more expensive. Money's a fiction: it's purpose is to incentivize people to produce things that other people want. If you increase the amount of money in a population but don't increase the supply of goods, it just means everything gets more expensive. You still have the same amount of hospital beds, senior living centers, cruise berths, golf courses, etc. to go around but now the market-clearing price of buying one goes up, some fraction of poor old people end up without one, and their spot is taken by a richer young person.
Over the long-term there's a reallocation of labor that actually does change things: that senior might retire and his job will be filled by someone younger, or people who might've gone into pediatric nursing instead work at a nursing home, or luxury condos might be converted into assisted living. All of these have unintended consequences that ripple down to others, eg. if condos are converted to senior homes it raises the price of housing for young people.
The government doesn’t do this though. That’s why there is confidence in the USD.
It's just that Congress has delegated this to multiple independent organizations within the government. The U.S. Mint makes physical coins and paper money. The U.S. Treasury issues government debt. The IRS collects taxes. The Secret Service prosecutes counterfeiting. The Federal Reserve serves as the lender of last resort to the banking system. The President submits the budget, which must be approved by Congress.
The division between the President, Congress, U.S. Treasury, and Federal Reserve forms a very important check on the tendency of most governments to just print money to cover government services, since different branches of government are responsible for determining how much is spent; where it's spent; where it's collected from, and under what terms it'll be repaid; and how much it's worth. But it's worth remembering that constitutionally, Congress has the power to create all of those agencies, and Congress also has the power to unmake them. I don't necessarily think that doing so is a good idea, but it's possible.
This is exactly what they're doing every time they drop rates - handing out new money to the financial industry. The main thing one can be confident in regarding The Fed is that they will create enough new money to keep the numbers at the Wall Street Casino ("The Ecomony") going up up up, even attempting to do so when it's blatantly inappropriate. It's seemingly the only button they know how to push.
The belief in USD comes from military dominance, the petrodollar, momentum, and a lack of better immediate options. Nobody was ever fired for buying IBM either, but eventually the world will move on.
We create money all in extreme amounts all the time. Money is not some sort of 'ore' which we have to mine out of the planet through hard labor. It's a resource we create at will by simple agreement and at the push of a button in unlimited quantities. The 'downside' is that 'new' money potentially can devalue existing money, as there is just more to go around.
Giving the massive amounts of money we create daily to those that need it, for instance to retire after a reasonable lifetime of work, in some twisted logic feels 'bad', where lavishing it on those that do not need it, so they can use it just to hoard, speculate, or buy back their own stock, seems to be accepted as 'fine'.
You can be critical of QE, monetary policy, and the general priorities of the government but it doesn't make OP's point a helpful one. Especially considering the lack of centralized control, let alone the various other major differences between it and entitlement spending.
Related: according to Twitter, kids are starting to call COVID-19 the "boomer remover" https://twitter.com/BaileyCarlin/status/1238147875143647234
People trying to scare people about SS talk about the trust fund depleting, but the trust fund is simply a bonus that was created to account for the fact that when the baby boomers started retiring, their numbers would be much greater than the numbers of working people to maintain a healthy SS system. So they set aside some additional money so the large number of baby boomers, who in their prime had to pay for a relatively smaller number of retirees, were paying some money towards their own retirement and so wouldn’t place too much of a burden when they retired.
The people who pocketed that money have resisted any attempt to put the tax burden on them, and indeed, have demanded more and more tax cuts. The next generation is thus not only paying for their parents' retirements, as per the Social Security social contract, but also financing their parents' massive debt. The Social Security Trust Fund helped enable that by making a massive government debt seem smaller than it would otherwise have been.
It's an entirely solvable political problem.
They can only borrow to the extent they have collateral. You can do the same thing. Any decent broker will let you margin Treasuries on the cheap.
There's absolutely no reason this can't be done.
Believe me, I'd still be collecting it if I knew this was going to happen.
>But do you think tech hiring will really slow down?
We should be good but these are extraordinary times.
Yeah, took cash positions before leaving.
Work: More people will work more time from home and many firms will switch to virtually full time remote with limited physical gathering. This will decrease the cost of office rents and alter the work/life balance. It will affect wages because people can live outside of city centers and still work so companies will pay less. We may be on the cusp of US government guaranteed sick leave.
Travel: People will, for the short term, do less travel for pleasure, but the big impact, long term, business trips will decrease. More and more business meetings will be replaced with voice and video conferencing. There was no big driver other than some cost reduction here, but now safety and security will be the big drivers here. Global pandemic concerns (prevention, containment) will complicate travel to varying degrees, and in a way that most US citizens aren't used to - it will affect interstate travel, not just trans-national travel.
Entertainment: Many of the sports that have been deferred or canceled will likely be replaced with other forms of entertainment that can be viewed on television or the Internet. Fewer people will go to live performances, both because they can't (cancelled by the government) and reluctant to after COVID clears. This will affect service workers - where most of the lesser skilled jobs have been created in the last three decades.
Security: Security will no longer be seen as just a physical access control concern. Business has been preparing over the last two decades for the eventuality of global pandemic - now they can put those plans into action, and the impacts of them will cascade into personal lives. US citizens will be demanding more from their government in disaster preparedness on pandemics - it will affect travel.
All of these tie into how US citizens see their relationship with their government, and what they demand from it.
My guess is that you're overstating the long-term effect on this front. People like leaving the house; people like gathering with other people; people have liked these things for as long as there have been people. They're not going to stop liking them because they've been stuck alone indoors for a couple of months. Enforced abstinence for a while may even increase demand for social entertainment, once the dust settles -- "you don't know what you've got until it's gone," etc.
It’s not our first pandemic. It won’t be the last. And I don’t see any reason at all to think why people won’t go back to living their lives at the first possible opportunity.
But what does “dig in deep” even mean? In the vast majority of cases it’s a mild virus with symptoms generally lasting a week.
If anything I think at the end of all this people will be deeply suspicious the next time the WHO declares a pandemic and insists we need to shut down the world economy.
We are not dealing with an exponential function. We are dealing with a logistics function, I.e. an “S” curve.
The predominant factor to coming out the other side of the curve is herd immunity.
IMO, the faster that young and middle age people acquire herd immunity, the safer it is long term for the elderly who are at the highest risk, because it drives R0 below 1 and extinguishes the pandemic.
The flaw with “flatten the curve” is overly simplistic thinking around the severity of cases. The best way to eliminate severe cases, assuming strict containment is impossible or cripplingly costly, is to gain herd immunity in the low-risk populations.
As far as I can tell, for almost all Americans, this is our first pandemic. The closest analogue might be polio in the 1950s, but maybe 10% of the population remembers that.
Going down the list, none of the remaining pandemics within living memory seem to have made a large impact on life in the US .
It’s not crazy to imagine changes from this event. There doesn’t seem to be much precedent here for it.
> These final estimates were that from April 12, 2009 to April 10, 2010 approximately 60.8 million cases (range: 43.3-89.3 million), 274,304 hospitalizations (195,086-402,719), and 12,469 deaths (8868-18,306) occurred in the United States due to pH1N1.
It remains to be seen if the hospitalizations or deaths due to COVID approach or exceed the levels of H1N1, which itself was less fatal than a typical flu.
Certainly the response to COVID is markedly different. But I think in the end what will matter is the actual numbers impacted. If the virus turns out to be not as deadly as H1N1 I think people will seriously question the role of the media in building up hysteria around this coronavirus.
I certainly hope you are right, but unfortunately I suspect the companies making billions of dollars will do absolutely everything in their power to make sure those changes don't happen.
Because there is so much money tied up in the current way things are done Americans have decades of fighting the power structure before they can expect to change their relationship with their government. If only they knew what Europeans get for their tax dollars.
Even the Spanish Flu didn't manage to do that and the actual death toll was even higher than the projections from COVID-19.
Travel and entertainment, doing these in-person is interwoven in our DNA. These industries (lol at how Trump says this word) are gonna take a huge hit, but will of course rebound.
I do think people will be more hygenic for many years to come because of this.
If all they were doing is giving people cash then you could just as easily call it a tax cut. And nobody turns those down either.
The legendary Craig T. Nelson quote comes to mind: "I've been on food stamps and welfare. Anybody help me out? No."
You cannot have a high income country without a high level of socialism. Socialism is simply the State providing services for its people.
> Socialism is a political, social and economic philosophy encompassing a range of economic and social systems characterised by social ownership of the means of production and workers' self-management of enterprises.
The likes of police and fire departments in the US are an example of not socialism. Most of what they need for their operations (cars, radios, buildings, etc.) are produced by private industry. The workers at the CDC and the FDA don't own it, its management and policies are chosen by politicians and voters (and lobbyists) rather than the workers.
Actual socialism doesn't even require government involvement. A worker-owned collective is a socialist enterprise. But the MTA and the US Department of Transportation are not examples of that.