Until there’s an effective treatment or vaccine for the coronavirus, the road to U.S. economic recovery will be long and hard, said Neel Kashkari, a former assistant treasury secretary who led the 2008-2009 TARP bailout program.
Now the head of the Federal Reserve Bank of Minneapolis, Kashkari did not sugarcoat his words during a CBS interview on Sunday. While he acknowledged the damage a prolonged shutdown could do to the economy, he said the U.S. can expect 18 months of rolling shutdowns — no quick rebound.
In the last crisis, Kashkari said the mistake was going too small and being too timid. This time, it’s more aggressive, he told CBS.
Moguldom founder and CEO Jamarlin Martin tweeted, “The Federal Reserve was probably shown intelligence agency assessments to get them to ‘Go Big’ quickly. Cuomo, CDC, MAGA, and Dr. Fauci will be giving you something else.”
More than 16 million people have reported losing their jobs in the past three weeks. The Centers for Disease Control estimated that 200,000 to 1.7 million deaths could be expected in the U.S.
“Barring some health-care miracle,” the U.S. can expect “waves of flare-ups, controls, flare-ups and controls,” Kashkari said.
Predictions of a V-shaped recovery — one where the economy suffers a sharp economic decline but recovers quickly and strongly — are overly optimistic, Kashkari said.
If, in the next few months, some new therapy was developed that would make people confident to go back to work knowing they could get treatment, then potentially we could have a V-shaped recovery, Kashkari said. “More likely, we’ll different parts of the economy turning back on and then turning back off again.”
Listen to GHOGH with Jamarlin Martin | Episode 70: Jamarlin Martin Jamarlin goes solo to discuss the COVID-19 crisis. He talks about the failed leadership of Trump, Andrew Cuomo, CDC Director Robert Redfield, Surgeon General Jerome Adams, and New York Mayor de Blasio.
Congress and the Trump administration are arguing about adding another $250 billion to the $350 billion already committed in stimulus money.
We don’t know if the support promised in the COVID-19 bailout is going to last long enough. “If we need to have different phases of shutdown for the next several months or until we have a therapy or vaccine, they’re going to need more help than that,” Kashkari said.
The Federal Reserve is part of the strategy because there are $2.3 trillion in loans that it could issue to businesses, states and local governments.
“We can’t shut down the economy for 18 months,” Kashkari said. “We need to find ways of getting the people who are healthy, who are at lower risk, back to work and then providing the assistance to those who are most at risk, who are going to need to be quarantined or isolated for the foreseeable future. That’s a real challenge.”
