What does it even mean to "drive" the economy? I've always thought that's such a vague phrase that can denote a lot of different objective, mathematical concepts, depending on the speaker.
If we find that unemployment does not improve quickly enough coming out of this we could be in for some pretty hairy downward spirals.
The cheques that were/are issued by the US Congress should not be thought of as stimulus packages (which they are not): they are disaster relief.
The economy (or economies, plural, of states considered individually) were put into a coma purposefully for health and safety reasons. It would be paradoxical to 'jump start' the economies when they have been shutdown at the same time.
The purpose of the cheques is that help those who cannot work, and draw an income, to pay the rent and purchase food. At least that is the opinion of folks like Ben Bernanke and Paul Krugman.
Some people are of course labelling them as "stimulus cheques", but that is incorrect: it is probably undesirable for people to go outside of their homes and try to do 'normal' stuff. At least not until vaccines are rolled out in volume.
In Australia the government handed out $600 to individuals who were on income support, and I can guarantee some of those recipients went straight out and bought a 60" television. This would naturally stimulate some sales but do absolutely nothing beneficial in the long run because the rest of us will have to pay for it eventually.
* https://en.wikipedia.org/wiki/Federal_aid_during_the_COVID-1...
> This would naturally stimulate some sales but do absolutely nothing beneficial in the long run because the rest of us will have to pay for it eventually.
Define "rest of us". The UK is still rolling forward debt from the 1700s and 1800s:
* https://www.theguardian.com/business/2014/oct/31/uk-first-wo...
* https://www.theguardian.com/business/blog/2014/oct/31/paying...
Unless your government has run budget surpluses sometime in its history, then the debt you have accumulated has probably never been paid off, but simply rolled forward. This generally isn't a probably as long as economic growth is higher than interest rates, which for AU look to be quite low:
* https://ca.investing.com/rates-bonds/australia-government-bo...
And interest rates have been (generally) falling for Western European countries for 700 years (with some gyrations):
* https://www.visualcapitalist.com/700-year-decline-of-interes...
So it's probably cheaper to pay off old debt with new debt. In Canada for example, even though we had an unprecedented CA$ 340B deficit, our total debt servicing costs will be lower over the next few years.
I'm with Piketty here and have no problem with more redistribution:
* https://en.wikipedia.org/wiki/Capital_in_the_Twenty-First_Ce...
We're living in another Gilded Age.
To have transactions for goods and services. Anything that creates more transactions "drives" it. Generally the Keynesian view is that it is demand (for goods/services) that creates/drives activity.
If people are scared of losing their jobs (or have lost their jobs) they won't spend money because they may not have any more. If people are confident of their future prospects they'll be more likely to spend now because they have faith that they'll get more money later.
The best ELI5 of Keynesianism that I've come across:
> I would summarize the Keynesian view in terms of four points:
> 1. Economies sometimes produce much less than they could, and employ many fewer workers than they should, because there just isn’t enough spending. Such episodes can happen for a variety of reasons; the question is how to respond.
> 2. There are normally forces that tend to push the economy back toward full employment. But they work slowly; a hands-off policy toward depressed economies means accepting a long, unnecessary period of pain.
> 3. It is often possible to drastically shorten this period of pain and greatly reduce the human and financial losses by “printing money”, using the central bank’s power of currency creation to push interest rates down.
> 4. Sometimes, however, monetary policy loses its effectiveness, especially when rates are close to zero. In that case temporary deficit spending can provide a useful boost. And conversely, fiscal austerity in a depressed economy imposes large economic losses.
* https://krugman.blogs.nytimes.com/2015/09/15/keynesianism-ex...