The Coming Return of Stimulus Checks & Recession.

so we've got a channel member with a

comment here about stimulus checks and I

think it's a brilliant topic that we

should discuss the potential of steamy

checks coming back to America let's

Analyze This Garrett purrington says if

we hit a hard recession with this

Administration referring to the Biden

Administration between now and 2024 they

will simply give more handouts one way

or another pushing inflation the

push-pull in 10 years prices will be

skyrocketing

so let's try to break this down and

analyze if and how stimulus checks could

make it back to the United States and

boy stemi checks would be another fun

session of video topics that we haven't

got to talk about in quite a while so

let's talk about the potential of

semi-checks now I think the easiest way

to do it is draw it out so let's do it

together first I think in order to

expect stimulus of any kind we would

have to have massive pain and massive

job loss now Elizabeth Warren is already

expecting somewhere around 3 million job

losses and the way she accomplishes that

is by saying if the unemployment rate

today is 3.5 percent and the FED thinks

it'll go to 4.5 percent the FED then the

reality is once the unemployment rate

goes up one percent history suggests the

unemployment rate will go up another

percent so history suggests we're gonna

go here since we've got just over 150

million people working in America

history suggests we should have about 3

million job losses at the same time

economic forecasts are really calling

for a recession or a negative GDP growth

sometime in Q3 Q4 right around the

holidays uh and so call it a holiday

recession see Christmas sweater holiday

recession it's almost like I wore this

by Design

so what could potentially the impact of

a holiday recession be well first of all

if we're in a recession if we actually

hit a recession usually and historically

that that doesn't mean that it will

happen this time but usually and

historically the stock market bottoms at

the start of a recession

so if the stock market bottoms at the

start of a recession and the recession

hasn't technically started yet then pain

in the stock market could still be ahead

of us so the stock market usually

bottoms at the start of recession the

only way to really then historically

suggest that the stock market hasn't hit

it bottom yet or has already hit bottom

rather would be to say that there's no

recession which is possible that there's

not a recession but for the purposes of

arguing stimulus checks let's assume the

stock market hits a new bottom at the

same time we get mass joblessness that

is a a sudden wave of 3 million jobless

uh individuals and that joblessness

creates a jobless spiral jobless spiral

this is I think where the government

would want to intervene because remember

the velocity of money when one person

spends five dollars at a hot dog stand

the person who takes that five dollars

then goes and spends that five dollars

on an employee to help them at the hot

dog stand that employee then spends

their wages on goods and services car

cleanings a muffler for their car radar

detector for their car I don't know

whatever they want food basic

necessities laundry whatever and you

have this circulation through the

economy and modern economic thoughts

suggests that when somebody spends money

it usually circulates through the

economy about four to five times but if

three million people have less money to

actually spend on goods and services

then you could actually take away four

to five times as much money which would

basically means if three million people

don't have income you could see the

impact of what could be as much as 12

million people without jobs because of

the velocity of money amplification

effect

now obviously there are Employment

Insurance programs and this is actually

where I think the government could stop

a jobless spiral because if 12 million

people were out of work then earnings

that companies are going to plummet then

they're going to hire less people and

then you get the spiral less earnings

they fire more people they then hire

less people right so they hire less

people they fire more people so more

people permanently unemployed in the

cycle less people spending money leads

to less hiring and you basically just

have a depressionary spiral well the

Keynesian economic thought which is one

that our government and Federal Reserve

like to follow is that well if times are

tough we should stimulate the economy so

how might they do that to stop a jobless

spiral well there are a few ways they

might do that the easiest way to think

about this is first how are they likely

to uh continue uh supporting an

anti-jobless spiral regime well first we

know this with certainty already we

expect they would amplify uh the debt

ceiling it seems like when I type today

this uh this HDMI connector is just

trash I bought a new cable so I'll fix

this for next time but uh let's go back

here so the first thing they might do is

amplify the death ceiling which is

basically saying they'll raise the debt

ceiling right once you raise the debt

ceiling what can you then continue to do

well you could continue to spend on chip

related Investments why would you

continue to spend on chip related

Investments via the chips act where you

could basically just and you don't even

need Congress to do this remember this

you could literally have the Biden

Administration just read the law of the

chip sack where they've agreed to you

know 80 plus billion dollars in spending

in chip manufacturing and they could

just Loosely interpret it to where all

of a sudden instead of spending 80

billion dollars they're actually

spending 240 billion dollars yes a 3X is

possible that's what Goldman Sachs said

in a piece we covered just three days

ago where Goldman sax thinks that

institutional stimulus check spending

could actually be three times as

expensive as previously thought because

of the way the Biden Administration is

interpreting it so what if they just

interpret it so loosely that it's

actually a four or five times investment

well now what you're doing is you're

creating jobs by going into more debt

that's likely to happen in chips it's

likely to happen in EV it's likely to

happen in solar hydro and other

scientific based uh based in my opinion

Investments

that the Biden Administration can

justify under acts that have already

been passed so I think the debt ceiling

gets raised hands down if we're knocking

on a door of recession that then enables

the government to spend more money on

programs that they've already passed

without the help of a bipartisan

Congress

another thing that could potentially

happen and we don't know this is you

could potentially good Lord you could

potentially have a bipartisan effort on

expanding unemployment Protections in

the event that you have an unemployment

crisis now these unemployment benefits

would probably be conjoined with some

kind of demand that individuals work I

don't believe that Congress is going to

go back to the days of here's massive uh

unemployment compensation for no work I

think there will probably be a look for

work requirements if Congress were to

expand in a bipartisan way unemployment

protections but I think this would

probably be the biggest stimulative uh

effect that Congress would have uh on

the economy is not only the Biden

Administration in their own way

basically increasing stimulus checks

that have already been written remember

what Goldman Sachs said they said hey

we've got about 390 billion dollars in

stimulus checks that'll probably end up

costing around 1.2 trillion dollars

because the Biden Administration is just

going to Loosely interpret those rules

but I actually do think that Congress

could in a bipartisan way increase

unemployment compensation stimulus

checks as long as people agree that

they're looking for work I think that's

how you can get a pretty divided

Congress right now Democrats and

Republicans on the same page and

actually printing money again

supporting massive unemployment checks

for people who've been laid off

especially in dare I say the tax sector

I think there's a chance you're going to

see a high level of tech unemployment

and that's going to lead to higher

unemployment checks to make sure people

who basically funded

so frustrating who basically funded a

very expensive lifestyle

I feel like I'm taking a Nintendo switch

here I've got expensive HDMI cables

expensive Apple dongles but no

oh don't you just love seeing Kevin blow

anyway so I there's this chance that you

have the tech sector that has an

expensive much more expensive lifestyle

right more expensive cars more expensive

apartments or whatever that actually

ends up fueling calls for higher

unemployment checks because they are now

unemployed and regular unemployment

won't help them pay the bills they

signed up for under salaries that they

used to be used to because of

unemployment caps basically so there is

the potential that you see stimulus

checks come back in the form of higher

unemployment compensation as long as to

appease Republicans there's a look for

work requirement that's potent that's a

potential now what about straight up

just stimmy checks is it possible stimi

checks is it possible that the Federal

Reserve and Congress issue stemi checks

well first you have to ask would the FED

print more money in the event uh of a

painful recessionary Dynamic that lasts

long so in Long recession right so let's

say Q3 Q4 we go into recession and by q1

2024 we're still in recession basically

the Fed uh went too far

is it possible that maybe instead of

getting stimmy checks to the tune of you

know twelve hundred dollars and then

fourteen hundred dollars and then

actually it was the other way around it

was twelve hundred dollars then we had

the six hundred dollars then we had the

fourteen hundred dollars from the Biden

step up then you had the uh child uh tax

credit right is it possible that we end

up getting a revisit of some form of

stemi checks maybe do I think it would

ever be to the degree that we saw here

very unlikely it's very unlikely we

would go back to this kind of stimulus

however is it possible that there would

be a a one-off maybe I think before

you'd ever get to a runoff and there was

you would not want to pray for that

because I think we would be in a pretty

deep recession if you prayed for that

but I do think that they'd probably go

back to some of the protections that

they previously had which were very

inflationary the expansion of the uh the

money supply is what created the

inflation that we have today but I think

they would actually and potentially make

the same inflationary mistakes that we

had the last time around just to a

slightly lower degree

I think though you could almost say with

certainty okay so let's let's put some

odds on this I think you could say with

certainty

uh that is like 99 likelihood uh which

is basically certainty that they are

going to Via the Biden Administration

print their way out of whatever

recession we're going into by dumping

money showering money into the chip

sector and the energy sector the

inflation reduction Act was a ruse

it's not going to reduce inflation it's

going to increase inflation

but because they told Republicans it was

going to be deficit neutral and

everybody believed them and now the

Biden Administration can Loosely

interpret every rule they want

there's going to be a massive amount of

spending here so if you're looking for a

job you're probably always going to be

able to get a job in chips manufacturing

EV solar Hydro you name it

over there I don't think there'll be a

shortage of jobs which I actually think

is going to be fantastic if you're

exposed to those kinds of stocks

now with maybe a 40 chance

I would say congress actually works

together to raise unemployment

compensation as long as there are look

for work requirements I'd actually go as

far as saying 40 to 60 percent in the

event we're in a recessionary

environment

oh and then stemmies I'd probably say a

one-off has maybe under the Biden admin

maybe a 20 chance but it would really

require a dirty recession so you

probably wouldn't want to go down that

direction uh so uh that that would be a

little scary so somebody here says why

would you stimulate the truth is out

there says why would you stimulate the

economy while at the same time at the

same time slowing the economy so the

only way this really plays out in my

opinion is that inflation is conquered

so inflation ends up proving to be

transitory right that so let me give you

an example of what that could look like

with data that's already happening uh I

want to pull up a NatWest piece and then

I want uh the costs for shipping

I have all I have so much data on my

iPad it's insane but uh it's somewhere

around here there got it that wasn't bad

look at this shipping costs out of China

I even wrote next to it this is what

transitory looks like okay that right

there is what transitory inflation looks

like so I know a lot of people are going

to say hey wait a minute how could you

possibly go back to stimulus checks if

you have all this crazy inflation well

you can't

here's how you go back to stimulus

checks okay

number one

inflation goes away inflation goes away

it goes away that's number one so step

number one is inflation goes away

however

to get there oh it's so annoying however

to get there you actually had to push

the economy into a nasty recession so

let's write that however now in uh nasty

oh my Lord whatever man uh you're now

you're in a nasty recession so inflation

goes away and now you're in a nasty

recession now that you're in a nasty

recession and you have no inflation

guess what the government can now do

they can print uh their way back out

but less than last time so that becomes

the rule right so the rule becomes look

we'll print but we just need to make

sure we're printing less than last time

because we don't want to create the

inflation again that we did last time so

let's draw that out for you for a moment

so inflation goes away however now we're

in a nasty recession so we want to print

our way out but we're going to do so

less than last time so imagine this I'm

going to draw a really big orange line

here and this is going to be inflation

okay so let's say we get inflation that

does this okay and then it goes negative

so we're actually at deflation well now

the government prints money via stimulus

checks or increased unemployment or

chips or EVS whatever so they print

money to push inflation back up and they

basically try to cause that right that's

the goal will they be able to accomplish

that probably not they'll probably screw

something up because that's what they're

really good at

but it could happen it could absolutely

happen that we end up falling into

deflation just like this chart shows you

I mean look at this chart this is

shipping costs out of China plummet

that's what our inflation is probably

going to look like now is it possible

that it'll look a little bit more like

this you know where where basically it

takes it stays higher for longer you

know it could even to some extent kind

of look like that right is it possible

yes

but if we get to deflation because of a

deep dark recession

I think they'll turn the printers right

back on and we'll be right back to

stimulus check 17.

so yes it is possible but there's

another thing that is possible as well

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