The Fed chairman says we need to keep spending money. Lots of money:
Federal Reserve Chairman Jerome Powell said Congress and the White House will need to spend more money to make sure policy makers’ quick initial response to the coronavirus-induced economic contraction isn’t wasted amid evidence that any recovery will take longer than first thought.
….Congress has spent nearly $2.9 trillion so far to support households, businesses, health-care providers and state and local governments, or around 14% of national economic output, the “fastest and largest response for any postwar downturn,” said Mr. Powell. But he said despite the appropriate size and speed, “it may not be the final chapter, given that the path ahead is both highly uncertain and subject to significant downside risks.”
“Additional fiscal support could be costly but worth it if it helps avoid long-term economic damage and leaves us with a stronger recovery,” said Mr. Powell.
There’s only so much that monetary policy can do to address a recession, and the Fed itself is probably out of ammunition. What’s left is fiscal policy. The $2.9 trillion already allocated might have been enough if our response to the coronavirus had been strong, but it was just the opposite. We are about to go through a second outbreak, and the price for that is—at least—another $3 trillion.
This is something Republicans brought on themselves and now it’s time to pay up instead of whining about deficits.