When the well runs dry

With all the news of millions and billions and trillions being thrown at this ‘Invisible Enemy’ it makes me wonder what happens when the well runs dry?

GDP estimate within a few sawbucks is around $20,000,000,000,000 and spare change. That is on a good day.

The following equation is used to calculate the GDP: GDP = C + I + G + (X – M) or GDP = private consumption + gross investment + government investment + government spending + (exports – imports) ... It transforms the money-value measure, nominal GDP, into an index for quantity of total output.

Now the estimate of unemployed is around 30,000,000,000. At least those are the ones who have applied for unemployment insurance.

When filing for Unemployment Insurance (UI) benefits, you must have earned enough wages during the base period to establish a claim, and be:

·        Totally or partially unemployed.

·        Unemployed through no fault of your own.

·        Physically able to work.

·        Available for work.

·        Ready and willing to accept work immediately.

A base period is a specific 12-month term the Employment Development Department (EDD) uses to see if you earned enough wages to establish a UI claim. To learn how we determine your base period, your Weekly Benefit Amount (WBA) ranges from $40 to $450.

·             Waiting Period – The 7-day waiting period is waived for claims beginning on or after January 19, 2020. After you submit your first two-week continued certification, you will be paid for the first week of your claim.

·             Work Search – You are not required to look for work each week to be eligible for benefits.

These are different times. I’m no economist or accountant or an individual who will study, develop, and apply theories and concepts from economics and write about economic policy.

Within this field there are many sub-fields, ranging from the broad philosophical theories to the focused study of minutiae within specific markets, macroeconomic analysis, microeconomic analysis or financial statement analysis, involving analytical methods and tools such as econometrics, statistics, economics computational models, financial economics, mathematical finance and mathematical economics.

In other words, an economist is a number cruncher.

FEDERAL BUDGET PROJECTIONS FOR 2020

Outlays....... $4.7 Trillion

Revenues.... $3.6 Trillion

Deficit......... $1.1 Trillion

Debt held by public.................. $17.8 Trillion

For tax year 2020, the top tax rate remains 37% for individual single taxpayers with incomes greater than $518,400 ($622,050 for married couples filing jointly).

The other rates are 35%, for incomes over $207,350 ($414,700 for married couples filing jointly)

In 2017, 143.3 million taxpayers reported earning $10.9 trillion in adjusted gross income and paid $1.6 trillion in individual income taxes.

Is your head spinning?

There are also all those business taxes, wealth taxes, inheritance taxes, estate taxes, gift taxes, property taxes, sales taxes, payroll taxes or tariffs.

Then there are state taxes and fees and as sundry ways of robbing your wallet.

If that is not enough there are city or county taxes for everything from getting water delivered to your toilet to road repairs.

Somebody has to pay for it.

Now things are different.

Businesses are closed and employees are sent home without pay (and health insurance). Rent and mortgages are due to the unemployed. Food must be found for the family and savings (if any) will be needed to keep the Internet alive.

Life has a cost.

Today’s news: The U.S. Treasury Department plans to borrow nearly $3 trillion between April and June to bankroll the federal response to the coronavirus pandemic.  The government had expected an influx of cash during the April to June quarter, as businesses and families paid their income taxes. But the tax filing deadline was pushed back until July. Meanwhile, with the economy cratering and unemployment climbing to levels not seen since the Great Depression, Congress has authorized trillions of dollars in relief payments, unemployment benefits and loans to small businesses, as well as money for vaccine research and coronavirus testing.

The Treasury Department said it expects to borrow another $677 billion between July and September.

Whoever does the budget in your household knows there is a certain amount of money coming in and the bills say there is certain amount of money going out. If the income is more than the drain on the bank account, then you have leftover money called ‘tangible assets’. This is the greenback in your wallet after you pay your bills.

This money can be saved for future vacations or children’s education or Christmas presents or insurance or property tax or just wasted on the latest desire sold to you by community glutton. This money could be invested hoping to reap rewards or just stuffed into the mattress for security.

The question is ‘What Happens When The Well Runs Dry?’

Let us surmise that all the businesses are closed, all the workers are out of work with no pay, all the schools are closed so the kids are home, there is no entertainment and everyone is told to stay inside.

The sun comes up and the sun goes down. The rain falls on the roof. The weeds grow among the flowers. Day after day after day after day are always the same.

Maybe it will just go away?

The ones we look up to for answers and solutions tell you tomorrow will be better and then hand you a check to keep you going. If you have faith in the words of promise, then hang on.

Without work you can’t pay taxes. You can’t pay for food or rent or gas for you don’t have a paycheck. When businesses are closed there are no taxes paid. Without taxes paid there is no revenue for the government. If the government has no income there are two choices. The government can borrow money from someone else that has the funds OR shut off the flow.

Don’t know what happens when a government goes bankrupt.

Will the police and fire fighters and teachers still show up without pay? Will the streets get repaved without funding? What happens when the water runs out? Who will pick up the trash?

Take it a step higher and the soldiers can lay down their guns and the international food banks will stop. Who is going to keep an eye on the missiles in the ground? Who is going to protect the vaults of nerve gas protected in the mountains with the bars of gold?

I know this sounds like doom and gloom, but while someone spiting on you or touching you threatens your health, your wallet is going down the drain. A stimulus check for $1,200.00 isn’t going to go far. When rent or mortgages are not paid, there will be evictions and collection agencies taking your assets to even the bill.

Will the 30,000,000,000+ unemployed become homeless? Who will feed the children?

The feds can print more money but if it is worthless? Store it for toilet paper.

The 1% that have will not invest in airplanes or infrastructure or school lunches or ventilators, but they cannot escape because this is a global pandemic. The lifestyle will start to drain.

Even if everyone went back to work tomorrow, it will take time to build up revenue lost for months. Pipes have rusted, wiring needs replacement, roofs leak and new inventory needs to be ordered and delivered. Employers need to contact legal aid about possible liability.

Tune in tomorrow and the day after that, for these are strange times.