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Category: Soap Box

Soapbox: Millions, billions, trillions – ‘free’ money!

Kanye West has achieved a great deal and seems to have huge ambitions, but is he really serious about running as a candidate for the US presidency? L...

23 July 2020

Gary Mead

Kanye West has achieved a great deal and seems to have huge ambitions, but is he really serious about running as a candidate for the US presidency?

Leave aside questions about whether he has registered his candidacy in time in several states, he has already wetted the appetites of some (by no means all), which may have boosted his popularity. He has suggested that if he was to be the 46th US President then “everybody that has a baby gets a million dollars”.

That’s a lot of dollars. Almost $4 trillion in fact – has Kanye thought this through?

Lots of American babies

The US birth-rate dropped to its lowest in more than 30 years in 2018. Nevertheless, there were 3,788,235 babies born. If Kanye really was to give each new baby a cool million, that would be around double what the US government is injecting into its economy.

On 25 March the US Congress passed the CARES (Coronavirus Aid, Relief and Economic Security) Act, a mosaic of handouts totalling almost $2 trillion aimed at delivering critical assistance to the US economy. That’s the biggest hand-out in its history but it still may not be enough. There’s talk of a second big US stimulus package but Congress will have to get its skates on if that’s to happen before it breaks up for the summer.

The era of big debts

The Organization for Economic Cooperation and Development (OECD), the collection of 36 member states which collectively account for more than 60% of the world’s GDP, has just published a report which says the total amount of government securities issued between January and May 2020 reached $11 trillion. For the overall OECD, outstanding central government debt is expected to increase from $47 trillion in 2019 to $52.7 trillion at the end of 2020.

This report does not take into account the €750 billion ($858 billion) package agreed at long last by the European Union leaders as the EU’s economic stimulus package. The EU proposal will see it borrow that money and issue debts – all of which will in theory be repaid by 2058.

We could argue that the world seems to be getting too comfortable with ridiculous numbers, but then, when did you last manage to get a bank loan which you promised to repay in 38 years’ time?

Have some free money

In the context of these vast sums now being borrowed, Mr. West’s one-million-per-baby thought, casually tossed-out though it may be, does not seem entirely crazy. It simply edges forward a variant of UBI.

UBI (universal basic income) is an idea which dates back at least to the 16th century. Thomas More, Lord Chancellor to Henry VIII, floated the suggestion of a UBI in his book Utopia.

Since then types of UBI have been tried in many places – Finland, Namibia, a Canadian province, Alaska (where every man woman and child gets around $1,600 or £1,300 a year paid into their bank accounts) – and now Spain.

Spain has agreed to introduce a ‘Guaranteed Minimum Income’ scheme as a relief for families hit by the economic slowdown. This will initially go to around 225,000 Spaniards and cost some €5.5 billion a year. The intention is that the Spanish experiment will not last, but people understandably become accustomed to receiving what they see as free money.

Jokers all around

Could the USA really accept a Kanye West in the White House? It would not be the first time a person who occasionally seems unstable, given to making off-the-cuff inflammatory statements, gaffe-prone and relatively inexperienced, has sat there. Ronald Reagan did it for a few years, after all.

At the heart of this all is a serious point however.

Covid-19 has thrown all the cards in the air and they have yet to fall down into what will inevitably be a new place.

So, as we ponder showmen and presidents, bailouts and billions, the only certainty is that, that new place will be uncertain, strange and possibly menacing. It will be one in which many former certainties are rocked. The world’s universal currency – the US dollar – may no longer be king. But there is another universal currency at your fingertips, one that even Sir Thomas More held to be true, five hundred years ago. It’s more reliable than the dollar, it’s stable, increasing in value (currently at $1886/Oz), and now available to buy, sell, save and spend, simply and safely with Glint and  – of course I’m talking about gold!

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