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Fed's Kashkari suggests 4-6 week shutdown; says U.S. Congress can spend big on coronavirus relief

Coronavirus Aug 02, 2020 04:35PM ET
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© Reuters. Minneapolis Federal Reserve Bank President Neel Kashkari poses during an interview with Reuters in his office at the bank's headquarters in Minneapolis

WASHINGTON (Reuters) - The U.S. economy could benefit if the nation were to "lock down really hard" for four to six weeks, a top Federal Reserve official said on Sunday, adding that Congress can well afford large sums for coronavirus relief efforts.

The economy, which in the second quarter suffered its biggest blow since the Great Depression, would be able to mount a robust recovery, but only if the virus were brought under control, Neel Kashkari, president of the Minneapolis Federal Reserve Bank, told CBS' "Face the Nation."

"If we don't do that and we just have this raging virus spreading throughout the country with flare-ups and local lockdowns for the next year or two, which is entirely possible, we're going to see many, many more business bankruptcies," Kashkari said.

"That's going to be a much slower recovery for all of us."

He said Congress is positioned to spend big on coronavirus relief efforts because the nation's budget gap can be financed without relying on foreign borrowing, given how much Americans are saving.

"Those of us who are fortunate enough to still have our jobs, we're saving a lot more money because we're not going to restaurants or movie theaters or vacations," Kashkari said.

"That actually means that we have a lot more resources as a country to support those who have been laid off," he said.

The Democratic-led U.S. House of Representatives approved a $3 trillion relief bill in May, while Senate Republicans, many of whom have expressed concerns about mounting debt, countered by proposing a $1 trillion aid package last week.

Efforts to craft a compromise appear stalled.

In an interview with ABC's "This Week" on Sunday, Treasury Secretary Steven Mnuchin said President Donald Trump would spend what was needed, but that the deficit was a factor.

"There's obviously a need to support workers and support the economy," he said. "On the other hand, we have to be careful about not piling on enormous amount of debts for future generations."

Kashkari took a different view, stressing both the high level of domestic saving and historically low interest rates.

"I'm not worried about it," he said. "Congress should use this opportunity to support the American people and the American economy."

"If we get the economy growing, we will be able to pay off the debt," Kashkari added.

Fed's Kashkari suggests 4-6 week shutdown; says U.S. Congress can spend big on coronavirus relief
 

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Comments (9)
zibby kbeer
zibby kbeer Aug 02, 2020 10:56PM ET
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lol lock him up... sick of this scare.... come on.... the Spanish flu didn't crash our economy like this did... and it killed 50 million.... enough is enough.. we need real time leaders
Silverbug 19
Silverbug 19 Aug 02, 2020 9:56PM ET
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Fraud.
Semih Unalan
Semih Unalan Aug 02, 2020 6:51PM ET
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This guy must be a communist or something
Eagleelgae Sunnus
Eagleelgae Sunnus Aug 02, 2020 6:36PM ET
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This is a punishment to the savers...
Joseph Spear
Joseph Spear Aug 02, 2020 6:17PM ET
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Taxes don't fund federal spending.
Joseph Spear
Joseph Spear Aug 02, 2020 6:15PM ET
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No citizen owes the Federal deficit. That's just a flat out lie. The narrative does make it easier to push Austerity however. If the citizens ever truly realize this... guillotines
Joseph Spear
Joseph Spear Aug 02, 2020 6:11PM ET
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The Federal deficit is simply the amount of U.S. currency in circulation. It's never meant to be "paid off". If it were, the economy would cease to function. The Fed can never go bankrupt. We literally print out own money, or more accurately, spend it into existence with a push of a button on a Fed keyboard. The purpose of sovereign currency is to serve the economy functioning at its highest production. We are currently a long way from that. Kashkari is absolutely correct. Most people have no clue how our money actually works. Most politicians do, they just lie about it for political purposes.
Max Dividend
MaxDividend Aug 02, 2020 5:19PM ET
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U.S is bankrupt! It is incredible how people with this mentality ends up working at the FED
Edward Chong
Edward Chong Aug 02, 2020 5:19PM ET
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the world needs the dollar. u still dont learn from the 08 crisis. if US is bankrupt u have already fled the country then.
UMA TRUMAN
UMA TRUMAN Aug 02, 2020 5:14PM ET
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you never started paying off the debt, are you starting when you have a few more trillions on top of it? gimme a break
 
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