The president of the Minneapolis Federal Reserve Bank said Sunday that the U.S. should “lock down really hard” for a few weeks in order to get control of the coronavirus and create the conditions for a more robust economic recovery. In the meantime, Congress should provide all the money that’s necessary to assist workers and businesses hurt by the shutdown.
Appearing on CBS’s “Face the Nation,” Kashkari said the recent surge in national savings, combined with historically low interest rates, means that increased deficit spending can be funded domestically, without relying on foreign investors. “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,” he said. “That actually means that we have a lot more resources as a country to support those who have been laid off.”
The price of not doing so will be high, Kashkari warned. “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,” he said.
Asked about concerns over rising debt levels, Kashkari took a different tack than Treasury Secretary Steven Mnuchin, who on Sunday said that “we have to be careful about not piling on enormous amount of debts for future generations.”
By contrast, Kashkari said, “I’m not worried about it. 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.”