“I see, especially on the small business front, I mean, some sectors of the economy are doing well. If you are a white collar employee like me … you are able to work from home. You are not really affected by this pandemic,” Kishekari told CNN. BSC confront the nation. ”But there are many sectors of the economy that are still being devastated. The travel and tourism industries, the front-line service industries, the restaurants, and this is where you see massive job losses and bankruptcies. This will continue to worsen and the bleeding continues. “
Kashkari said there are nearly 11 million Americans still struggling to pay their bills and put food on the table, and that as long as the problem persists for consumers, there will be “spillover effects” on other areas of the economy.
“The reason why the economy has rebounded strongly, as it did in June and July, is that the Congress was very aggressive in the spring,” Kishkari added. “We need Congress to keep moving so the recovery gets stronger.”
He warned that it took 10 years to rebuild the labor market from the Great Recession and that the country could avoid going through a similar experience now if Congress is more aggressive at it. Spending In the immediate moment, not the future.
While Kashkari acknowledged that the Fed could use wide-ranging tools such as lowering interest rates and quantitative easing, he stressed that it could not fix certain areas of the economy that were being hit, without further stimulus from the government.
“We don’t have the ability to direct aid to one group or one district or one sector. Only Congress can do that. And it is much cheaper if you can keep whole people at the front end, then if we have these constant layoffs,” Kashkari said. This ongoing bankruptcy and the attempt to rebuild it in the back end, ”which takes much longer. In fact, this becomes more expensive for taxpayers. “
He argues that now is the best opportunity to provide assistance without serious economic fallout given the ability to borrow at extremely low interest rates.
“Right now, the United States government can borrow at very low rates. Now is the time. If there is a need to manage the deficit, now is the time to go ahead and use the government’s financial capacity to provide for it,” Kashkari said. Changes. We have to make some decisions about our financial home in order to have some balance, but now is the time to help. “
Kashkari’s statements came days after one of his colleagues, Federal Reserve Chairman Robert Kaplan, He said he saw no need to expand asset purchases from the central bank to boost the economic recovery.
“I would be skeptical of the benefits of doing more,” Kaplan told Bloomberg Radio.
Kaplan believes that “bond purchases need to be curtailed, and the Fed’s balance sheet growth needs to be curtailed” when the crisis begins to unravel.
“I don’t think it’s healthy for me Markets Being addicted to, or too dependent on, the existence of the Federal Reserve … breeds vulnerability, ”Kaplan added.
Negotiations on Capitol Hill currently remain stalemate as Democrats and Republicans continue to disagree over the price of the stimulus package. President Trump said on Friday he wanted an even bigger stimulus package than lawmakers had proposed, a startling reversal that came amid reports that Treasury Secretary Stephen Mnuchin was about to discuss a $ 1.8 trillion stimulus proposal with House Speaker Nancy Pelosi, California. Friday.
Pelosi rejected the agreement, calling it “a step forward and two steps back” on Saturday. However, she indicated that there was still hope that progress towards an agreement could still be made. Currently, the most recent public offer from Democrats is $ 2.2 trillion.