Billionaire venture capitalist Chamath Palihapitiya says the US government’s efforts to get money into the hands of taxpayers have been largely misguided and futile.
The CEO of Social Capital returned to CNBC for part two of an interview on the state of the American economy. He says lawmakers in Washington, DC need to greatly expand their efforts to directly increase consumer spending, and the $2,480,000,000,000 worth of stimulus measures passed so far won’t cut it.
“The one way that we have tried to get money to consumers is by giving it to companies in the hopes that it trickles through those companies back to employees. And what I will tell you is I think we will be disappointed by that. I think that a lot of companies that got support will still be struggling when the terms of those grants and loans fall off, which is September.
And unfortunately, I think we may see large waves of layoffs that just happen in Q4 heading into Christmas time of 2020. Instead, I think we really need to think about direct capital injections into the hands of people.”
He’s also questioning why money was allocated for Harvard and other universities with large endowments.
You have a $41 billion dollar endowment.
This is a fucking joke. https://t.co/1aVmDFBcWb
— Chamath Palihapitiya (@chamath) April 20, 2020
“It’s a complete joke and it’s a perversion of what this program is supposed to be. It will take a while for us to really figure out the unintended consequences of this.”
Despite following rules set by Congress that allowed the elite private university to qualify for government support in the amount of $8.7 million, Harvard capitulated on Wednesday and agreed to return the relief package, funded by taxpayers’ dollars, after initially rebuffing President Trump’s demands to give it back.
“If there are multi-millionaire land developers that are getting PPP [relief] but not small businesses that really employ one or two people, or they work with banks that don’t have the connectivity into the government whereas the large banks were able to facilitate and mobilize credit or payments to their best businesses, all of these things are probably what happened.”
Palihapitiya is a high-profile Bitcoin supporter who believes that if the US dollar plummets in value, BTC could exponentially rise in price and become a digital form of gold.
To keep the gears of the US economy from grinding to a halt, he says it’s time for lawmakers and regulators to exercise direct and unequivocal compassion for their citizens.
“My point is, right now we are way too tilted into things that are opaque, that are difficult to administer and that may not have the intended consequences we want. Of every dollar that we’ve given out, fiscal and monetary, what we’re talking about is less than five cents that has gotten into the hands of the US consumer. All I’m saying is, why not 10 or 15 cents or 20 cents? And keep most of the other programs as they are.
Or why not be incrementally spending, going towards student debt or towards direct payments to US taxpayers? These are not bad ideas and in a moment like this…
We are that compassionate, and we can be that compassionate, and I don’t understand instead why we continue to defend practices that were not justifiable at any point in time, but particularly in a moment like this where we can see that an entire US economy was completely unprepared for any form of externality of exogenous shock.”
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