Enough with monetary policies, it's time for real fiscal policies: a case for "socialism"​

The last time I experienced a financial crisis was 11 years ago. I remember the day Lehman went under as if it was yesterday. My macro-economics professor walked into the classroom and said to us: "We are witnessing history. This might be the worst economic crisis since 1929. You are lucky to be at school. Hopefully, this won't impact you by the time you graduate."

For the next 11 years, I was captivated by the world's economy and the capital markets. I became a student in Mathematics and computational finance and worked as an analyst on the side while at school. Over the last decade, I had the opportunity to witness the impact of monetary policies on the capital market, the real estate market and the venture capital/startup world through my experience as an analyst in the capital market, a VC-backed startup founder and real estate investor. And I am grateful to be on the beneficiary side of these policies and the longest bull market the world has ever witnessed.

However, it is not hard to see that beneath the surface of the record-low unemployment rate and the record-high asset prices (real estate, stocks, bonds), there is the reality of record low Active-population rate and an actual inflation rate way above the CPI index suggests. Most asset classes have risen way over 200% over the last decade while 17 million people NET have left the labour force in North America.

This effectively created the biggest wealth gap in history between the asset owners and people who live paycheque to paycheque. More importantly, it also created the "social distancing" between the beneficiaries and the forgotten. While I'm little concerned about the actual dollar value discrepancies, it would be foolish to ignore the potential social impact caused by the social imbalance. While Trump's presidency was supposed to be the wake-up call, most of us in the "mainstream" are too busy worrying about first world problems such as political correctness and too drunk on the continuous asset appreciation that makes us feel rich.

2 weeks ago, all hell broke loose. The long-waited market correction was fuelled by an oil war and the market blew up with the panic of Covid-19. Amplified with a decade of ETF growth, all asset classes entered into a downward spiral at the speed that defies Newton's gravitational constant...

Luckily, our sugar daddies, the Central banks never failed to back us up. Just like they did Every Single Time over the last decade. And if a 50-basis point of rate drop by the Fed last week is not enough. Just a couple of hours ago, it announced to cut the rates to ZERO and launch another $700B quantitative easing.

Federal Reserve cuts rates to zero and launches a massive $700 billion quantitative easing program

Just like that, we are supposed to head back to "normal". The normal where asset prices continue to rise. Where the vast majority of everyday people will never see a dime of this stimulus unless of course, it's through mortgages. Where small businesses continue to struggle to get any funding despite trillions of dollars being pumped into "the economy". Where hundreds of billions of dollars will be used to buy back junk bonds that were once used for stock buybacks...

Monetary policies are easy. It requires no effort and creativity. It's the cheat code that everyone uses that doesn't actually require any work. It's like shooting steroid and cosmetic pectorals instead of actually go on a diet and hit the gym. But at a certain point, we can't just keep kicking the can down the road and expect trickle-down economics to work. It hasn't, it's not and it won't.

So maybe just maybe, this time is different. Because finally, we have reached a point of Maximus-Stimulus where we literally cannot go any lower with the interest rates. Unless the Fed pays us to spend money, which apparently is a thing now in Europe. Maybe we hit a wall this time. Maybe this time, monetary policy actually won't restore our confidence and the governments actually have to come up with some real fiscal policies that require the political will to help the people at needs. The thousands of small business owners who will be struggling to stay alive. The small landlords who will have trouble paying mortgages. And the millions of people they employ who are living paycheque to paycheque but forced to stay home.

Maybe this time, we will get a recession that actually forces us to take real actions. To come up with real fiscal policies that actually create jobs. Perhaps, a labour force to fix our infrastructures and a universal healthcare program in the United States. Let's not forget what brought us out of the Great Depression. So maybe just maybe, this time around, all of us can benefit from some socialism and not just Wallstreet and the asset owners.

P.S: I'm not a "socialist/communist". I am an entrepreneur who simply believes that a degree of "socialism" is good for social stability. And a larger pool of middle class and more people in the labour force are all beneficial for businesses and the overall economy. Millionaires won't buy 10 iPhones and they certainly won't rent 3 apartments.