News ID: 266883
Published: 0425 GMT March 14, 2020

US should give citizens $1,000 a month to limit coronavirus impact on economy, strategist says

US should give citizens $1,000 a month to limit coronavirus impact on economy, strategist says


The US should follow Hong Kong’s lead and give a cash handout to its citizens amid the coronavirus pandemic, a strategist said.

“This is not a financial crisis,” Andrew Freris, CEO of Ecognosis Advisory, told CNBC’s “Capital Connection.” “It is a crisis about the real economy.”

He noted that in 2008, central banks used stimulus to respond to the collapse of the US mortgage market — but he said nothing of the kind was happening right now.

“The concern here is what’s going to happen with the real economy,” he said. “Now I’m afraid pumping in more money to support the financial sector does absolutely nothing where the real problem is.”

Although he said it was good news to see central banks like the US Federal Reserve take steps to support financial markets, Freris added that lowering interest rates would do “absolutely nothing” to address the core cause of the current economic turmoil.

Central banks around the world, including the Fed, Bank of England and Norges Bank have cut their key interest rates in an attempt to offset some of the economic damage being wreaked by the coronavirus pandemic.

“Hong Kong, however much it’s been criticized, they did something quite right — they gave money to the people, 10,000 Hong Kong dollars ($1,287) for all its individual citizens,” Freris said.

“The United States has got 330 million people. If they start giving $1,000 per month to every single American, within three months they would have done about a billion plus, and they will still have plenty of money still to come — and this is money that will go straight into consumption.”

Hong Kong’s government announced in late February that it would be giving every resident over the age of 18 a cash payout of 10,000 Hong Kong dollars, part of a package of measures aimed at reducing the financial blow to the territory from the COVID-19 outbreak and months of protests. At the time, the city’s Financial Secretary Paul Chan said the move could boost Hong Kong’s economy by around one percent.

The global economy is expected to take a significant hit from the coronavirus pandemic this year, with the Institute for International Finance warning global gross domestic product (GDP) could be as low as one percent this year — far below last year’s 2.6 percent growth.

Meanwhile, financial markets around the world have suffered huge losses in recent weeks. The pan-European Stoxx 600 recorded its biggest one-day loss ever on Thursday, while the Dow Jones industrial average suffered its worst session since the “Black Monday” market crash in 1987.

While Freris praised Hong Kong for its cash handout initiative, some strategists claimed it would do little to encourage consumer spending amid the coronavirus crisis.

Speaking to CNBC’s “Capital Connection” following Hong Kong’s budget announcement, David Webb, editor of, noted that the amount the government had budgeted for its cash handout initiative had some implications for how effective it might be.

“They’re budgeting 71 billion, that implies 7.1 million people over the age of 18, but in fact there’s only about 5.5 Hong Kong permanent residents in Hong Kong,” he said. “So that indicates there’s about 1.6 million overseas. Once you are born in Hong Kong to (a) Hong Kong Chinese parent, you have permanent residency for life basically and you can be living in Birmingham or Vancouver and still claim your 10,000 dollars. So it’s rather a wasteful way of returning the reserves to the public and not at all targeted in terms of need.”

Meanwhile, Alicia Garcia-Herrero, chief economist for Asia at Natixis, told CNBC’s “Street Signs Europe” earlier this month that she was skeptical the “helicopter money” would have the desired result.

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