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October 25, 2021

Covid-19 financing accelerates household inequalities – leading macroeconomic influencers

About 270,000 children below 12 years have active share portfolios across Australia, while over a million are growing up in poverty.

Economists believe that children without healthy share portfolios, savings or any real job prospects will be financially fraught as economies brace for a depression relapse.

Jim Stanford

Jim Stanford, economist and director of the Centre for Future Work, based at the Australia Institute, retweeted an article shared by Alison Pennington, a senior economist at the Centre  for Future Work, at the Australia Institute, on the pandemic era financing by central banks during the early days of the virus crisis to exacerbate the intergenerational wealth divide.

Pennington believes that the pandemic financing has forced cash-loaded households to throw away their savings either in real estate or share accounts, especially in their children’s names. Consequently, as richer households prepare to secure the lives of their kids, about 1.7 million people depending on disaster payments and others facing pay cuts and job losses, are expected to be worse off than before the pandemic.

The pandemic era is therefore likely to increase the levels of inequalities between households, where everyone will not have the cash to throw away on investments. Additionally, the Fed’s austerity and a crashing labour market has caused youth unemployment rates to more than double the adult average.

Stephany Griffith-Jones

Stephany Griffith-Jones, financial markets director at the Initiative for Policy Dialogue at Columbia University, and former professorial fellow at the Institute of Development Studies, shared an article on Labour calling for a back-up plan to tackle the Covid-19 crisis in England in the form of compulsory wearing of masks and reinstating work from home measures.

Rachel Reeves, serving as Shadow Chancellor of the Exchequer, believes that the Covid-19 vaccine programme has also been stalled for too long, and needs to be improved for wider distribution and administration. Rishi Sunak, the Chancellor of the Exchequer, however, suggested that the data did not suggest moving immediately to the government’s back-up plan to tackle the pandemic.

The measures aim to protect the National Health Service (NHS) from being overwhelmed by the pandemic, including mandatory Covid-19 passports. While the currently in place Plan A focuses on booster jabs for the vulnerable groups, a single dose for healthy children aged between 12 and 15 years, and encouraging vaccinations, Ms Reeves believes that the government should ensure that Plan A is working effectively, along with introducing parts of the plan B to reduce infection transmission rates in England.

Diane Coyle

Diane Coyle, economist and Bennett professor of public policy at the University of Cambridge and a former advisor to the UK Treasury, retweeted an article shared by Daniel Gusev, managing partner at Gauss Ventures, on how the Covid-19 pandemic has accelerated the shift to data and faster analysis.

Amazon and Netflix, for instance, are relying on instant data to monitor deliveries as well as understand users’ over-the-top (OTT) viewing trends. As a result, the Covid-19 pandemic has forced governments to adopt digital measures such as tracking cards transactions and restaurant bookings. Although in their nascent stages, these technologies such as sensors and other digital devices have helped policymakers view the economy better and improve it.

Reports suggest that real-time payments have increased by 41% during the Covid-19 pandemic in 2020, while more devices and machines were fitted with sensors to identify supply chain bottlenecks and other problems. Additionally, the pervasiveness of GovCoin, or cryptocurrencies issued and controlled by central banks, currently in its final stages of piloting by China and being considered by 50 other countries, is expected to provide a treasure-trove of information and real-time data to understand how the economy functions.

 

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