Fed Should Invest in Gift Cards – The Mercury News

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The Federal Reserve should stop buying mortgages and invest its money in restaurant gift cards.

The housing market has received enough help from the country’s central bank – perhaps too much given the soaring prices we’ve seen. The Fed has used all the tools at its disposal to keep mortgage rates at historically low levels, well below where they should be. This assistance includes the purchase of more than $ 1 trillion in mortgages.

If the Fed can bail out the housing market, why can’t it do the same for the restaurants that are still suffering?

Pandemic grill pain is strong, according to statistics collected by the Independent Restaurant Coalition, which supports the replenishment of the Federal Restaurant Revitalization Fund.

More than 90,000 American restaurants and bars have closed. Industry losses exceed $ 280 billion, but targeted aid has only been $ 29 billion. Half of the owners could not pay the September rent. To make matters worse, costs are skyrocketing. Think about the 57% rise in prices for beef and veal or grain (up 55%) or eggs (up 37%) or cooking oils (42%).

Now look at the jobs numbers: American restaurants employed 11.5 million people in November, still down 750,000, or 6% from pre-pandemic levels. California restaurants employed 1.26 million workers, down 225,000 or 15% from February 2020. Yes, nearly a third of the food service job losses occurred in California.

In addition, business has not been much better lately in many parts of the country. The omicron variant frightened some guests. Just look OpenDoor service reservation statistics compare the activity of the last three months to that of a year earlier.

Nationally, OpenDoor recorded 8% fewer bookings. California is also down 8%, the 17th worst performance of the 40 states tracked. New York was the hardest hit, down 32%. Nevada was the best, up 35%.

And meditate on some California food centers. Reservations in San Francisco are down 48%, behind just 52% for Minneapolis in 47 tracked markets. Los Angeles is down 20%, the 18th largest drop. Beverly Hills was down 14%, No. 24. And San Diego was up 1%, the 15th best result.

The biggest winner? Las Vegas, up 32%.

So how would the Fed bailout buy these gift cards? Well, some financial innovation is needed.

Wall Street was smart enough to learn how to (hum, take advantage of) mortgages conditioned on negotiable raw materials. So, can it be that hard to collect gift cards – a much simpler financial gadget – to resell them en masse?

The Fed could then resell the gift cards to recoup their investment – perhaps directly to citizens or large retailers or government agencies tasked with feeding the poor and hungry across the country.

Yep, that’s a ridiculous idea. But so is trying to keep the economy buzzing by providing grants to people with good jobs, strong credit histories, and available cash.

You know, home hunters and homeowners looking for loans to buy or refinance a home.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be contacted at [email protected]


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