- The famed venture-capital investor Chamath Palihapitiya told CNBC on Tuesday that a lot of the first round of economic stimulus was “wasted” because companies didn’t allocate it properly and still laid off hundreds of thousands of employees.
- The Social Capital CEO said the US needed to give more stimulus money directly to Americans, as the consumer is the driver of economic growth in the US.
- “The longer we wait to realize that, and the more money we waste and give to zombie companies, we’re just going to push the can down the road, and it’s all unnecessary,” he said.
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Chamath Palihapitiya told CNBC on Tuesday that the US economy was “not in a great place” and that much of the first round of the COVID-19 relief stimulus was “wasted” and wasn’t “functionally useful.”
The billionaire Social Capital CEO said that the “first phase of stimulus, frankly, was quite honestly wasted,” adding: “A lot of this money got sent to companies, those companies didn’t allocate it properly, they still ended up laying off tens if not hundreds of thousands of employees just literally the day after the stimulus said that they could.”
Palihapitiya also said it was unnecessary to give money to “zombie” companies, or companies that cannot pay off their debts without borrowing more because their profits are near zero.
Instead, he said, the US needs to send more stimulus money directly to Americans, because the economy is led by the consumer.
“It’s consumption that drives growth in the United States. It drives jobs and capital allocation. And the more money in individuals’ hands, the better they can be to support businesses, buy different products, and that’s how we grow ourselves up,” Palihapitiya said.
He added: “The longer we wait to realize that, and the more money we waste and give to zombie companies, we’re just going to push the can down the road, and it’s all unnecessary.”
The stimulus law enacted in March included a $1,200 direct payment for Americans earning up to $75,000 a year, plus $500 for each dependent child.
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