Why a No-strings $1,000 Cash Handout is a Terrible Idea

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Talk of a $1,000 handout for Americans to help them with difficulties during the coronavirus outbreak is starting to gather pace, but in many ways this is the one of the worst things that they could do. Successive governments have done their utmost to widen the gap between rich and poor as well as helping foster a society based on rampant commercialism, all of which means that those most in need of the money are the least likely to use it wisely.

Sudden Injections of Money Can Do More Harm Than Good

For many in the US, $1,000 will not make a huge difference to their lives. These are people who likely see that amount of money as largely inconsequential given their monthly income and outgoings, although it might help with grocery bills or a mortgage repayment. For these people, $1,000 will be nice but not life changing.

However, for others who live hand to mouth or rely on food banks, $1,000 could be, temporarily at least, a life changing amount of money. And this is where the problems start. To those not used to having money, a sudden injection of it can do more harm than good. The negative impacts can range from the money being spent on frivolous items like clothes or technology to it being used to fund damaging addictions.

Existing Mindset is the Driving Force

Lottery winners are a perfect example of how one’s existing attitude towards money is the biggest determining factor when it comes to using it, with nearly 1/3 ending up broke. Of course, the amount of money we’re talking about in this case is vastly lower, but the principle is the same.

In his book Rich Dad, Poor Dad, Robert Kiyosaki explains the difference in the mentality of the rich versus the poor. He explains that the rich use every opportunity to make money work for them, which is how they stay rich. The poor on the other hand remain so because they spend every penny that comes in, or get themselves into debt buying things that they can’t afford. In short, they aren’t careful with the money they have, so why should we expect them to be careful with a $1,000 gift?

The Government Wants You to Spend

The concept of a government handout has gathered pace this week, especially since rumors of further bailouts for companies and banks have sprung up, and people have not forgotten 2008. There are a number of better ways the government could go about the task of helping those in need, but the likelihood is that they want people to spend in order to help boost the economy and business again.

So what should you do instead with your $1,000? Of course, we can’t tell you what to do, but there’s a certain cryptocurrency that might just take your fancy. Incidentally, the cost of mailing out a $1,000 check to every US citizen individually would total something in the region of $165 million in traditional postal fees. For comparison, in February, the PlusToken scammers moved 12,000, then worth $117 million, from one wallet to another. The cost? $0.13.

Just saying.