No matter how well or poorly the federal government addresses the overall economic crisis, millions of vulnerable people will be left unprotected. Homeless people, incarcerated people, immigrants, people in fringe, off-the-books employment like day labor—unless steps are taken that specifically target them, they are staring into the abyss.
This is fundamentally a local problem. States, counties and cities know where the needs are. They have existing ties through social service agencies and their connections to nonprofits. This is where the expertise lies, but their budgets, lean in good times, are in free-fall right now.
The solution is straightforward. Congress should authorize the Federal Reserve to purchase specially designated state and municipal bonds floated for the specific purpose of serving the health, housing, food and other essential needs of vulnerable populations. There should be no limit to the amount that can be borrowed. And the Fed should purchase these bonds with the intention of retiring them. Effectively, the Fed would be using its money-creating power to finance social protection at the local level.
This facility can be created immediately, with auditing to follow when practicable. There should be no delay in meeting the urgent human needs that will otherwise go unaddressed by more conventional policies.