- Famed VC investor Chamath Palihapitiya told CNBC 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 that the US needs to focus on increasing the direct amount of stimulus given 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 give to zombie companies, we're just going to push the can down the road and it's all unnecessary," he said.
Billionaire Chamath Palihapitiya told CNBC on Tuesday that the US economy is "not in a great place" and much of the first round of the COVID-19 relief stimulus was "wasted" and "not functionally useful."
"That first phase of stimulus ... was quite honestly wasted. 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," the Social Capital CEO said.
Palihapitiya also said that it's unnecessary to give money to "zombie" companies, or companies that cannot pay off their debts without borrowing more because their profits are near zero.
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Instead, he said the US needs to increase the stimulus it sends 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, to 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 give to zombie companies, we're just going to push the can down the road and it's all unnecessary."
The first round of stimulus in March included a $1,200 direct payment for all individuals earning up to $75,000 a year, plus $500 for each dependent child.