When purchases are paid, corporations make a profit, and when purchases are paid, debt is eliminated.
The government can best bail out industries by injecting cash to pay for purchases.* This will sustain the corporation revenue “top line.” This will keep them whole through the crisis. During a recession, a single application of cash can both sustain business profit and reduce consumer debt.
What industries lose in a recession is not profit. They lose revenue. Profit does not keep business doors open. Revenue does. Revenue is king to the survival of an industry, not profit. Profit is a motivator, not the creator of infrastructure or a sustainer of industry.
Sales make revenue. Reduced revenue is the loss, not reduced profit. Reduced sales destroy an industry, not reduced profit.
The cost of goods sold is the cost of doing business. It can not be paid for by a third party for the cycle of capitalism to survive.* Costs are covered by sales revenue from customers. After revenue is counted and the cost of doing business is covered, the remainder is gross profit. The payment of costs also supports suppliers, energy, and labor. This cycle keeps capitalism alive and growing.
To stimulate the economic system in a recession, industries do not need to have profits restored. What a thriving industry depends on is revenue. Injecting cash to support sales protects the industry’s profitable operation and maintains the availability of essential products.
An economic stimulus is best granted to consumers to pay to businesses.
* Any injection of cash by the government is essentially a loan because the source is going to be restored (plus interest on the bonds sold) by taxes collected from the recipients and from several points in the cycle.
