Savings? You’re so old fashioned. You do realize they’re going to finance this with funny $$ printed out of thin air—right?
No, not printed out of thin air...printed to fund new debt that is issued for each new Dollar/Euro/Yen/Yuan issued.
And it is *debt* that is deflationary.
Well they don’t actually print anything of course, the new money being credits in the banking system. But there are limits to how much of this new money the economy can absorb. The bond vigilantes watch the amount of debt being monetized, and at some point they will drive up interest rates despite the best efforts of the Fed to hold interest rates down. And that is when the Treasury finds itself in a bind. Higher interest rates mean trouble covering interest on the national debt while still paying for “essential services”.