It sounds counter-intuitive, but these massive stimulus bills are aimed mainly at staving off DEFLATION in our economy. They’re basically propping up the value of the U.S. dollar, not devaluing it.
The real solution to this self inflicted problem is to completely open things back up. Come what may. But noooooo.
That may be the short term impact. I am unconvinced that it has long term benefits. Look at the value of the dollar since 1913; this won’t reverse that trend, only accelerate it.
These money creation actions are being taken only because the government has shut down the greater economy. There should be a parallel contraction in government spending at all levels since the government is shut down too. Not reading to much about that except some states want a federal bail-out - which is what is supposed to be included in Pelosi’s bill.
You have it, exactly.
Huh? Deflation occurs when prices go down. Each dollar can buy more stuff, because people like keeping those dollars more than the stuff it can buy. The government isn't propping that dollar value up. They are trying to knock it down. If they get very, very lucky they can return to a 0-2% inflation rate again like before the pandemic.
This example is more likely from rebalancing of supply and demand rather than monetary policy, but gasoline prices have gone from typically $1.20 to $1.90 in about three weeks. I loved taking my $1/gallon Kroger discount and getting 35 gallons for about $7. But I knew that wasn't a healthy price long term.
Yes and a good deal of this stimulus money is not being collateralized by Treasury bonds but rather congressional promises which is the equivalent of an unsecured loan. Trump is bankrupting the Fed.