The News Radar

Timely links to external news and articles, usually valuation related, with occasional commentary.

Originally posted Friday, 29 April 2022
Were The Stimulus Checks A Mistake?

It wasn’t long ago that the U.S. economy needed a shot in the arm. Millions of Americans had lost their jobs as the country shut itself down to slow the spread of a deadly virus. At the time, policymakers, advocates and economists agreed that Americans needed immediate relief — and so they quickly acted on it.

Lawmakers passed a $2.2-trillion stimulus package in March 2020, followed by two more installments of COVID-19 relief later in 2020 and then again in 2021. In total, it added up to one of the most generous fiscal responses to the virus globally.

There would be a catch, though. As U.S. prices continue to rise by rates not seen in decades, it’s become clear that the stimulus came at a significant, unintended cost: inflation.

Betteridge's law, where for any headline that ends in a question mark the answer is always "no", strikes again. Introducing $2.2 trillion dollars into the money supply obviously is relevant and worthy of both inspection and criticism, (particularly when it happens as it did here, immediately before generational-high inflation spikes). But to not mention the decade-long expansionary monetary policy of the Fed here is derelict. At least the stimulus was intended to go to the citizens being hurt the most, rather than to prop up the asset prices of the already wealthy.