From what I know, the government can make cash out of thin air, but this causes inflation levels to rise. Or is everything they’re giving out just their surplus?
In: Economics
Savings rates are way up, which means people aren’t spending as much as they were.
This means there is latent inflation in peoples savings.
So now there’s multiple paths that can be taken:
1 – People keep or increase their savings rates (likely until the pandemic is over) – This results on no inflation or even deflation
2 – People start spending fast, bringing their savings rates back to what they were – This results in high inflation until those savings run out
3 – People slowly start spending again bringing their savings rates to what they were – This results in low inflation over the next few years
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