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
Despite what doomsayers claim, inflation isn’t just a “print money = more inflation”.
If monetary policy is loose in an economy that is running close to capacity, then yes it will have a higher likelihood of causing inflation. In an economy with surplus capacity, demand shocks (ie COVID), additional stimulus is needed to head off deflation. In fact the Fed would dearly love to see some signs of inflation since deflation is a much worse economic situation.
At this point, it was clear that simple monetary stimulus in the form of QE was insufficient and direct fiscal action was needed to mitigate rather bad employment numbers. 1.9T is large, but the US economy is 25 trillion annually.
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