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
There’s some mixed opinions but in basically all of them, you’re not going to see the effect as immediate and certainly not before most people have gotten their payments. Per [Janet Yellen](https://www.cnn.com/2021/03/14/investing/janet-yellen-inflation/index.html) at least:
>”Policymaking is about identifying and addressing risks, and the most significant risk we face is a workforce that’s scarred by a long period of unemployment,” Yellen said on ABC’s “This Week.”
>Yellen added that prices fell substantially last year when the pandemic surged and that she expects to see them move up again as the economy recovers.
>”That’s a temporary movement in prices,” she said. “To get a sustained high inflation like we had in the 1970’s, I absolutely don’t expect that. We’ve had a very well anchored inflation expectations, and a Federal Reserve that’s learned about how to manage inflation. So, I don’t think it’s a significant risk and if it materializes, we’ll certainly monitor for it, but we have tools to address it,” she added.
So basically, prices and inflation ebb and flow – even without the stimulus we likely would have seen some additional inflation once the pandemic dies down a bit and while yes, the stimulus will likely contribute as well, it’s going to be temporary. With an added note/caveat:
>”But, of course, we have to make sure that the economy’s budget is on a sustainable path and this is something that we can afford. In the longer run, we need to get deficits under control to make sure that our fiscal situation is sustainable.”
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