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Well I think a big contributor to the current inflation problem was the last round of stimulus passed right as the pandemic was starting to wind down. At that p
by e4e78a06 5y ago
Well I think a big contributor to the current inflation problem was the last round of stimulus passed right as the pandemic was starting to wind down. At that point unemployment numbers had almost gotten back to normal and most revenue numbers for things like restaurants, travel, etc. had recovered to at least 70% of pre-pandemic levels. And then some states like California dumped even more money into the economy through multi-round state funded stimulus checks over a year after the pandemic started. The unemployment programs also should have started winding down the moment vaccines were widely available rather than 6 months after the fact.
I personally know a lot of people that just dumped their stimulus checks on memecoins or wasted it buying spurious goods. I'm sure the used car and electronics market also was greatly affected by stimulus as well.
The Fed also should have limited its stimulus to buying Treasuries rather than MBS. It makes no sense for the government to buy mortgage backed securities (basically a freebie to homeowners/homebuyers who are already wealthy).
- lazide 5y agoI expect it's years of money printing to avoid a dip in the middle of the largest demand drop we've had in a very long time, following by a resurgence in demand as folks get out and try to get moving again (resulting in them spending a bunch of that money all the sudden). It's pretty predictable IMO. Either we'd have to drop the economy during the demand slackening during COVID (which would have caused a severe recession, because it WAS a recession in activity, and then there would be a bunch of panicked people in the middle of a pandemic who also lost all their income running around and maybe setting even MORE things on fire), or inflate our way out of it. Hopefully we don't see some crazy 25% inflation like the 80's, but I wouldn't rule it out. I'd expect that in a few years it'll flatten out though.
- CPLX 5y ago> a lot of people that just dumped their stimulus checks on memecoins or wasted it buying spurious goods By contrast, when the Bush tax cuts were passed all that money was used for tasteful, ethical spending
- e4e78a06 5y agoNever said TCJA or the Bush era tax cuts were used for good purposes :) but it's probably better for the country in the long run to have excess money flowing into tech VC funds rather than being spent on memecoins and shitty electronics. That way maybe 1% of the funds will have positive returns rather than all of it being set on fire.
- CPLX 5y ago> better for the country in the long run to have excess money flowing into tech VC funds rather than being spent on memecoins and shitty electronics Why
- e4e78a06 5y agoI'm just saying in the absence of any alternatives (which I'm sure there are), it's better to have 1% of trillions of dollars going towards advancing humanity and technology than 0%. I am fully aware that 99% of that money is going to be burned on WeWorks and the like.
- MisterMower 5y agoAt least those tax cuts were on income, by definition money earned through productive activity.
- CPLX 5y agoOh good. I was worried that there were still people earning income from exploitation, rent seeking, monopoly, cronyism, and leveraging principal-agent conflicts of interest but looks like that’s all over now.
- analyte123 5y agoDon't forget that nobody has had to pay student loans for two years.
- lazide 5y agoAlso a lot of rent forgiveness too!
- refurb 5y agoI haven't seen the actual data, but a Stanford economist compared the stimulus payments with actual consumption and it's pretty apparent most stimulus dollars were not spent, but rather used to pay down debt or invest (hello r/WSB!).