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Economists from the St. Louis Federal Reserve estimated that the stimulus contributed about 2.3 percentage points to inflation. The idea that pumping ~$800 bil

by hvs 4y ago

Economists from the St. Louis Federal Reserve estimated that the stimulus contributed about 2.3 percentage points to inflation. The idea that pumping ~$800 billion into the economy wouldn't affect inflation and the economy in general seems unlikely. https://files.stlouisfed.org/files/htdocs/publications/review/2023/01/20/demand-supply-imbalance-during-the-covid-19-pandemic-the-role-of-fiscal-policy.pdf https://files.stlouisfed.org/files/htdocs/publications/revie...

ck2 4y ago
In the 20 years after 9/11 the US spent $8 TRILLION on war Not $800 Billion, rather $8000 Billion What did that do to the economy/prices/inflation and why isn't that headline news every day for 20 years? https://www.brown.edu/news/2021-09-01/costsofwar https://www.brown.edu/news/2021-09-01/costsofwar
- hvs 4y ago
  I agree. But "whatabout" isn't argument to keep doing it.
  - gumby 4y ago
    I didn't interpret the comment that way. It seems likely the blood and treasure squandered on those unnecessary wars held back growth by misdirecting investment money into war rather than being traditionally inflationary (as it was, say, in Viet Nam or WWII). Now the US is spending on the order of $0 on the UKR war for an enormous IRR, and that's controversial.
- mc32 4y ago
  Moreover those wars add to the count of people unable to work as a consequence of injuries from being sent off to war. The people in Washington don’t blink at sending the military out to fight their ideology for them.
- UncleEntity 4y ago
  Probably because that money wasn’t pumped directly into the US economy for the purpose of keeping the economic engine moving. You build a bomb, you blow up the bomb, that’s money that’s just gone for good. You give people money, along with negative interest rates so they don’t just hold on to the money, and that money spread out into the whole economy causing the price of goods to increase because of more competition for a finite amount of resources needed to produce said goods. That being said, that 8 trillion dollars could have undoubtedly been spent in a more productive manner but that’s not the world we currently find ourselves in.
  - vkou 4y ago
    > You build a bomb, you blow up the bomb, that’s money that’s just gone for good. The bomb is gone, the money isn't. It's still circulating, because the people working for the defense contractors who built the bomb got paid. The money was also created by the government borrowing it (As the war was financed by deficits). In our current financial system, loans expand the money supply. There's no significant difference in the impact on the economy between paying defense contractors money to build a bomb that you then explode, and paying them to sit around and pick their nose.
    - UncleEntity 4y ago
      Yep, that’s what’s called the broken window fallacy.
kasey_junk 4y ago
No they specifically don't say that. They say that fiscal support caused the 2.3 percentage point inflation. Fiscal support is defined by divergence in all governmental spending. The PPP program for instance is included in that, which has been widely proven to have not been used as direct employee support [0]. The PPP program was almost a trillion dollars that flowed to business owners, yet never seems to get mentioned in talk of inflation. Weird that. [0] https://www.stlouisfed.org/publications/regional-economist/2022/jul/was-paycheck-protection-program-effective https://www.stlouisfed.org/publications/regional-economist/2...
- sokoloff 4y ago
  You seem to be trying to draw some bright line between "stimulus" and "fiscal support". I don't quite see the line yet; they seem the same to me.
  - kasey_junk 4y ago
    The poster I was responding to used $800 billion which is the number attached to the direct EIP payment in the US that went to people on an income adjusted basis. Colloquially that is usually referred to as “stimulus checks”. In addition to that the US had a ~950 billion program for businesses, PPP. I assumed from context that the poster was describing the former. Their link does not create a bright line, instead it commingled both programs (and any other increased governmental spending).
  - llbeansandrice 4y ago
    That's because when people refer to "stimulus checks" they're exclusively referring to the ~$1800 everyone received while actively ignoring PPP "loans".

by hvs 4y ago

ck2 4y ago

In the 20 years after 9/11 the US spent $8 TRILLION on war Not $800 Billion, rather $8000 Billion What did that do to the economy/prices/inflation and why isn't that headline news every day for 20 years? https://www.brown.edu/news/2021-09-01/costsofwar https://www.brown.edu/news/2021-09-01/costsofwar

hvs 4y ago
I agree. But "whatabout" isn't argument to keep doing it.
- gumby 4y ago
  I didn't interpret the comment that way. It seems likely the blood and treasure squandered on those unnecessary wars held back growth by misdirecting investment money into war rather than being traditionally inflationary (as it was, say, in Viet Nam or WWII). Now the US is spending on the order of $0 on the UKR war for an enormous IRR, and that's controversial.
mc32 4y ago
Moreover those wars add to the count of people unable to work as a consequence of injuries from being sent off to war. The people in Washington don’t blink at sending the military out to fight their ideology for them.
UncleEntity 4y ago
Probably because that money wasn’t pumped directly into the US economy for the purpose of keeping the economic engine moving. You build a bomb, you blow up the bomb, that’s money that’s just gone for good. You give people money, along with negative interest rates so they don’t just hold on to the money, and that money spread out into the whole economy causing the price of goods to increase because of more competition for a finite amount of resources needed to produce said goods. That being said, that 8 trillion dollars could have undoubtedly been spent in a more productive manner but that’s not the world we currently find ourselves in.
- vkou 4y ago
  > You build a bomb, you blow up the bomb, that’s money that’s just gone for good. The bomb is gone, the money isn't. It's still circulating, because the people working for the defense contractors who built the bomb got paid. The money was also created by the government borrowing it (As the war was financed by deficits). In our current financial system, loans expand the money supply. There's no significant difference in the impact on the economy between paying defense contractors money to build a bomb that you then explode, and paying them to sit around and pick their nose.
  - UncleEntity 4y ago
    Yep, that’s what’s called the broken window fallacy.

kasey_junk 4y ago

No they specifically don't say that. They say that fiscal support caused the 2.3 percentage point inflation. Fiscal support is defined by divergence in all governmental spending. The PPP program for instance is included in that, which has been widely proven to have not been used as direct employee support [0]. The PPP program was almost a trillion dollars that flowed to business owners, yet never seems to get mentioned in talk of inflation. Weird that. [0] https://www.stlouisfed.org/publications/regional-economist/2022/jul/was-paycheck-protection-program-effective https://www.stlouisfed.org/publications/regional-economist/2...

sokoloff 4y ago
You seem to be trying to draw some bright line between "stimulus" and "fiscal support". I don't quite see the line yet; they seem the same to me.
- kasey_junk 4y ago
  The poster I was responding to used $800 billion which is the number attached to the direct EIP payment in the US that went to people on an income adjusted basis. Colloquially that is usually referred to as “stimulus checks”. In addition to that the US had a ~950 billion program for businesses, PPP. I assumed from context that the poster was describing the former. Their link does not create a bright line, instead it commingled both programs (and any other increased governmental spending).
- llbeansandrice 4y ago
  That's because when people refer to "stimulus checks" they're exclusively referring to the ~$1800 everyone received while actively ignoring PPP "loans".