{"id":698239,"date":"2022-06-13T17:14:00","date_gmt":"2022-06-13T17:14:00","guid":{"rendered":"https:\/\/basicincometoday.com\/?p=13598"},"modified":"2022-06-13T17:14:00","modified_gmt":"2022-06-13T17:14:00","slug":"did-stimulus-checks-cause-inflation","status":"publish","type":"post","link":"https:\/\/radiofree.asia\/2022\/06\/13\/did-stimulus-checks-cause-inflation\/","title":{"rendered":"Did Stimulus Checks Cause Inflation?"},"content":{"rendered":"\n

By: John Csiszar<\/strong><\/p>\n\n\n\n

See original post here<\/a>. <\/p>\n\n\n\n

America stayed afloat during the pandemic thanks to a $5 trillion avalanche of money transferred from the government back to the people during 2020-21. The biggest share, according to The New York Times, was paid directly to households and businesses.<\/p>\n\n\n\n

More than $1 trillion made its way into personal bank accounts through direct stimulus payments and advance Child Tax Credits alone. Trillions more reached them indirectly through enhancements to programs like SNAP.<\/p>\n\n\n\n

Prices soon began increasing across the entire economy<\/a>, and not long after, inflation was rising at its fastest rate in 40 years. <\/p>\n\n\n\n

It\u2019s easy to draw a straight cause-and-effect line between the two events, but the connection between today\u2019s high inflation and the largest cash injection in America\u2019s economic history is a bit more complicated than that.<\/a><\/p>\n\n\n\n

The Payments Fueled Inflation \u2014 But Not All of It<\/h2>\n\n\n\n

Inflation is a normal and natural side effect of economic expansion. As businesses grow, they hire more workers, unemployment falls and households have more money to spend, so demand for goods and services increases, which causes prices to rise.<\/p>\n\n\n\n

The economic impact of the pandemic, however, was neither normal nor natural, and the same could be said for today\u2019s 8.3% inflation rate, which is finally trending down a bit after resting for months at a 40-year high, according to the Wall Street Journal.<\/p>\n\n\n\n

In times of normal economic expansion, prices rise slowly as money slowly enters the economy, so it stands to reason that a sudden influx of trillions of stimulus dollars would send prices up quickly.<\/p>\n\n\n\n

So are the stimulus payments to blame for today\u2019s high inflation, as some voices on the politically toxic subject would have you believe? There\u2019s no question that the payments are responsible for at least some of it \u2014 but how much? <\/p><\/blockquote>\n\n\n\n

The most reliable approximation comes from the Federal Reserve Bank of San Francisco, which estimated at the end of March that government stimulus may have added three percentage points to the national inflation rate.<\/p>\n\n\n\n

There Is No One Thing That Caused Prices To Rise<\/h2>\n\n\n\n

Despite all the controversy, according to Fortune, economists generally agree on some of the causes behind the high inflation that has defined the economy over the last several months:<\/p>\n\n\n\n