[_curious_]

"Given that the stimulus is appropriate for the economy, this is all fine."

Very casually assumptive, but ok, let's go with it...

"It's not anything that future generations have to "pay back. And it's not going to cause a collapse of the dollar."

If this is true, then what's the catch? What then are the adverse affects of the Fed printing money? Does it not inadvertently devalue the dollar? Why not double, triple, or quadruple the "stimulus" if it is, as you claim, appropriate and without any noted trade-offs??

[OscarCunningham]

> If this is true, then what's the catch? What then are the adverse affects of the Fed printing money? Does it not inadvertently devalue the dollar? Why not double, triple, or quadruple the "stimulus" if it is, as you claim, appropriate and without any noted trade-offs??

This is a good question. The answer is that the virus and lockdown are currently causing lots of deflation. So the Fed needs to cause lots of inflation to cancel it out. But if they did four times more then that would be too much and would cause inflation to be far too high.

Personally I suspect the the Fed has undershot and we'll see net deflation over this year and the next.

[_curious_]

"Personally I suspect the the Fed has undershot and we'll see net deflation over this year and the next."

And then what happens?

[OscarCunningham]

Depends how bad the virus is.

[tumetab1]

Example of the catch of the FED buying financial assets, it increases their value:

Before 1 Google stock was worth 1 Tesla car. After 1 Google stock is worth 2 Tesla cars.

The purchasing power of those who hold financial assets is increasing while for those who don't own financial assets stays the same.

[RobertoG]

The GP is saying that the future generations have not to pay back and that the stimulus is necessary now and it will not be inflationary. It's not saying that it's not possible to spend too much and create undesired inflation.

But note that, in the same way it's possible to spend too much, it's possible to spend too little. For some reason there are people who think that is impossible.

[jchook]

The Keynesian theory of economics doesn’t exactly have a spotless track record for modeling and predicting outcomes of non-routine interference in the economy.

[CaptArmchair]

As opposed to other theories such as...?

[jchook]

Austrian economics? Scientific method?