| The insulation of almost everybody from failure is somewhat of a problem. On the other hand this is a unique situation where the economic downturn is being explicitly forced by governments. Companies failing is important, and companies acting in ways in which they try not to fail is important, and all of this protection from failure puts companies who try to be conservative and responsible in their finances preparing to survive bad times are at a significant disadvantage. And with all of this money being injected into the economy, we are absolutely going to get an enormous amount of inflation... eventually. You could see it as already happening with the valuation of the stock market. Markets usually lag consumer prices in inflationary periods, but it looks like this unique situation will be in reverse. I think these are the first steps towards post-scarcity economies where money becomes vastly less important, but the road there will be extremely rocky, I wouldn't be surprised by global famines and world wars before it's all sorted out. Short term though, many of these actions are extremely necessary to prevent a serious depression. What happens when you prevent a global depression by everybody injecting lots of new money into the various global economies is sort of an unknown, if everybody devalues their currency the same then it's not like everybody's currency can be devauled against everybody else's. |
But if basically none of the money is making it into the hands of the average person, will we actually see inflation of anything except stock prices (and probably also luxury goods that are being bought by people who receive most of their income from capital gains)?
There was supposed to be inflation due to QE as well, but interest rates have been low for over a decade and we've barely seen any inflation. Maybe it's because the average person isn't seeing any of it, and the small portion of people who are will only consume so much. Most of it ends up getting shoveled right back into assets.