[adam_arthur]

False dichotomy. It should have been done, but to a much lesser magnitude. That is plainly obvious to any rational minded person.

The Fed also should have considered velocity in employment gains. They basically waited until labor market was already overheated to do anything... which means many are likely to lose their jobs in the fight with inflation now.

Unfortunately the basic law of economics and real productivity vs nominal currency units has continued to exist, despite it being 2022.

[shakezula]

> That is plainly obvious to any rational minded person

No, it’s not. There was a real economic crisis, and hindsight alone allows you to take that position.

[adam_arthur]

There were 4 major bills passed, as well as many executive actions. This was not a one time piece of legislation that caused inflation.

The latest major bill, $2T dollars worth, was passed 1 full year after Covid lockdowns started... at a time where markets were reaching bubble levels, housing was appreciating at a double digit rate, unemployment rate was already dropping .5-1% per month.

Student loans are still in forbearance even today, despite being proven to be largely regressive and contributing to inflation (billions a month in spending power). Those who didn't go to college are footing the bill for this. It seems you're not a very rational minded individual... or simply misinformed of the timeline.

Many people don't seem to understand that a labor market this tight is a death knell to the downtrodden. They will be laid off when unemployment spikes after the Fed achieves their inflation fighting goals. Defeating the entire purpose of the stimulus and effectively making that money wasted, while we're left with high inflation and worse wealth inequality than ever before.

The feel good policy of spending excessively and avoiding inflation fighting has proven to fail many times in history. The 1970's in the US being the most relevant.

Also worth noting, that Larry Summers, the treasury secretary under Clinton argued exactly that the ARP would be inflationary. There were many voices calling this out that were ignored

[dntrkv]

And there were a ton of voices saying the exact opposite. That we must do everything we can to avoid another 2008.

There will always be the voices on both sides, the problem is that it's not always easy to know who to listen to at the time.

> The feel good policy of spending excessively and avoiding inflation fighting has proven to fail many times in history

There are many examples of the opposite.

The question isn't whether we spend or not, it's how much. That's the difficult part to get, especially in a democracy (doubly so in the US political system where you try to get as much done in the half a year that you can actually govern).

[adam_arthur]

It's basic math. Society lost x in purchasing power through lost wages via unemployment, and you inject 10x in stimulus, what do you think is going to happen?

This was Larry Summers' argument, backed with real numbers. Nobody passing these bills ever considered whether it was too much. You have the two top economists for both Clinton and Obama saying it was too much and being outspoken about the issues with how the bill was constructed. I don't know where current politicians lost all economic sense along the way, but it was the zeitgeist of the moment to spend as recklessly as possible

All they had to do was replace lost income for unemployed, and leave pretty much everything else untouched and things would have been fine. No need for debt forbearance, because you've supported income for those who lost their jobs. But needs to be structured such that incentive to return to work.

Now most of the impact of the stimulus will be destroyed by inflation

[Shocka1]

You've made some really great points in all your comments thus far that I 100% agree with, especially with current politicians losing all economic sense. Even the once budget stubborn Republicans signed away. I have no citations, but my theory about this is that the American society as a whole is foaming at the mouth for instant gratification. It feels as though we're thinking of the weekend instead of years ahead... That, combined with a high percentage of economically uneducated politicians that seem more like social media influencers than actual lawmakers = not well thought out economic decisions.