| The past 3 years of experimentation of wealth transfer has wholly benefited the wealthy and corporations by a large margin. Direct cash assistance[0] in total cost is less than what just the PPP loans ended up costing the government, for example. This actually would be a great example of government spending that does cause inflation[1][2] and largely did not benefit the middle class (let alone the poor). Cash assistance to the poor / middle class is more murky. While yes, short term inflation in part was driven by the broad relief payments[3], it is sustained by cheap money[4]. My argument is centrally that cash assistance to the poor and middle class, broadly, won't sustain inflation as prices rise and demand normalizes, as an efficient market should do. The distortion on that market happens with a combination of low interests, which drives cheap capital creation, which distorts natural price normalization, and fuels riskier investments, which are all observable economic cycles. My conclusion, based on what I understand and evidence there in, is that cash assistance, especially in limited one shot capacity, is not going to sustain inflation at the pace we've been seeing it most broadly. One particular note is PPP loans (which were largely forgiven) + "cheap money" is a big driver in being able to sustain higher prices via "buffing" the balance sheets of businesses. If I can sustain demand loss at a higher price because my operating costs dropped significantly due to cheap (or in some cases "free") money, you've just distorted the market. In a healthy environment, high prices should naturally have lead to lower demand, which would kick off the deflation cycle, which in a certain band, is healthy for the economy as a whole. This is why there's arguments over whether interests rising more dramatically is the "right tool for the job". To be honest, I'm not sure our understanding differs that much on this aspect, only in as so far as I am less critical of direct cash assistance to the poor / middle class than the assistance given to wealthy / corporations (in, for instance, form of PPP loans). I also don't think that cash assistance is the real long term driver of inflation at this stage. I'd also like to note, I wasn't talking about pandemic relief per se, I was more talking about general cash assistance that you would typically see in welfare programs, which is provided via taxation, usually. [0]: https://home.treasury.gov/policy-issues/coronavirus/assistan... [1]: https://www.cnbc.com/2023/06/26/ppp-loan-fraud-drove-home-pr... [2]: https://www.stlouisfed.org/en/publications/regional-economis... [3]: https://www.federalreserve.gov/econres/notes/feds-notes/fisc... [4]: https://www.imf.org/en/News/Articles/2022/07/11/CF-US-Econom... |