But most of that stimulus didn't end up in the hands of consumers.
People weren't purchasing Pelotons with $600 stimulus checks. The sort of person who has nothing better to spend an extra $600 on than a Peloton is the sort of person who wasn't eligible for the stimulus in the first place. (I do fully agree that stay-at-home orders motivated some purchases, though - but again, the sort of people who could actually stay at home and take meetings from their home office instead of driving around town delivering Pelotons were the sort of people who already had the cash to spare for these things, anyway.)
That stimulus ended up in the hands of business owners, which effectively caused a partition: because business owners, as a group, had more money, they could all raise prices and afford it. But the working class, as a group, did not have noticeably more money.
In other words, there was a sharp rise in inflation - for the owning class. The effect was the same as if there were two neighboring countries, and one experiences inflation. That country's cost of living goes up, but so do their wages and the valuations of the things they own. So they're fine, and effectively they can buy things from the second country for even cheaper in terms of purchasing power. But people in the other country find it harder to afford to buy things from the first country. They're the ones most hurt by inflation.
> The sort of person who has nothing better to spend an extra $600 on than a Peloton is the sort of person who wasn't eligible for the stimulus in the first place.
That's not true at all. The cutoff for a married couple to get stimulus checks was 150k combined per year, which is a lot of money in the majority of the country. I was making 135k, 40k more than the median income for my state, and my wife and I got thousands of dollars in stimulus money. We ended up each buying $1200 Herman-Miller office chairs since we were stuck at home on our computers all day.
> People weren't purchasing Pelotons with $600 stimulus checks.
Anecdotally, they totally were. In my immediate friends group, families that were eligible for stimulus (making around $120K/yr) spent it on luxury items including photo cameras and as a downpayment for new cars. I don't know anyone who bought a peloton but extrapolating what I saw in my circle, it's totally believable.
Your example only works if both countries use the same currency. If they don't the country suffering inflation will have a devalued currency, so their buying power relative to the other country will have collapsed.
People weren't purchasing Pelotons with $600 stimulus checks. The sort of person who has nothing better to spend an extra $600 on than a Peloton is the sort of person who wasn't eligible for the stimulus in the first place. (I do fully agree that stay-at-home orders motivated some purchases, though - but again, the sort of people who could actually stay at home and take meetings from their home office instead of driving around town delivering Pelotons were the sort of people who already had the cash to spare for these things, anyway.)
That stimulus ended up in the hands of business owners, which effectively caused a partition: because business owners, as a group, had more money, they could all raise prices and afford it. But the working class, as a group, did not have noticeably more money.
In other words, there was a sharp rise in inflation - for the owning class. The effect was the same as if there were two neighboring countries, and one experiences inflation. That country's cost of living goes up, but so do their wages and the valuations of the things they own. So they're fine, and effectively they can buy things from the second country for even cheaper in terms of purchasing power. But people in the other country find it harder to afford to buy things from the first country. They're the ones most hurt by inflation.