I'm taking issue with "If people have "extra" money (e.g. COVID payments)" and that you're saying that this is now a very small amount of the total pie.
I additionally take issue with "If there's more employed (i.e. government jobs)" - and here's the total government jobs numbers: https://fred.stlouisfed.org/series/USGOVT and those numbers are lower than the value in January 2019.
And yes, we were going to have inflation. I believe it is fair to criticize the fed for not raising rates sooner.
> With the Fed’s main tool for stimulating the economy—interest rates—virtually useless right now, the problem becomes one of how to help the economy recover without it. But there is a solution. Under current conditions, fiscal policy— government deficit spending—is likely to be a very powerful tool for stimulating the economy. After all, with interest rates likely to stay at record lows, more federal borrowing is not going to affect investment spending by raising the cost of capital. That means that government spending financed by borrowing is likely to be particularly effective, since it won’t be offset by lower investment spending.
> The bottom line: To help cushion the crisis’s impact, the Fed has done its job and done it well. Now it’s up to the rest of the government to act to support the US economy.
And that's been weathered. So, the next question: why is inflation not responding well to the monetary policy?
In part, that appears to be that companies are locking in the higher prices (and increasing them) at a higher rate than inflation is growing while at the same time recording record profits on even lower sales.
Also https://www.cnbc.com/2023/01/30/long-covid-has-underapprecia... "About 18% of people with long Covid hadn’t returned to work for more than a year, according to a report by the New York State Insurance Fund, state’s largest workers’ compensation insurer."
So lets not blame government jobs for the tight labor market but rather a substantial decrease in the number of immigrants for the prior half decade and an estimated 4M US citizens that have left the labor market as part of long covid.
I additionally take issue with "If there's more employed (i.e. government jobs)" - and here's the total government jobs numbers: https://fred.stlouisfed.org/series/USGOVT and those numbers are lower than the value in January 2019.
And yes, we were going to have inflation. I believe it is fair to criticize the fed for not raising rates sooner.
> With the Fed’s main tool for stimulating the economy—interest rates—virtually useless right now, the problem becomes one of how to help the economy recover without it. But there is a solution. Under current conditions, fiscal policy— government deficit spending—is likely to be a very powerful tool for stimulating the economy. After all, with interest rates likely to stay at record lows, more federal borrowing is not going to affect investment spending by raising the cost of capital. That means that government spending financed by borrowing is likely to be particularly effective, since it won’t be offset by lower investment spending.
> The bottom line: To help cushion the crisis’s impact, the Fed has done its job and done it well. Now it’s up to the rest of the government to act to support the US economy.
And that's been weathered. So, the next question: why is inflation not responding well to the monetary policy?
In part, that appears to be that companies are locking in the higher prices (and increasing them) at a higher rate than inflation is growing while at the same time recording record profits on even lower sales.
That is the continuing part.
Let's look at the fewer jobs part. https://www.census.gov/library/stories/2022/12/net-internati... - you will note a substantial drop in the number of immigrants to the US.
Also https://www.cnbc.com/2023/01/30/long-covid-has-underapprecia... "About 18% of people with long Covid hadn’t returned to work for more than a year, according to a report by the New York State Insurance Fund, state’s largest workers’ compensation insurer."
So lets not blame government jobs for the tight labor market but rather a substantial decrease in the number of immigrants for the prior half decade and an estimated 4M US citizens that have left the labor market as part of long covid.