When the economy gets bad, print money. When the economy looks like a tornado hit it, print more money. Pass out stimulus checks for $600, then another $600, then top it off with another $1,400.
Will it work to get Americans back in stores? Will the so-called stimulus checks rev-up the post pandemic disaster that hit our “goods and services” real economy?
Or will the next $1.9Trillion Dollars of stimulus flow off the Federal Reserve’s printing presses and disappear into banks and Stock Market.
A Bank of America survey released in March reports a majority of the $1,400 stimulus checks will go into savings— not to spending. BofA surveyed 3,000 people in February and here’s what they said—
36% Will Spend the money
30% Pay off debts
25% Saying Save it
9% Invest the stimulus checks
BofA explained, “We group three of these as ‘saving’ in a broad sense, since the payments stay within the financial system and don’t create demand for goods and services in the real economy.”
Summarizing, it looks like 64% of the $1,400 stimulus checks will be passive for sectors of the U.S. economy, for now. Keep in mind lockdowns are very much in effect in large areas of the country— and the world.
“If most savings are stuck with wealthy households unlikely to spend, and the bottom 80% devote their excess cash to debt, savings, and stocks anyway, it’s not clear who will be doing all the sustained, voracious consumption markets now are pricing in,” BofA said.
Eventually, the giveaway money from Washington D.C. Democrats will find its way into the economy as states open, restaurants re-open, travel season unfolds, and folks feel safe enough to go out again.
You should continue to see inflation, not on the horizon, but in the real economy begin to rise swiftly this year. Beyond the rapidly rising gas, lumber, commodity, and food prices, we will feel the impact of inflation at the retail level.
Talk is of 5% inflation periods coming. Fears are building. We’ll see how this all works out long-term for those of us stubbornly holding Gold and Silver assets.
Stock melt-ups invariably end in Stock melt-downs.