How Much Did the Stimmy Cost?

Jun 29, 2022 | Macro Insights

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Summary: The government’s response to covid was a $5.7 trillion experiment in how to deal with a pandemic (especially relevant given the widespread development of bioweapons globally). However, the real economic cost of this experiment went far beyond the $5.7T since the country was also locked down for an extended period leading to massive unemployment and financial upheavals. Ultimately, the country ended up with trillions extra to spend beyond their unemployment benefits but with a major supply disruption caused by the lockdowns and the subsequent reticence of employees to return to work. This drove what the Fed and the government believed at first to be “transitory” inflation (demand temporarily exceeding supply). However, we presently find that the long-term cost of this experiment is runaway hyperinflation with the real risk of an economic crash. This reflects that supply never returned to pre-covid levels in critical areas like energy and food production as the economy began to recover (aggravated by restrictions from the “green deal”). Perhaps the lesson of this experiment is that we need a strong economy, no matter what, because you never know when external shocks might strike.

Covid Stimulus Graph

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