Inflation Alert! The US Government Is Still Handing Out COVID Money and It Wants More
Did you know the Biden administration is still handing out COVID-19 stimulus money?
In fact, there are still billions of dollars in pandemic aid sitting in various federal and state government accounts waiting to be handed out.
Just last week, the Biden administration announced $1 billion in federal grants for “manufacturing, clean energy, farming, biotech and more.” The money will be doled out to 21 regional partnerships throughout the nation.
The US government showered more than $7 trillion in stimulus money on the US economy during the pandemic — most of it created out of thin air. Now, more than a year later, stimulus money is still dripping into the broader economy, even as Americans labor under the weight of inflation. And there is more money in the pipeline.
For instance, only 12% of the $122 billion American Rescue Plan money earmarked for education has been spent. States and school districts have until the end of 2024 to spend that money. And according to Treasury Department figures, state and local governments have only spent about $70 billion of the $350 billion allocated to them in the plan.
Meanwhile, the Biden administration is pushing for more COVID cash. Just last week, the White House released a “supplemental” emergency spending request totaling $47.1 billion. The proposal included more aid for Ukraine and “$22.4 billion to cover ongoing needs associated with the COVID-19 pandemic.”
In other words, even as the Federal Reserve is raising interest rates to fight inflation, COVID-era inflation is still dripping into the economy and the Biden administration is pushing for more.
As ZeroHedge put it, “The issue of covid stimulus remains a key problem for the US economy for multiple reasons – First and foremost, it was the covid stimulus packages that sent our stagflationary crisis into overdrive.”
While Biden and the media consistently point out initially high retail sales and low unemployment numbers as a sign that all is well, what they conveniently ignore is the effects of the covid money bonanza. When you dump $8 trillions into the system in the span of two years (continuing into 2022), what you are doing is creating a massive spike in artificial demand. People, businesses and government agencies are going to go out immediately and spend that money with wild abandon. By extension, that spending will create a need for more workers and more jobs. However, this momentum is impossible to maintain because as trillions of dollars are created the value of the money diminishes. Inflation or stagflation is the inevitable result.”
In other words, you’re already paying for all of this stimulus through the inflation tax. And the price tag is going to continue to go up. As Peter Schiff explained during a recent interview, when you talk about families struggling with inflation, they’re really struggling with government.
Inflation is a tax. It’s the way government finances deficit spending. Government spends money. It doesn’t collect enough taxes, so it has to run deficits. The Federal Reserve monetizes those defiticts – prints money. They call it quantitative easing, but that’s inflation. Government is getting bigger and bigger, and families across America are going to have to bear that burden through higher prices.”
A recent paper quietly published by the Kansas City Federal Reserve Bank admitted that the central bank can’t get inflation under control when the government keeps borrowing and spending money.
Trend inflation is fully controlled by the monetary authority only when public debt can be successfully stabilized by credible future fiscal plans. When the fiscal authority is not perceived as fully responsible for covering the existing fiscal imbalances, the private sector expects that inflation will rise to ensure sustainability of national debt. As a result, a large fiscal imbalance combined with a weakening fiscal credibility may lead trend inflation to drift away from the long-run target chosen by the monetary authority.”
It’s clear that the “fiscal authority” (the federal government) has no intention of “covering existing fiscal imbalances.” In fact, the plan seems to be to spend more money and create more debt. Any excuse will do, including a pandemic that ended more than a year ago.