Does inflation doom loom? After all, the Fed’s humongous monetary “stimulus” exploded the money supply. Then, too, Uncle Sam drunken-sailored nearly $3 trillion in 2020 COVID “relief”--another $1.9 trillion this year—and up to $4 trillion more under discussion. All sloshing and splashing around. With GDP now nudging pre-lockdown levels, pundits near-universally envision increased inflation. But maybe not! First, despite conventional wisdom, Fed policy may not actually have stoked true money creation. Second, so-called fiscal “stimulus” doesn’t drive hot growth—a historical reality few fathom.
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