The following can apply to any country that acted similar to the U.S.
Free Stimulus Money? Think again.
As the U.S. Government is handing out money like candies, and people are practically dancing in the streets, with joy in their hearts, there is, unfortunately, a certain reality connected to it. In fact, there are two strikes already against the consumer, as explained below.
First, too much stimulus money running after goods and services, in a short supply economy stimulates suppliers to raise their prices, and not just by a little-bit but by sizable amounts, or percentages, if one wants to talk about normalized figures.
"This infographic shows the annual rate of change in U.S. consumer prices. (By: Büşra Öztürk / Daily Sabah)"
SECOND, massive printing of money, by the Federal Reserve, money that we really have not supported by gold, or any other meaningful standard, reduces the purchasing power of the dollar, pure and simple.
The end-result is, on average one pays 5.4% more for goods and services, and to add insult to injury, one has to, additionally, shell-out more money, to make up for the weaker dollar. It won't take that long before the stimulus monies have been given back to the Government, and thereafter, Governments (Federal and State) will collect a mountain of extra taxes, because of its gain from sales taxes on higher priced goods and services. Prices seldom get back to their prior-inflation levels. Also, under current monetary policies, the dollar will only get weaker against other major currencies. Refer to Graph below. This is good for exporters but not for consumers, the importers. GET IT?
Click charts to enlarge
https://www.xe.com/currencycharts/?from=USD&to=EUR&view=2Y
With Loan Sharks, after a loan is paid off (flesh and bones included), they will leave the debtor alone, not so with Governments we have elected.
Now, should people still be overjoyed because of the (free???) stimulus money?
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