# $2 trillion stimulus to a locked-down economy - will it be inflationary?

**URL:** <https://boards.straightdope.com/t/2-trillion-stimulus-to-a-locked-down-economy-will-it-be-inflationary/850376>\
**Category:** Great Debates\
**Created:** [March 26, 2020, 11:56pm UTC](https://boards.straightdope.com/t/2-trillion-stimulus-to-a-locked-down-economy-will-it-be-inflationary/850376 "2020-03-26T23:56:35Z")\
**Posts on this page:** 2\
**Page:** 2

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**Author:** ![Voyager](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/voyager/32/133_2.png) [@Voyager](https://boards.straightdope.com/u/Voyager)\
**Post date:** [March 30, 2020, 3:50am UTC](https://boards.straightdope.com/t/2-trillion-stimulus-to-a-locked-down-economy-will-it-be-inflationary/850376/21 "2020-03-30T03:50:30Z")

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> [@septimus](#):
>
> ์None of the responses address the fact of _reduced production_. Normally a stimulus is intended to increase demand, which increases hiring, and increases production. Higher demand leads to higher supply. But here production is inhibited by shutdowns. What will the extra money be buying? Some will be spent paying higher prices for medical necessities; some spent to prop up stock prices. The stimulus may be a good idea, but it’s not clear to me why it won’t be inflationary. And even if prices are stable in the near-term, the ever-mounting debt bubble looks bad for the longer-term.
> 
> Other countries are adopting similar (but smaller) stimulus programs. (Thailand’s government recently decided to pay $450 to qualifying adults. A surge of on-line applications for the payments has slowed 'Net performance here! ;))

Unlike any other recession I know of, reduced production is the goal. The goal of the stimulus (and I like disaster relief instead of stimulus) is to keep companies employing people, even with no work, and to keep people eating and out of bankruptcy or foreclosure. The demand and production will return by themselves when the crisis is over.  
It is more like WW II, where decreased production of consumer goods was a war goal, thought there, because we had full employment, they had to use rationing to do it.

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**Author:** ![Earl\_McCabe](https://avatars.discourse-cdn.com/v4/letter/e/a9a28c/32.png) [@Earl\_McCabe](https://boards.straightdope.com/u/Earl_McCabe)\
**Post date:** [March 30, 2020, 11:10am UTC](https://boards.straightdope.com/t/2-trillion-stimulus-to-a-locked-down-economy-will-it-be-inflationary/850376/22 "2020-03-30T11:10:17Z")

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The previous stimulus targeted the big banks and the inflation stayed in asset markets. This stimulus is directed toward Main Street. Look for a return to consumer inflation.

> [@RitterSport](#):
>
> I suppose the answer to the OPs question is really yes, in that it will likely be inflationary relative to the state of the economy if there were no stimulus. That economy may experience extreme deflation, so if inflation is modest (or deflation is not too severe), you could argue that it was inflationary relative to the baseline expectation, even if the inflation number is not large in an absolute sense.

This is very true. The term “inflation” originally meant money creation, not its consequences.

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