The stimulus won’t inflate the economy because it’s not going to be in the economy very long. Let me give you an example: if you have a car that break down, and I lend you my car for the year the total number of cars has been inflated right? Only until I get my car back and then it’s the same number of cars. That’s how the stimulus works.
How many people do you know that actually save their money? They don’t, they spend it. What happens when people spend the money? it’s taxed and the government collects the money via sales tax. If people have more money to spend, they’ll spend more money and the government will collect more in taxes.
It’s the same principal in cutting taxes: if you cut taxes people will have more money to spend, so they’ll buy more things and the government will collect more money via sales tax revenue. Same thing.
For example: my dad got his stimulus and bought a new pair of boots, and went and got a tune up, both sales are taxed, so the government gets the stimulus money back via sales tax. After the businesses makes the transaction they tax the extra revenue and spend it, and whatever they spend it on will eventually get taxed, rinse and repeat until the $1,200 check is returned to the government via revenue for the government via taxes.
This doesn’t mean we can give out an unlimited amount – there’s limits probably around $6,000 a year per person without adding any significant new taxes, but $1,200 isn’t anything too significant and most of it will be gone by next year anyway.
2.2T isn’t all that much, our GDP is nearly 20T a year, we’ve spent more in Afghanistan and Iraq 2.4T; we’ve spent more two months ago 2.7T trying to keep the stock market from crumbling which failed, and all that money is gone, if anything will cause inflation it’ll be that 2.7T that we won’t see again. Nobody asked whether either of those would cause inflation and nobody cared that both of those are going into pointless money holes, but now when our citizens are getting money that is suddenly awful? No.
Think of it as a tax break for corporations being funneled through the lower class. Trickle up economics. There’s been a lot of tax breaks for wealthy people, at least we’re getting a slice of the pie.
Ricky J. Smith 