Thanks for the analysis. What if the checks the governments issue to citizens do not get spent and instead go into savings. Could it be that inflation expectations maybe too high?
Plenty will be saved but household balance sheets are already in great shape coming out of a downturn so I expect enough to be spent (combined with supply constraints) to generate significant inflation short term...18 months from now...different story.
But if we get massive savings households will be in great shape to spend in the future and policy makers will just point to the fact that they can run a very high pressure economy without getting inflation - would just guarantee that we eventually go way to far.
Thanks for the analysis. What if the checks the governments issue to citizens do not get spent and instead go into savings. Could it be that inflation expectations maybe too high?
Plenty will be saved but household balance sheets are already in great shape coming out of a downturn so I expect enough to be spent (combined with supply constraints) to generate significant inflation short term...18 months from now...different story.
But if we get massive savings households will be in great shape to spend in the future and policy makers will just point to the fact that they can run a very high pressure economy without getting inflation - would just guarantee that we eventually go way to far.