“Creating” Cash to Stimulate Economy

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(FinancialHealth.net) – COVID-19 has decimated the US economy. The federal government, along with the Federal Reserve, is trying to get it back on track. Everyone seems to be doing their part, and so far, there have been results. The Fed, however, is making a move that might cause big problems down the road.

According to reports, the Fed is pulling virtual money from nowhere and injecting it into the economy in the hope that it will carry us through this rough spot. By the end of 2020, the agency will have bought $3.5 trillion in government securities (debt). When the Fed creates this cash, it credits American banks.

Critics of the Fed say this is a bad idea. Essentially, the money the agency is creating isn’t real. Former Rep. Ron Paul (R-TX) told USA Today the US is now working with “fake money, a fake measuring rod.” He went on to say, “It is unbelievable.”

What could go wrong?

Inflation.

Economics 101 will teach you if there’s too much money flooding the market, it’ll become worthless. That can lead to inflation and high prices. At a time when more than 30 million people are unemployed, the results could be catastrophic.

Although it might be helping in this moment, it shouldn’t be a long-term strategy. The country needs healthy growth, not manufactured growth. Thankfully, President Donald Trump is the man with the skills to get us there again; he’s proven that before.

~Here’s to Your Financial Health!

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