Increased consumer demand without increased supply = inflation.
However, since California can’t print money they are just returning money they had taxed earlier. Presumably the state would have spent it on something else if not these direct payments. It may though increase the velocity of money in the state.
Increased consumer demand without increased supply = inflation.
Seems to me that if more working people had gas money and child care we could fill some of those 11.4 million positions the “job creators” keep whining about because the can’t hire anybody.
If more people were working, they’d be more “supply”.
On the last business day of April, the number and rate of job openings decreased to 11.4 million (-455,000) and 7.0 percent, respectively. The largest decreases in job openings were in health care and social assistance (-266,000), retail trade (-162,000), and accommodation and food services (-113,000). The largest increases were in transportation, warehousing, and utilities (+97,000); nondurable goods manufacturing (+67,000); and durable goods manufacturing (+53,000). (See table 1.)
Couldn’t get my favorite bread yesterday (lack of supply) because the bakery can’t find enough employees. I’m gonna go out on a limb and guess childcare issues have something to do with that.
However, since California can’t print money they are just returning money they had taxed earlier.
Not exactly. It appears to be more like redistribution, based on the income limits.
Wendy: Increased consumer demand without increased supply = inflation.
Intercst: If more people were working, they’d be more “supply”.
The message from the governor is that this will help people pay for gas, food and other goods.
How would this increase the supply of gas? It won’t.
Would this increase the supply of food? Doubtful since farmers have already planted whatever they have allocated water during the drought to plant. And high value and high water use crops are also sent out of the state.
Other goods. Not so sure, but wouldn’t CA be competing against other states, just raising prices.
Over the weekend I drove by the port of Oakland and saw about 25 cranes that offload containers all sitting idle.
However, since California can’t print money they are just returning money they had taxed earlier. — Not exactly. It appears to be more like redistribution, based on the income limits.
The state is returning the money it had taxed earlier, just not to the same people. So, no increase in money supply. It should be inflationary to the extent that it increases the velocity of money in California.
Presumably the state would have spent it on something else if not these direct payments.
Yes, but they wouldn’t have spent it NOW. The budget is already set for now, so they may have put it into a rainy-day fund, and then spent it during a rainy day while inflation is lower (or even during outright mild deflation). Or most likely they simply would put into one of their pension funds that always need funding, and it would be spent in dribs and drabs over the next 50 years.