California's $1,000 Inflation Relief Checks

… now that’s what I call “public policy” rather than shoveling more money to the top of the pyramid.

23 million Californians to get ‘inflation relief’ payments after budget deal struck, state leaders say
https://www.kcra.com/article/23-million-californians-get-gas…

The framework includes giving taxpayers direct payments of up to $1,050…

intercst

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Increased consumer demand without increased supply = inflation.

Wendy

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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.

DB2

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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”.

https://www.bls.gov/news.release/jolts.nr0.htm

Job Openings

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.)

intercst

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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.

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I’m gonna go out on a limb and guess childcare issues have something to do with that.

Baumol’s cost disease in action!

https://saverocity.com/independentlyfinanced/learning-to-lov…

Albaby

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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.

Mike

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.

DB2

The state is returning the money it had taxed earlier, just not to the same people.

Like I posted elsewhere, your money is being spent by someone else who did not earn it.

The Captain

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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.

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