The amount of money Congress has pumped into the economy in an attempt to fight the Covid pandemic is staggering. Don’t quite have enough adjectives to describe the amount of money that is forced into the economy without any corresponding increase in production.
The amount spent directly on the pandemic is more than four times the annual budget at the federal level.
This is one of the primary reasons we are seeing inflation rates running at a thirty year high.
A close cousin on the list of inflation causes is the Fed flooding the economy with liquidity. See previous discussion: Just how much money has the Federal Reserve created out of thin air and injected into the economy?
I’ve pulled together the amount of money appropriated by Congress in 2020 and 2021 which are focused on fighting the pandemic and stimulating the economy. Here is my tally, with amount of funding in billions of dollars, date Congress passed the legislation, and name of the program:
|8||3/6/20||Coronavirus Preparedness and Response Supplemental Appropriation Act|
|192||3/18/20||Families First Coronavirus Response Act|
|2,500||3/25/20||CARES – Coronavirus Aid, Relief, and Economic Security Act|
|480||4/23/20||PPP – Paycheck Protection Program & Healthcare Enhancement Act|
|900||2/21/20||Consolidated Appropriations Act|
|82||12/27/20||CRRSA – Coronavirus Response and Relief Supplemental Appropriations Act|
|1,900||3/10/21||ARP – American Rescue Plan|
|1,000||8/10/2021||Infrastructure Investment and Jobs Act|
As you can see, those eight bills add up to $6.06 trillion. That’s $6,062 billion.
To put that into context, the Consolidated Appropriations Act passed on 12/21/20 also included $1.4 trillion to fund the federal government for fiscal year 2022. Yeah, that’s $1.4T for a full year operation compared to $6.1T in coronavirus spending.
For additional context, the infrastructure bill passed on 8/10/21 was another $1 trillion, mostly deficit spending with some tax increases and creative accounting.
Let’s look at that astronomical spending in relation to the federal budget:
|7.1||Cash pumped into the economy|
|1.4||Budget for entire federal government in FY 22|
|4.4x||Coronavirus spending in relation to federal budget|
|5.1x||Total stimulation in relation to federal budget|
The coronavirus stimulation is 4.4 times larger than the ’22 federal budget
The total stimulation to the economy, including the infrastructure bill, is a staggering 5.1 times the entire ’22 budget.
Let’s take a look at that visually:
See that small bar on the left? That is all the spending by the federal government in FY 22 on its normal operation.
See that huge bar in the second column? That is how much money the Congress kicked into the economy without any corresponding growth in the output of the economy.
With the next round of inflation reports, and the next one, and the next after that, keep in mind this incomprehensively huge mainlining of deficit spending straight into the economy.
No wonder we are seeing inflation at a level we have not suffered in 30 years.