Why Bidenomics Gets No Love From Voters – WSJ:
That record, though, is overshadowed by the record of his first months in office, when his American Rescue Plan pumped $1.9 trillion of demand into a supply-constrained economy. The result was the tightest job market in memory and a surge in inflation that still hangs over Biden’s approval ratings and his prospects for re-election.
It’s why the Fed is having a hard time bringing inflation within the 2% inflation target: because the government is trying to do two things at the same time. It’s trying to spend more money–which floods the market with currency. And it’s trying to restrict the supply of money in the economy with higher interest rates.
Pulling and pushing at the same time is utterly unhelpful.
And worse: the “American Rescue Plan” is not a one-shot stimulus; it’s spending over time. So the government will continue to pull for a while, even as the Fed raises interest rates more–with the side effect of crashing smaller banks as bond values plummet.