Financial Fiction Friday #18
Fighting Fire With Fire
Inflation is raging like a grease fire and many states are planning to treat it with gasoline. It's hard to turn down additional cash when the state wants to provide it. Many families are still in troubling financial straights as costs are rising and a recession could be brewing. Who wouldn't want a boost?
Even when it might be the best thing for middle and working class families, this could backfire. Whether we like it or not, this money will fuel demand even as supply continues to be constrained. This strategy is likely to only prolong the pain as it undercuts the taming of inflation. The longer high inflation persists, the more harshly the Federal Reserve will respond.
This is an incredibly challenging situation, and coordination and planning may be the best opportunity we have as a nation to control this economic dilemma.