Political power of the purse
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Started by wglassfo - Aug. 3, 2020, 12:07 p.m.


Politicians are/will slowly usurp the Fed power of the purse, or we will have increased deficits and inflation, if the Fed continues their stimulus plans

We have seen how those closest to low int rates are the favored segment of economic activity. But Wall St does little to improve the 80% who have no or a small interest in Wall St [401k and other passive investment is the most one can think of, that the 80% benefits from]

However, politicians are slowly realizing that direct stimulus into Main St and consumers has a much better chance of re-election and voter appreciation

We will see politicians slowly spend more money for the 80% as opposed to the top 10-20%

One would think Biden's policy statement will increase social welfare with more money going to the 80% which is a political decision

If congress takes a leading role in stimulus spending, which looks to last a long time, they will direct this money to the 80% and leave the Fed as a spectator, merely printing money for congress to send to the 80% 

Of coarse if the Fed continues as we have seen, with stimulus for corp and Wall St, can you imagine the inflation we will see, if Biden and congress direct additional money to the 80%

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