“How ya gonna keep ‘em down on the farm after they’ve seen Paree?”
The words from this popular World War I song popped into my mind after reading that millions of hard-working people were already seeing their $1,400 stimulus payments as direct deposits in their bank accounts. The song’s sentiment was reinforced when I read that 85% of America’s households would be receiving this early gift from our generous government Easter Bunny.
To those accustomed to producing something real and selling it before putting money in the bank, this may seem a little like the magic of Paris as experienced by those World War I soldiers from back on the farm. At the very least, it probably feels like something better than a sleight-of-hand card trick. But that, in many ways, is what it is. So, welcome to Paris. Forget your worries while you can. The early Easter egg money is good as gold. But it would still be wise to spend it before inflation reduces its purchasing power.
Talk about high-speed government transfers. The president signs a law and, a week later, freshly printed money is in the bank. Yes, I did say freshly printed money. Where else would it come from? Tax increases that have yet to materialize? Reduced spending on other favored programs? Don’t kid yourself.
You’ve got to be a bit goofy to think that our stimulus money would be generated by one of those old-fashioned, painful methods. No, our smiling politicians know better. They instruct the Federal Reserve to issue new government bonds and place the proceeds in the federal account just in time to cover the stimulus checks. The Easter Bunny is actually on steroids. Let the good times roll! And if inflation comes and eats away the value of the dollar, let someone else worry about that. After all, the Fed and the secretary of the treasury know how to hit the brakes when they have to do so.
Considering the large percentage who have kept their finances right-side up during the pandemic, only time will tell how much spending and actual stimulus comes from the sudden sugar surge coming into our banks. Lots of people may just decide to hold the cash for a while. Others may pay down some debt. Others may share the cash with their children or grandchildren, who may spend it.
Already, however, suggestions for what to do with the money are showing up in local newspaper ads and email messages. The Kia dealer in my neighborhood is running a stimulus check special, betting that the one-time money may lead drivers to trade up to new and larger cars.
What about charity? Those who don’t need the money may be tempted to give it away. The creative manager of one of the largest United Ways in my region has sent a list of things that can be done with the stimulus checks to help make life better for folks who are truly hurting from COVID-19 and other personal tragedies. The list includes such things as summer reading camps for children, supporting a family suffering from job loss, or providing financial coaching for families who are trying to dig their way out of lost-job hardships.
Whatever happens with all of the stimulus bonanza money, whether most of it goes toward making ends meet, purchases that will truly stimulate the economy, or other purposes our politicians didn’t intend it for, one thing is certain: When $1.9 trillion flies out of Washington and lands in our bank accounts, for most of us, the improvement is only temporary.
But then again, the early Easter Bunny’s deliveries may leave a permanent mark on the populace. They may decide that getting instant cash goodies from Washington beats working extra hours and saving before spending. Yes, life on the farm may not look so good after seeing gay Paree.
Bruce Yandle is a contributor to the Washington Examiner’s Beltway Confidential blog. He is a distinguished adjunct fellow with the Mercatus Center at George Mason University and a dean emeritus of the Clemson University College of Business and Behavioral Science. He developed the “Bootleggers and Baptists” political model.
