Why do governments create inflation? Milton and Rose Friedman

"Inflation is a disease, a dangerous and sometimes fatal disease, a disease that if not checked in time can destroy a society (long list of examples Russia and German after WWI, China after WWII, Brazil in 1954, Chile in 1973, Argentina 1976)  

"No government is willing to accept responsibility for producing inflation, even in less virulent degree.  Government officials always find some excuse--greedy businessmen, grasping trade unions, spendthrift consumers, Arab sheikhs, bad weather, or anything else that seems even remotely plausible. . . none of the alleged culprits possesses a printing press on which it can turn out those pieces of paper we carry in our pockets; none can legally authorize a bookkeeper to make entries on ledgers that are the equivalent of those pieces of paper."

"The more basic question is, why do modern governments increase the quantity of money too rapidly?  Why do they produce inflation when they understand its potential for harm?

From "Free to choose: a personal statement," by Milton and Rose Friedman,  p. 253-254, pb, 1990

https://en.wikipedia.org/wiki/CARES_Act  The CARES act under President Trump

https://www.whitehouse.gov/american-rescue-plan/  is our best example of a government creating inflation.

https://www.ncsl.org/ncsl-in-dc/publications-and-resources/american-rescue-plan-act-of-2021.aspx

https://www.investopedia.com/american-rescue-plan-definition-5095694

Some American households may have received $60-70,000 in pandemic relief

 Who would consider going back to work?  In some states the figure is as high as $100,000.

The unemployment insurance benefits paired existing state-level weekly aid with a federal payment ranging from $600/week under the CARES Act to $300 per week under the American Rescue Plan Act. The aid was also extended to workers who usually do not qualify for unemployment benefits, including gig economy workers and independent contractors. Unemployed workers could continue to claim unemployment insurance benefits past the usual 26-week window during the pandemic.

Take, for example, a married household with two young children living in Georgia with a single earner who made $60,000 in 2019. Imagine the single earner lost her job on April 1, 2020 due to the coronavirus pandemic. Prior to the pandemic, the family would have been eligible for $365 per week from the state of Georgia in unemployment benefits up to 26 weeks and $4,000 in Child Tax Credit, for a total of $13,490.

Read further: https://taxfoundation.org/total-covid-relief-unemployment-insurance/?

Would you get a job?

 "Full summary of what the unemployed and low income workers get.

 Family of four: $5600+$3,400 from CARES Act+$2400 from December bill. Total cash $11,400. 

Then they get $300 a week x 4=$1200 per month for each parent through September which will get extended to December =$21,600 (9 months) for both together. 

Plus average state unemployment another $300 a week each = another $21,600 by December. 

Child care credit $7,200 each child under 6- $6,000 over 6. Let’s say $13,200. 

Dependent care child care tax credit $4000 per kid if the parents are working, so 2 kids $8000 tax CREDIT, not deduction. 

If on Obamacare, zero premium payments if unemployed. 15% added value to food stamps. $27 billion to give to people who have not paid their rent and utilities. On top of $25 billion in December for the same use. And cancellation of at least $10,000 student loan.

So $11,400 + $21,600 + $21,600 + $13,200 = $67,800. Plus 2 kids $8000 kid tax credit, plus rent subsidy paid, plus utilities bills paid, plus free medical insurance plus food stamps. 

And they expect these people to go seek a job? Don’t you feel great supporting all those lazy people. And they will try to make these credits and subsidies permanent. You wonder why the Democrats win elections in poor counties and cities. 

These numbers come from the Wall Street Journal."

Investment letter