Is stimulus check accelerating inflation?

Question

Is it really a Band-Aid or is it lending itself to accelerating the collapse of an already lame economy?

When everyone finds out that people have an unexpected $300 - $1200 in their pockets it seems like everyone else is raising their prices to get a bigger slice.

Answer 1

ignore the "CPI" stuff.  Inflation is an economic term and increased prices are a result of inflation; not inflation itself.  Inflation is an increase in money supply.  

Last month's budget deficit, because of the checks, was the largest one month deficit in history.

So yes, the checks are causing inflation; they are causing an increase in money supply.

ps - over $300 million of the checks were cashed at Walmart, and spent on Chinese made products.  The stimulus is occuring in the Chinese economy, not here.

Answer 2

The price expectation increase idea is partially relevant but higher fuel costs are more to blame for the .6% increase in Cpi we saw this month.  CPI being the consumer price index which excludes food and energy costs.  The stimulus check if you ask most macrotheorists who look at aggregate data on the economy don't put much faith in these stimulus checks.  If anything they cushion a fall into a recession.  A lot of the stimulus checks went into energy costs and were negated and a lot of people ended up saving them because of expectations of higher fuel costs.  The checks helped retail a little but don't expect a turnaround in the economy.