More Problems, More Money

Over the last 3 months, the U.S. Government has provided a huge stimulus to the economy – perhaps more than the economy lost from shutting down. On top of that, people had no where to spend money. The result? An enormous rise in deposits at banks.

Year-over-Year Change in Deposits, in Billions (Fed H.8)

Deposits are up almost **3** trillion dollars over the last year. This is currently how a lot of people feel:

The question is what happens with all of this money. If everyone tries to spend it at once, there could be a massive inflation issue.

Inflation Problem Coming?

Inflation data shows flat core inflation in April. However, is there a coming inflation problem?

As noted in my previous post, real income was UP in April. Couple that with the fact that no one can spend much money since things are closed, we had the highest savings rate EVER.

Personal Savings Rate

What happens when people can go out and spend money when supply chains have been disrupted? It would seem prices are likely to go up.