40% of all U.S. dollars were printed from January 4th, 2020, to January 6th, 2021. Let that sink in for a moment, 40% of all money in the United States was printed the year Covid 19 hit America. Now what does this mean and how did that happen?
With more money in the economy, that most likely means inflation, and that's exactly what has happened; the federal reserve has expanded the amount of money in the economy while there are much less goods and services being put into it.
Now how has this happened? The simple answer is the pandemic. As a response to the pandemic, there were many shutdowns. In efforts to not become an overbearing and unconstitutional government, President Trump gave the power to the states. However, several of those states actually did shut down and as a result their economies plummeted. With that, millions of businesses went out of business and millions of Americans lost their jobs.
However, to compensate, the government simply issued stimulus checks to help those who lost jobs stay afloat. While it seems like these checks were “free money” they were the exact opposite.
In an economically now burdened America due to the pandemic, how was the government able to distribute what feels like free money if the economy was basically shot? Money doesn't come out of thin air, the money you got for "free" from the government was a direct result of the federal reserve printing more money.
However, the people who got this money were those who couldn't work, thus people who contributed no goods or services to the economy and yet they got money as if they had. Now, there is an imbalance in the economy, more money but less goods and services provided, and this is the basic cause of inflation.
Another major issue with this is that in tandem with less goods and services being provided to the economy, the government has essentially spent more, in fact, they got a nearly 2 trillion-dollar relief package to combat Covid 19, which has been one of the largest yet. The government spending more usually wouldn't be too much of an issue, but along with people not providing goods and services to the economy, the government has not financed their money as they should have (for example, cutting costs elsewhere in the government). As a result, the government has simply printed more money thus creating a vacuum of printing more money to help combat the problem they started by printing more money.
Many people like to think their stimulus checks were actually free money from the government, but free money really doesn't exist. As I've stated they simply printed it, either the political leaders of America don't understand how money works, or they don't want you to understand the long-term deficits printing money will have in order for them to stay in power. I'm going to take a wild guess and say it's the latter. Since the economy feels as if there were goods and services provided due to the amount of money flowing within it, the prices have risen because there really wasn’t enough goods and services provided to compensate for the amount of money flowing in the economy.
During 2020, the prices rose relatively slow, it wasn't that much that the common folk really noticed it. Instead, the inflation affected assets, assets such as stocks and crypto currencies. That's where most people heard of prices rising, that's because inflation hits the economy in different places. Though in these terms, when prices rise it's a good thing, but people use the money they get from inflated stock and crypto currency markets for consumer goods, that's where they get the stuff they really need. When they start spending more on consumer goods because they have more money to spend the demand goes up for those goods thus the prices also go up. This poses a major issue because people aren’t working due to the pandemic and simply getting government checks to buy their consumer goods. This cycle is inflation and sadly, the federal reserve nor the government is being careful about printing money. This lack of attention to the danger could lead us to the same fate as Weimar Germany after WWII or Venezuela, or Zimbabwe, all countries whose economies faced intense economic downfalls as a result of printing money.