Kevin Hassett writes about a new fiscal-policy version of the Greenspan put:
We are seeing the reverse of the normal recession pattern from consumers. Normally, things get a little rough, and then prudent consumers prepare for the storm by reducing their debts and increasing their savings. This time, things got a little bit rough in the beginning of the year, and consumers threw a massive party.
The best explanation for this behavior is that the extremely generous fiscal policy during the pandemic and even after it has taught consumers that there is a fiscal-policy analogue to the Greenspan put. Call it the “Covid put.” Just as Greenspan was always there to bail out equities when times got tough, Congress will be there to mail checks as soon as the seas are stormy. And it’s not just the federal government: California has already mailed “stimulus” checks of up to $1050 this year.
David Bahnsen talks to Adam Brandon of FreedomWorks on the latest episode of Capital Record. Listen here, or wherever you get your podcasts.