Stimulus Update: Did Stimulus Funds Lead to Inflation? Jeff Bezos Thinks So

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  • Many Americans are grappling with sky-high living costs.
  • Jeff Bezos of Amazon fame insists that stimulus payments only made matters worse.

The former Amazon CEO had some choice words for the Biden administration.

It's hardly a secret that Americans are spending more money than ever just to live. The cost of everything from gas to groceries to apparel is soaring (and has been for months), and wages aren't doing a good enough job of keeping up.

Because of rampant inflation, many Americans are calling for a fourth stimulus check. The last stimulus check to hit consumers' bank accounts was approved more than a year ago, and given that the boosted Child Tax Credit has been off the table this year, it has been a while since Americans have gotten a round of federal relief.

But a fourth stimulus round is unlikely to help solve the issue of inflation. In fact, former Amazon CEO Jeff Bezos recently pointed a finger at stimulus policies for a big part of the reason we're in this mess in the first place.

Did stimulus policies set us back?

In March of last year, the Biden administration approved a round of $1,400 stimulus checks at a time when unemployment was rampant and COVID-19 vaccines were in short supply. At the time, a stimulus round seemed justifiable, as consumers really did need relief in the absence of being able to find work or go to work.

The problem, though, is that pumping that extra money into the economy at a time when supply chains were struggling created an imbalance between spending power and available goods. And so not surprisingly, the cost of everyday products started to rise in the months following the last stimulus bill.

Meanwhile, supply chains still haven't managed to catch up enough to meet consumer demand. As such, living costs have been soaring since last year, and many Americans are now struggling to cover their basic bills.

Making matters worse is that many people don't have savings to dip into to tide themselves over. And so now, consumers risk racking up debt at a time when interest rates are rising, making that debt even more costly.

Bezos blames stimulus funds

Recently, Jeff Bezos put out some pretty harsh commentary on the inflation situation, blaming stimulus policies for the fact that living costs are soaring. He's quoted as saying, "The administration tried hard to inject even more stimulus into an already over-heated, inflationary economy and only Manchin saved them from themselves."

That comment refers to the Build Back Better bill, a massive spending bill that stalled in the Senate earlier this year when West Virginia Senator Joe Manchin refused to support it. Manchin has been criticized for blocking efforts to keep the boosted Child Tax Credit in effect for 2022, as the enhanced credit was a big part of that spending bill.

But giving families extra money this year could, indeed, only make the problem worse, the same way another round of stimulus checks might cause a similar issue. And so while Americans may not be thrilled with the fact that stimulus funds are off the table, the reality is that they have the potential to prolong inflation and potentially do more harm than good.

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