The Economic Stimulus Package and Its Allocation: Has it Reached the Economy or Stayed in Corporate Hands?

As of late 2020, a significant amount of economic stimulus has been injected into the US economy through Congress and the Federal Reserve (Fed) amidst the ongoing coronavirus pandemic. However, questions remain about the effectiveness and distribution of this funding.

Evaluation of Authorized Spending

Various sources estimate that a little over 4 trillion dollars has been authorized to be allocated during the coronavirus epidemic. Not all authorized spending translates to actual disbursal, which raises concerns about the efficiency and impact of the stimulus measures.

According to Axel Carlson's figure, approximately 1 to 2 trillion dollars has been distributed to individuals and businesses in the form of authorized payments or loans. This leaves another 2 to 3 trillion dollars as yet unspent or in the process of being spent. The exact details of these further disbursements are unclear and may take time to materialize completely.

The Disconnect Between Authorized Spending and Reality

There is a significant gap between the authorization of funds and their actual allocation to recipients. Sources such as news publications and social media have reported that many individuals, especially those in dire need, have not received any assistance. This suggests that there might be barriers within the governmental system that prevent the timely delivery of funds.

Some skeptics have raised the idea that the government or government departments, under orders from the president, might prioritize other groups over those in need. These concerns are further fueled by reports suggesting that a considerable portion of the funds has ended up in the hands of corporations and billionaires who support the RRFF party.

Analysis of Economic Stimulus through Open Market Operations

For a deeper dive into where the funds have actually ended up, one can look at the Federal Reserve's records. The New York Fed's website offers detailed insights into how the Fed implements monetary policy, including its open market operations (OMO).

Go to the NY Fed's website and navigate to the Policy Implementation section under Markets. Within this section, look for Desk Operations to explore the categories of Fed open market operations by date. The specific categories to focus on include:

Repo Operations: The majority of the Fed's monetary policy implementation falls under repo transactions. These transactions involve the Fed purchasing assets, which in turn injects money into the economy. Repo transactions can have terms ranging from overnight to 12 months. Reverse Repo Operations: The reverse process involves selling assets to the Fed, thus removing money from the economy for a certain period.

By examining these operations, one can gain a better understanding of how the Fed directly influences the economy through the monetary policy toolkit, which often involves direct injections of money into the financial system.

Conclusion

The distribution and effectiveness of the economic stimulus have been widely debated. While a significant amount of funds has been authorized, the actual allocation and its impact on individual recipients remain uncertain. As transparency and accountability continue to be key concerns, it is crucial to monitor the ongoing processes to ensure that the funds reach those who need them most, thereby fulfilling the intended purpose of the economic stimulus package.