It will be a big boost to the money supply, that's for sure. However, the problem is two-fold.
First, half of the bill is simply including the Surface Transportation Reauthorization Act. That takes this $1.2 trillion and cuts it in half because the Surface Transportation Act was already being monetized so it is not "new" funds.
Second, these funds will take time to disperse. As far as I can tell, there is no timetable. It will most likely be monetized over a 12-month period. Extrapolate this out and that is a $50 billion monthly injection. Unfortunately, the Fed is withdrawing $15 billion, soon to be $30 billion a month. If they increase the taper again, it could become $45 billion. At that point, it makes the infrastructure bill a wash.
It'd be $100 billion per month over 12-months, but let's say it's over 24-months to keep the $50 billion figure. If it offsets the taper, wouldn't that leave us in a status quo situation instead of bracing for an immediate recession?
P.S. Just realized I made the original comment on the wrong article.
Only offsetting the taper means that money growth would stay flat. The market needs a constant increase in money supply to fuel further growth. This is why the infrastructure bill won't be enough. Now if the Build Back Budget Buster gets through, we would need to reevaluate, but currently it is being held up by Manchin and the repubs.
Even if the Fed tapers, won't the $1.2 trillion infrastructure bill passed last month still inject a ton of money into the system?
How do you see that playing into this situation?
It will be a big boost to the money supply, that's for sure. However, the problem is two-fold.
First, half of the bill is simply including the Surface Transportation Reauthorization Act. That takes this $1.2 trillion and cuts it in half because the Surface Transportation Act was already being monetized so it is not "new" funds.
Second, these funds will take time to disperse. As far as I can tell, there is no timetable. It will most likely be monetized over a 12-month period. Extrapolate this out and that is a $50 billion monthly injection. Unfortunately, the Fed is withdrawing $15 billion, soon to be $30 billion a month. If they increase the taper again, it could become $45 billion. At that point, it makes the infrastructure bill a wash.
It'd be $100 billion per month over 12-months, but let's say it's over 24-months to keep the $50 billion figure. If it offsets the taper, wouldn't that leave us in a status quo situation instead of bracing for an immediate recession?
P.S. Just realized I made the original comment on the wrong article.
Missed the part about the Surface Transportation Reauthorization Act (and cutting the number in half). But the rest of the question still holds.
Only offsetting the taper means that money growth would stay flat. The market needs a constant increase in money supply to fuel further growth. This is why the infrastructure bill won't be enough. Now if the Build Back Budget Buster gets through, we would need to reevaluate, but currently it is being held up by Manchin and the repubs.