What to do With That Stimulus Check?
(Utah Pulse) Once that much anticipated government stimulus check is in consumers’ bank accounts, the next question is what to do with it? The government hopes you’ll spend it. Experts say you should save it, or pay down debt.
Jeff Thredgold, an economist for Zion’s Bank and President of Thredgold Economic Associates says that money will give a little shot to the slow economy. …”We’ve done this before. In the past any time the government has sent out rebate checks, about half of the money is spent. That’s what the administration is urging Americans to do. “
Most consumers will get $300 back, $600 for couples, plus $300 each for up to 2 children. Thredgold says it will help consumers take pressure off rising gas and food prices, but he says it’s not exactly sound economic policy for the federal government. “It would be nice if the administration and Congress were tapping into their own rainy day fund for this money,” says Thredgold. “Unfortunately, this is borrowed money, which means the US will be running a larger deficit next year."
Borrowing that money may give some experts pause, but Thredgold says he’s not too worried. “We borrow against the future every time we buy a home. We may borrow to buy a car or a college education. The government has certain flexibilities you and I don’t have,” Thredgold said. “One of those is the ability to create money out of thin air. That’s what the Federal Reserve does. That has led to a $10 trillion deficit. The bad news is that money has a whole bunch of interest related costs. The good news, if you will, is a $10 trillion annual debt out of a $14.5 trillion economy is exactly the same ratio it was in the mid 1960’s.”
Thredgold says that 67% of debt to the overall economy is not as bad as some countries. He says Japan’s debt is about 160% of that nation’s total economy.
Jeff Thredgold will speak at the Salt Lake City Main Library on Saturday evening at 7:30pm as part of the “Dewey Lecture Series.” That talk is free to the public