Why Haven't We Received Another Stimulus Check?

This is a great question. First we need to understand that there are actually two different types of stimulus that the federal government can use. The first, is called Monetary Stimulus and comes directly from the Federal Reserve. The Federal Reserve, or "Fed" for short, is the US central bank and they are responsible for managing the money supply and controlling treasury bond interest rates (which ripple into all other interest rates like mortgages, corporate bonds, etc.). They can issue stimulus by printing more money or by lowering interest rates.


The process of printing money and injecting the money into the market is called Quantitating Easing (a.k.a. QE). Through this complicated process, asset prices such as stocks are pushed higher and the money supply increases which inevitably decreases the value of the dollar.


Fun Fact: Interest rates were lowered all the way down to 0% in March during an emergency meeting of the Federal Reserve board. The markets continued to fall until the Fed commit to issuing $2 trillion worth of QE. Now we have spent more than $5 trillion in QE.


The other kind of stimulus is called Fiscal Stimulus, and this is the process of Congress making stimulus payments directly to citizens or increasing unemployment/welfare benefits. The process of delivering fiscal stimulus is entirely different than delivering monetary stimulus. Fiscal stimulus requires a plan to be passed by both houses of Congress, the Senate and House of Representatives. That's why it has taken so long for us to receive additional stimulus checks, yet the stock market has reached all-time highs.


Our houses of Congress are entirely divided, at some points even taking vacation during the Pandemic while stimulus checks and unemployment benefits ran out. Not to mention, they issued one, single stimulus check worth $1200 and not another dime since. Senate leader Mitch McConnell says he wants to see another stimulus deal get passed, this one worth $500 billion in total, which includes funds for the PPP loan program.


$500 billion sounds like a lot, but not when it's compared to the $5 trillion in Monetary Stimulus which was used to keep markets artificially high. Yet the fiscal stimulus cannot be funded via an emergency meeting; it requires a group of over 200 lawmakers acting like petulant children making demands while the people they represent struggle to stay afloat.


It somehow seems like fiscal stimulus is more important than monetary stimulus. And not to be frank, but who cares about the stock market being stimulated during a pandemic? The stock markets reaching all-time highs while American families struggle is an abundantly clear indication that whatever we are doing isn't working. Or maybe it's working for those who own stock, but for the majority of Americans it's leaving them in a very vulnerable place.

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