Risks of US cash
“When America sneezes, the world catches a cold” is a term used to describe the ripple effects of the US economy on global growth. But what if America takes a triple espresso?
The $1.9 trillion stimulus package, set to become law on Friday, is an enormous moment in US politics. It will do a great many things, from funding roll-out of vaccines to providing $1,400 stimulus payments.
For a country with a threadbare social safety net compared with European nations, this money will make an enormous difference to the lives of millions of people.
Two measures — monthly cheques for young children and those over five — could reduce child poverty by 45 per cent. Yet there are risks. As George Osborne wrote in this paper, such a glut of money could lead to a bout of inflation.
This would not only push up prices for American consumers, but it could also raise the cost of servicing government debt, including in Britain.
