In a scramble to keep the economy from plummeting into a depression during the COVID-19 crisis, the US Government signed off an unprecedented $2.3 trillion in relief to support households, employers, financial markets, and state and local governments. And discussions continue on providing a second stimulus package worth an additional $1 trillion.
For the most part, this money is coming essentially out of thin air.
But conventional wisdom has held that governments cannot simply create money on such a massive scale and continue propping up the markets without triggering inflation.
Should investors be worried? To understand whether inflation is likely to become a risk in the near term, let’s take a closer look at what inflation is, what causes it, and how you can protect yourself.