Magnitude is relative

There’s $2 trillion of economic aid in the works. The headline is big and loud, and the amount is monumental by any prior standard, but historic standards don’t apply for an event that is unprecedented. If the objective is to keep the economy from collapsing, the package may be a first step only.


In Q4 2019, U.S. GDP was approximately $22 trillion – and there’s no economic rule to keep it just exactly where it is – but a gap filler of roughly 10% when the economy is largely shutting down doesn’t seem to be as filling as it could and probably should be.

Without considering the details of how and where the funds are being spent, the aggregate is probably far less than monetary and fiscal measures can sustain… in the home of the U.S. dollar, where inflation risks were low even before this mess began.

It really boils down to the duration of the fall and trajectory of the rebound. If long and relatively slow respectively, then the current measure may be a warmup exercise. Hopefully that’s the spirit in which it is being contemplated.