Deflation Still a Threat: Not Enough Stimulus

In order to grow nominal GDP, the economy must create enough credit. The government, private business or a comination of both must borrow. Total credit market debt outstanding (TCMDO) is more than $80 trillion, or about 400 percent of GDP. TCMDO spiked to 10 percent growth in the second quarter, or $7.5 trillion. Credit growth is already slowing though. The $10 trillion total loans and leases in the private market is growing slower than it did at any time during the Trump administration. It looks like stimulus will fall to the federal government, at least as long as they're locking down the American economy. Now President Biden is saying the $2,000 check is the $600 from end of 2020 plus a $1,400 check this year. His $1.9 trillion stimulus proposal is less than expected. Deficit-hawk Dems in the House and Senate make it unlikely Congress will exceed Biden's propsed stimulus. It is still possible the next budget is much higher than expected, but the deficit hawks must be won over. For credit growth to rise, the private economy needs confidence in the future. Lockdowns do not inspire confidence. In conclusion, it is possible credit growth will take off and drive growth, but it hasn't materialized yet. The incoming regime has signaled it won't create "enough" stimulus if the private economy doesn't rebound. I put enough in quotes because stimulus will destroy the currency and encourage more bad investments, pushing out the day of reckoning.