13/06/2022
There's nothing more expensive than "free money."
The average price for apartment rents just went above $2,000 per month for the first time ever.
Surging rents are part of the crippling cost of the post-pandemic stimulus hangover.
We all remember the pandemic-era stimulus checks... $3,600 in total for millions of Americans. It was part of $5+ trillion in stimulus spending, designed to insulate the economy from the economic fallout of COVID-19.
Sure, all the free money felt nice at the time, as consumers and businesses enjoyed a temporary boost to their bottom lines.
There's just one problem...
The government did not create $5 trillion in wealth to hand out. Instead, they simply borrowed and created the money required to foot the bill. But with all this extra money chasing a fixed supply of goods and services, prices have exploded higher.
Gas is now $5 per gallon, +115% from 2019
The average American home costs $429k, or $100k more than pre-pandemic levels.
The average used car price is approaching $30,000 - up more than $10,000 from 2019.
Meanwhile, interest rates are shooting higher in response to this inflation, crushing the prices of financial assets across the board. So we not only have higher consumer prices, but also lower values for stocks and bonds.
Hopefully we remember this costly lesson the next time the government promises us a painless solution to our economic problems.
There's nothing more expensive than "free money."
