2020 - 2023: Borrowing from the Future Generations (1/2)

Continuing the Series “Investing Milestones and Lessons (1974-2024)”

COVID-era government dole outs, with no recouping mechanism, accumulated in consumers’ hands. As pandemic restrictions lifted, this pent-up spending power was unleashed, setting the stage for an inflation surge.

But who bears the brunt of inflation?

It is the less fortunate in our society, for whom the rising costs of essentials like food and housing consume a disproportionate share of their income.

Ironically, the very measures intended to cushion the economic fallout for the most vulnerable ended up exacerbating their financial strain through soaring living expenses.

One can’t help but wonder, could a balanced approach—perhaps through a temporary tax surcharge announced simultaneously with aid but deferred until the pandemic was under control - could have softened the inflationary blow? Alas, such fiscal harmony remains elusive in a landscape marred by deep-seated political divisions.

Just like there is no free no lunch in investing, there is no free lunch when it comes to fiscal spending and borrowing by the government. This bill will need to be paid one day.

Future generations will blame our generation for the debt we have incurred. They already do, and with good reasons. Expect their complaints to become more vociferous in the future.

What do you think? Do you think government aid during the COVID crisis ultimately helped the poor or the rich?

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Photography by Alena Darmel