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Instead of quantitative easing and interest rate reductions why wouldn’t Stimulus at Checkout (SAC) work?

What is SAC? When the Fed needs to stimulate the economy, using Point of Sale technology, SAC pays for 50 percent of purchases made by consumers at checkout.

SAC creates fewer dangerous unintended consequences than quantitative easing or interest rate tools. Money tied to quantitative easing and interest rate reductions tends to leak into creating asset bubbles. SAC creates demand not asset bubbles.

Politically, SAC is an easier sell than traditional tools. It’s popular with lower income households and business owners.

Here is a YouTube video which summarizes SAC:

https://youtu.be/_YhIQqa00Is?si=U5oUEYpLhTvGJH3W

Why wouldn't SAC be a better alternative to quantitative easing?

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The SAC is a direct fiscal stimulus. The Fed is not allowed to do that- fiscal policy is controlled by Congress. The Fed is only allowed to take monetary action, such as lowering rates or buying bonds (QE).

As to whether SAC is a good idea for fiscal policy depends on your political viewpoint. It’s a highly progressive , broad distribution of money. I can see all kinds of practical issues such as hoarding in case the policy goes away. Overall it doesn’t sound too sensible.

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  • $\begingroup$ Are you sure this is highly progressive when I can get a 50% subsidy for a bag of groceries but a billionaire gets 50% for a yacht? $\endgroup$
    – H2ONaCl
    Sep 19, 2023 at 9:53
  • $\begingroup$ I didn’t know that. Where can I get a yacht half price ? $\endgroup$
    – dm63
    Sep 21, 2023 at 2:00
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Direct fiscal stimuli in the form of deposit level increases is arguably an even better policy than SAC. This way, you don't get a bigger discount the more you spend (i.e. the richest) and it's incredibly progressive and redistributes income to the lower end of of the distribution.

You're completely right that QE largely has the effect of creating asset price inflation as opposed to Consumer Price Inflation (CPI). This primarily benefits the most well off with the most assets... clearly regressive in nature.

The Government through Congress in the US or Parliaments in the UK or Canada, etc, are responsible for fiscal policy by institutional convention.

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