Biden's big gamble

This week's extraordinary stimulus is a high-stakes bet for America and the world

When the pandemic(全国或全球性)流行病。此指新冠 struck it was natural to fear that the world economy would stay in the doldrums低迷，不景气 for years. America is defying抵抗 such pessimism悲观情绪. Having outrun gloomy令人沮丧的 growth forecasts from last summer, it is adding fiscal财政的 rocket fuel to an already fiery火热的 economic-policy mix. President Joe Biden's $1.9trn(trillion)万亿 stimulus bill, which he was poised(be poised to)信誓旦旦，随时准备做某事 to sign into law after The Economist went to press, takes to nearly $3trn (14% of pre-cri-sis危机前 GDP) the amount of pandemic-related spending passed since December, and to about $6trn the total paid out since the start of the crisis. On current plans the Federal Reserve and Treasury联邦储备和财政部 will also pour some $2.5trn into the banking system this year, and interest rates will stay near zero. For a decade十年来 after the global financial crisis of 2007-09 America's economic policymakers决策者were too timid. Today they are letting rip恣意妄为.

The probable result is a bounce-back反弹 that was unthinkable in the spring of 2020. In January America's retail sales零售销售 were already 7-4% higher than a year earlier, as most Americans received $600 cheques支票 from the government, part of the previous round of stimulus. Stuck被困住的 at home and unable to spend as much as they normally would in restaurants, bars and cinemas, consumers have accumulated积攒 $1.6trn in excess过度；过量地 savings during the past year. Mr Biden's stimulus gives most Americans another $1,400 each. Unusually for a rich country, a big chunk of大量的 the cash pile is held by poor households that are likely to spend it once the economy fully reopens (see Finance section). If vaccines疫苗 continue to reach arms and America avoids a nasty encounter with new variants(病毒的)变种, the unemployment rate should fall comfortably below 5% by the end of the year.

The good news is not confined只限于 to America. Manufacturing surveys are healthy even in the euro zone欧元区, which is behind on落后于 vaccinations and battling new variants, and is applying less stimulus. Mr Biden's spending will further boost global demand for goods. America's trade deficit贸易逆差；贸易赤字 is already more than 50% greater than before the pandemic, as the economy sucks in imports (see Buttonwood《经济学人》的金融市场专栏). But the rest of the world will not match Uncle Sam's breakneck极快的 pace. On March 9th the OECD(Organization for Economic Cooperation and Development)经济合作与发展组织，工业化国家鼓励贸易和经济发展的组织, a club of rich countries, forecast that America's economy will, uniquely among big economies大型经济体, be larger at the end of 2022 than it had been predicting before the pandemic. From April to September America is likely to outgrow even China, which is tightening monetary货币的；财政的 policy and has suffered a 9% fall in its stockmarket since mid-February.

Surging out走出 of a crisis that had at its worst moment cut the number of people in work by 15% will be a triumph胜利 for America and will stand in contrast to the puny弱小的；微不足道的 recovery after the financial crisis. Mr Biden's spending will provide welcome relief to those whose lives have been upended—today America is still missing 9-5m(million) jobs. Thanks to extra cash for most parents, the country's persistent and widespread child poverty will fall dramatically显著的，巨大的.

Yet, though today's policymakers have a guaranteed place有一定的地位 in economic history, they may not come to be seen as heroes. That is because America is running an unpredictable three-pronged从三方面的，三管齐下的 economic experiment that features historic levels of fiscal stimulus财政刺激达到历史水平, a more tolerant attitude at the Fed towards temporary overshoots in inflation过度的通货膨胀, and huge pent-up被压抑的 savings which no one knows if consumers will hoard囤积，储藏 or spend. This experiment has no parallel对比 since the second world war. The danger for America and the world is that the economy overheats.

It is a risk that investors have been weighing up权衡. America's ten-year bond yields十年期债券的收益率, which move inversely against prices与价格反向波动, have risen by about one percentage point since last summer, on expectations of higher inflation and higher interest rates. Because of America's pivotal关键的；中枢的 role in the global financial system, its outlook for monetary policy spills溢出，流出 across borders. In recent weeks Australia's central bank has had to increase its bond purchases债券购买 to prevent yields from rising too much. The European Central Bank was deciding whether to make a similar intervention干预，介入 as we went to press. Emerging markets新兴市场 with big deficits[财政]赤字，亏损, like Brazil, or with large dollar-denominated debts美元债务, like Argentinan阿根廷（位于拉丁美洲）, have reason to fear the tightening in global financial conditions following a turn in American monetary policy.

The Fed is adamant坚定不移的 that it will keep interest rates low and continue to buy assets资产 until the economy is much healthier. Inflation will inevitably不可避免地；必然地 rise as a collapse崩溃 in commodities prices商品价格 early in the pandemic falls out of comparisons with a year earlier, but the Fed will ignore this. Under its new "average inflation targeting" regime管理体制, adopted last year, it is seeking to bring about inflation over its 2% target in order to make up for past shortfalls短缺，不足. That is particularly desirable非常可取的 because, for much of the past decade, the world economy's problem has been too little inflation, not too much. Even if the economy eventually overheats, Jerome Powell, the Fed's chairman, has argued that this, too, will be temporary. Longer-term inflation dynamics, he argues, "don't change on a dime在极小的时间内".

Might they, however, turn on trillions of dollars动用数万亿美元? We have no reason to doubt the Fed's near-terms短期；近期 plans, but neither it nor the markets can predict the eventual outcome of America's experiment. The Fed might have to pour cold water on the economy, raising interest rates to get inflation down. That would be awkward, given how much it has recently emphasised its obligation义务；职责 to seek "broad based and inclusive广泛性和包容性" strength in the jobs market. Higher rates would puncture刺破 asset markets资产市场 and might also precipitate使（坏事等）突然发生 conflict with an increasingly indebted government负债累累的政府.

All the chips on red孤注一掷

Mr Biden's stimulus is a big gamble. If it pays off, America will avoid the miserable low-inflation, low-rate trap in which Japan and Europe look stuck. Other central banks may copy the Fed's new target (see Free exchange). Massive fiscal stimulus may become the normal response to recessions衰退；不景气. The risk, however, is that America is left with rising debts, an inflation problem and a central bank facing a test of its credibility可信度.

This newspaper would have preferred a smaller stimulus本刊更倾向于较小规模的刺激. Alas唉（表悲伤、遗憾、恐惧、关切等等）, America's troubled politics混乱的政治 do not permit fine-tuned policymaking精细的政策制定 (see next Leader) and Democrats民主党人 wanted all they could get. Mr Biden's gamble is better than inaction. But nobody should doubt the size of his bet.

Mar 13th 2021, The Economist