The government can give you money, but it can't make you toilet paper

Congress can pass legislation and give you $1,200, but Congress can't give you a pork chop.  Congress does not have any special ability to make it possible for you to turn money it gives you into a pork chop.  Producing a pork chop at a minimum requires a farmer and employees to raise a pig, a truck-driver to transport the pig to a processing plant, owners and workers at a processing plant, then another truck-driver to transport the processed pig to a grocery store and then finally a grocer and employees to sell the resulting pork chop to you.  This does not even consider any workers involved in producing any machine, such as a truck, used in the pork chop supply chain.  So, again, Congress can give you money, but if the supply chain breaks down at any point, legislators cannot make it so you can turn that money into a pork chop.

The central bank, the Fed for the U.S., can print and put more money into circulation, but the Fed can't give you a smartphone.  The FED does not have a magic production wand so that there is a smartphone to turn that money into.  Producing a smartphone requires someone or a team to design the smartphone, an owner and employees at a factory to assemble the smartphone, a person or people to transport it to a retail store, and an owner and employees to sell the smartphone to you.  Again, this does not consider anyone involved in producing any machine used in the factory producing the smartphone or any vehicle used in transporting the smartphone or any machine used in the store selling you the smartphone.  So if the supply chain breaks down at any point, the Fed cannot make it so you can turn the increased money supply into a smart phone.

That the Fed can't produce a smartphone is why, when in reaction to the Wuhan coronavirus, the Fed tried to support the U.S. stock markets, the markets yawned or, worse yet, took the Fed's dramatic moves as signs that things were much worse than the market participants already thought.  People in the stock market know that Congress or the Fed can give you money but can't produce a pork chop or a smartphone.  This is the reason, despite anything the Fed did, why Apple faced a shortage of replacement iPhones in early March due to the disruption of its supply chain in China.

Similarly, after the Berlin Wall fell, a famous eastern bloc explanation of workers' former life in eastern bloc countries was "they pretended to pay us and we pretended to work."  The "they," the government in eastern bloc countries, who owned all the means of production like any government, was able to give workers pay — that is, money.  The "we," the workers who were being given money, only pretended to work because neither they nor anyone else in their economy was producing enough of what people wanted to buy.  So once again, government can give you money — $1,200, $12,000, $120,000, $1.2 million — but the government cannot make you toilet paper.

The author is a professor of economics in the Department of Economics, Finance and Real Estate at the Mitchell College of Business of the University of South Alabama.

If you experience technical problems, please write to