"Reduced business investment and increased unemployment results...

"Reduced business investment and increased unemployment results in less economic growth" that is the whole idea!

It puts a cap on inflationary pressure.

Goes like this.

• Add liquidity to market = increases employment, increases potential to buy, grow GDP, increases inflation.
• Remove liquidity from market = decreases employment, decreases potential to buy, grow GDP, decreases inflation.
• Less buying drives down prices, drives down inflation.

Welfare $$ is at a reduced % of a job $$ = safety net + decreases potential to buy = decreases GDP = decreases inflation.

The particular nuance of this COVID welfare event is they significantly over supplied liquidity, so that there was to much money chasing reduced supply, because supply chains broke!

The FED has been removing liquidity for months + increased interest rates to make mortgages + credit higher to decrease discretionary spend, putting downward pressure on GDP and prices in conjunction with fixing and normalizing supply chains so that demand + supply are in relative balance.

The problem is, the US and other western countries are on-shoring a % of jobs that went to China which increases employment + wages. Additionally, the demographics of the country has lead to higher retirements than typical, which increases employment and wages stats, as shown in the monthly JOLTS metrics.

They've only been using the model for 7 decades, so relatively new compared to the history of man.