$5,000 Cheque Plan Sparks Alarm Among Economists

US President Donald Trump's promise to send $5,000 cheques to every American has sparked alarm among economists and monetary policy experts. The plan, which could cost up to $1.2 trillion, would likely embolden the Federal Reserve to tighten its monetary policy and combat rising inflation.

The proposal, which is seen as a political ploy by Trump and his Treasury Secretary Scott Bessent, has been met with skepticism by most analysts in Washington and on Wall Street. There is no clear funding source for the plan, and even if Republicans retain both houses of Congress at the midterms, it's unclear that they will get the necessary approval.

Fed Chair Kevin Warsh, a monetarist who has frequently aired his views on monetary policy, is likely to be particularly opposed to the idea. As he noted in his annual Jackson Hole speech, 'money matters' and a one-off injection of $1.2 trillion would be equivalent to more than 5% of total M2 money supply.