Stimulus checks are fixing a problem the economy doesn't have

It's not true that economist Larry Summers is always right — contrary to the belief of Larry Summers. However, he's bright enough that we should always take note of what he's saying. At the moment, he's saying that the new round of stimulus checks is a mistake, and in this, he's right.

It may be surprising, but household incomes are actually hardly down at all this year. We do have economic problems, but people not having money isn't one of them. Thus, giving people money doesn't solve the problems we have. In more technical terms, we are not in the standard Keynesian recession in which there is not enough demand. We are, instead, in one in which there are certain things that cannot be done — it's a supply-side problem. This is why the savings rate has leaped this year. People have money but cannot spend it as they would wish: restaurants, bars, theater, vacations, live music, and the rest.