When Congress passes a spending bill that is fully “paid for,” it sends two sets of instructions to the Federal Reserve. The Fed is the government’s fiscal agent — i.e. its bank — and virtually all payments made by (and to) the federal government are handled by the Fed.
The first set of instructions tells the Fed to make certain authorized payments on behalf of the U.S. Treasury. The Fed makes these payments by using a computer to add dollars to bank accounts. If we’re doing a big infrastructure bill, then the government might be paying Caterpillar Inc. for lots of new building equipment and hiring thousands of construction workers, architects, engineers, and so on. Government spending adds dollars to bank accounts.
The second set of instructions tells the Fed to use the computer to subtract dollars from bank accounts. In our example, closing tax loopholes would force people and companies to pay higher taxes.
On balance, “paying for” its spending means that the government instructs the Fed to subtract away (via tax) exactly as many dollars as it adds (via spending) to bank accounts.
That is not what Congress is doing today. Instead of writing a bill that would send two sets of instructions to the Fed, Congress is pushing through a $2 trillion spending bill that will send just one set of instructions. No one is bothering to try to offset — i.e. “pay for” — that spending, because the goal is to get lots of money to people (and companies) without subtracting a lot away. As Rep. Ocasio-Cortez correctly points out, Congress is doing now what it could always have done.
So what are the limits for a currency-issuing government like the United States? The answer is inflation. The government can’t run out of money, but it can run out of things to buy (including labor). We are constrained by our real resources — i.e. our technical know-how and the available supply of workers, factories, machines, raw materials, and so on. As long as the economy isn’t already operating at full capacity, then it is reasonable for Congress to send just one set of instructions to the Fed.
Source: https://theintercept.com/2020/03/27/coronavirus-stimulus-package-spending/
This is the gist of it. These are the constraints a nation with a sovereign currency operates under. Whether or not the economy is functioning at full capacity or not. But the corona virus crisis is a special case where much of the economy is shut down. We certainly do not want to stimulate the economy, which is why it would be a mistake to call the package a stimulus package.
What is it about, then? What the package does is put money in the hands of individuals and businesses who are not allowed to operate right now to ensure that the individuals continue to be able to buy food and other essentials despite not being paid salaries and to keep the businesses from going bankrupt owing to unpaid debts until the crisis is over and they can start operating again. This type of package is absolutely essential to prevent widespread carnage in the economy owing to a short-term crisis that would have very serious long-term consequences.
If the gold standard were in effect or if the world had adopted the Bitcoin standard, then this type of packages would obviously be impossible. As access to money would suddenly dry up for a large proportion of the population, the only way to stave off a real emergency would be to maintain large reserves to pay for essentials during crises like this or to heavily tax those who have kept their jobs so far. What we're doing now is much easier to implement.