It’s possible that we’ll not in fact find out whether inflation is a purely monetary phenomenon. For Joe Biden seems set on trying to gain inflation anyway, through simple overstimulus of the economy. He’s proposing that there be $1 trillion deficits out for the next decade. Just the thing when the economy is already growing strongly, right?
Under the plan, documents for which were obtained by the Times, the federal government would spend $6 trillion in the 2022 fiscal year, and spending would increase to $8.2 trillion by the year 2031.
That is, you know, a lot.
The plan demonstrates that Biden shows little interest in taming the deficit, which would remain above $1 trillion through the next decade, despite an expected economic recovery.
That’s really a lot a lot.
Rather than find a path to a sustainable debt, the plan would increase the country’s debt burden to 117 percent of GDP by the end of the decade,
This is after all the calculations about how much such spending will grow the economy.
Writ large, the budget proposal, which the White House is expected to formally lay out on Friday, is an unabashed call for a bigger role for government in the U.S. economy, bringing spending to a quarter of the nation’s annual output, larger than any level before the pandemic.
Well, yes. And then when you add local and state spending on top then you’re going to get to 35% of GDP, perhaps a bit more. Which is European levels – UK sorta numbers. And guess what? Even with that sort of spending they’re still not going to have universal and single payer health care, nor an all round welfare state.
What will happen though is substantial inflation. For the economy is already booming. There are already inflationary pressures. And the money supply has expanded out the wazoo. Add in substantial deficit spending and which possible cause of inflation don’t we already have?
Sadly, this isn’t in fact good news for those of us who even still understand the phrase “fiscal rectitude”. For there are so many things that might go wrong here that the blame will never be pinned upon any one of them.