Polls show Americans are pessimistic about the economy, with inflation as the top concern. But do they understand where this inflationary surge came from, and why Washington’s addiction to government spending threatens the country’s future prosperity?
That may sound hyperbolic, but consider the numbers. The sum of new spending authorizations between 2020 and 2022 was a staggering $7.5 trillion — over $57,400 per household.
According to the Committee for a Responsible Federal Budget, roughly $700 billion (less than 10% of the total) was directed toward public health in the wake of the COVID-19 pandemic. Instead, the spending spree focused on welfare expansions, cash handouts and subsidies for a variety of special interests.
Badly flawed, Keynesian “stimulus” spending escalated even after the economy had stabilized in the summer of 2020 and was the definition of inflationary.
The Federal Reserve’s role is often overlooked. The Fed purchased a massive volume of Treasury securities from 2020 through 2021. This not only created money out of thin air but also served to provide artificial demand for federal debt at low interest rates.