The supply of money governs inflation. Print it without either greater productivity or more goods and services, and the currency cheapens. Yet America apparently rejects that primordial truism.
The United States is more than $ 28 trillion in debt – about 130% of the country’s annual gross domestic product. The government will run up a $ 2.3 trillion budget deficit for 2021 after a record $ 3.1 trillion deficit the year before.
The Biden administration still wants to borrow more – another $ 2 trillion in new social programs and “infrastructure.”
In the crazy last 100 days, the price of everything from lumber, food and gas to cars and houses has soared. Yet many interest rates are still stuck at or below 3%.
Jobs are plentiful; workers are not. Is it a surprise when government handouts discourage the unemployed from taking a pay cut to go back to work?
After being freed from 13 months of quarantine, Americans are splurging. But this huge pent-up demand is causing shortages. Producers fear the Biden administration’s loose talk of higher taxes, greater regulation and cutbacks in energy development.
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Are the old principles really obsolete? Should we be printing money while expanding government debt? Is it wise to keep interest rates close to zero and to discourage employment, production and thrift? This dangerous behavior used to ensure inflation, followed by ruinous stagflation.
After George Floyd was killed while in police custody in Minneapolis, some U.S. cities slashed police spending. Police response times have slowed in many places, perhaps because officers are worried about being fired for using force.
The result? In major cities such as New York and Los Angeles, homicide and violent crime rates have increased by double digits.
State and local governments believed they were exempt from primeval laws of deterrence that warned when criminals assumed they would not be caught and punished, then they committed more crimes.
The same dangers of ignoring unchanging human nature apply to foreign policy.
Aggressive opponents such as Iran, North Korea, China and Russia expect that the Biden administration will ignore their brinkmanship. They assume the administration will cut American defenses. And Biden sounds to them more critical of Trump foreign policy than of America’s enemies. Why not take previously unwarranted risks?