Stupid Inflation Tricks

resident Biden was warned. Back in February 2021, as Congress debated the $2 trillion American Rescue Plan, former Treasury secretary Lawrence Summers made the case in a Washington Post op-ed that the bill might “set off inflationary pressures of a kind we have not seen in a generation, with consequences for the value of the dollar and financial stability.”

His argument was textbook economics: The proposed legislation simply spent too much relative to the size of the economy. It would come on top of an unprecedented $4 trillion in deficit spending Congress had appropriated the year before. The Federal Reserve, meanwhile, was doubling its balance sheet. And the economy in 2021 was growing. “There is the risk of inflation expectations rising sharply,” Summers concluded.

Read Full Article »