Cecil Bohanon & Nick Curott: Higher government spending has fueled inflation

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4 thoughts on “Cecil Bohanon & Nick Curott: Higher government spending has fueled inflation

  1. Inflation is a worldwide problem driven by pandemic related supply-side disruptions, war and, in some countries, by pandemic-related spending policies. The US inflation rate is about 2 points higher than Europe’s and some of this difference may be due to our pandemic spending policies. But these policies prevented a massive increase in poverty and promoted economic growth. We shouldn’t apologize for this.
    So, it appears that have three challenges: substantial pandemic-related supply-side challenges, war-related supply interruptions and pandemic-related spending levels. But attacking supply-side problems with interest rate increases does not solve these problems and it has consequences, particularly in interest rate sensitive occupations like construction.
    Here’s another approach suggested by our home-grown Nobel Laureate Joseph Stiglitz, that would let price signals address the supply-side challenges while protecting the most vulnerable from inflation’s effects:
    “a one-time “inflation adjustment” tax cut for lower- and middle-income households would help them through the post-pandemic transition. It could be financed by taxing the monopoly rents of the oil, technology, pharmaceutical, and other corporate giants that made a killing from the crisis. “

    1. I don’t live in Germany, David; I live here. I learned many years ago that there is no free lunch. If money is printed and distributed with no goods or services rendered for it, it is worth less than earned money. Since we have no way of distinguishing between the two, the printed and distributed with no value added money dilutes the value of money earned legitimately. This is not rocket science.

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