The Inflation Scare and Healthy Economic Growth

Andrew Spannaus for Aspenia online:

To counter the effects of the Covid-19 pandemic, the United States Congress has approved spending packages totaling close to $6 trillion, and President Joe Biden is now pushing for even more, aiming to pass both the $1 trillion bipartisan compromise on “hard infrastructure”, and the $3.5 trillion “human infrastructure” bill drawn up by Congressional Democrats to address social and environmental spending.

The amount of money involved is staggering: adding it all up, it would come to almost 50% of GDP, without even counting interventions by the Federal Reserve, which are not reflected in government accounts. Some of this money would have been spent anyway, for example being shifted from other budget items, but there is a reason why even mainstream conservative commentators are writing about the end of the neoliberal consensus and a new role for government: the potential for a paradigm shift with respect to the economic policy approach of the past 40 years is real, although there is still a long way to go to revive the “American System” approach of Alexander Hamilton, Abraham Lincoln and Franklin Delano Roosevelt.

Perhaps the most effective argument in recent decades against a more interventionist economic policy has been the fear of growing public debt. Republicans and Democrats alike have constantly reminded us of the danger of too much spending, alleged to represent a mortal danger to our children and grandchildren’s future, as we increasingly hock ourselves to private interests and even foreign countries that will soon demand we pay the bill.

It is a scary story, but entirely untrue.

Read the whole article here on Aspenia online.