The COVID-era inflation directly resulted from the government borrowing and printing $5 trillion while handing out checks, demonstrating how fiscal and monetary policies are always coordinated despite appearing separate. The large national debt severely constrains the Federal Reserve’s ability to fight inflation by raising interest rates, creating a fiscal inflationary cycle unless Congress raises taxes or cuts spending. Any future debt crisis would cause a double catastrophe by collapsing both the financial system and government simultaneously, with no external entity available to bail out the United States as Germany did for Greece.
Learn more at: https://www.hoover.org/research-teams/fiscal-policy-initiative?utm_source=youtube&utm_medium=description&utm_campaign=fpi_description
Featuring:
– John Cochrane, Hoover Institution
– Hanno Lustig, Stanford University
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