Inflation as Chronic Illness – Veronique de Rugy

When COVID-19 emerged in early 2020 , policymakers across the world scrambled to respond.

They locked economies, confined healthy people with sick ones, and closed schools.

Congress , two successive administrations, and the Federal Reserve responded with an unprecedented fiscal and monetary expansion.

The result was the highest US inflation in 40 years , a labor market riddled with perverse incentives and government dependency that outlasted the crisis.

The Payroll Protection Program , a $953 billion flagship pandemic program, aimed to provide forgivable loans to small businesses to retain employees, was a prime example of wasteful government spending, fraud, and misallocation of resources.

The amount of fraud in the program was enormous, according to the Government Accountability Office .

Inflation is a large part the result of Biden ’s disregard of the old fiscal religion that holds that, while the government may deficit-spend during recessions, the aftermath requires austerity.

The Federal Reserve played a critical role in facilitating this inflationary spiral by keeping interest rates near zero and purchasing massive amounts of government debt ( $2.7 trillion ).