I'd like to hone in on your bit about the risk of inflation from passing the $3.5 trillion reconciliation bill. Over the same period we will spend $7.6 trillion on defense. Where were the howls about inflation when that spending bill was sailing its way through congress?
The $3.5 trillion bill is mostly paid for unless the conservative de…
I'd like to hone in on your bit about the risk of inflation from passing the $3.5 trillion reconciliation bill. Over the same period we will spend $7.6 trillion on defense. Where were the howls about inflation when that spending bill was sailing its way through congress?
The $3.5 trillion bill is mostly paid for unless the conservative democrats get their way and most of the revenue portion gets stripped out. So it's not $3.5 trillion of new money getting dumped into the economy. It's $3.5 trillion getting added over 10 years and let's guess about $2 trillion getting removed through taxation for a net effect of about $1.5 trillion new money over 10 years.
The entire US economy will generate over $214 trillion over the same period. That means new cash injected into the system will be about 0.7% of the economy. I'm sorry, but I doubt even Milton Friedman would argue that adding 0.7% of government spending into the economy over 10 years would generate an appreciable amount of inflation, never mind enough inflation to actually worry about.
I truly hope you are right about this. I'm no economist, and it's certainly possible that I've been listening too much to the inflation hawks on this lately. And true, since it's a reconciliation package it's supposed to be budget neutral, in theory.
Still, it feels like they're rushing something that most of us haven't really had time to digest. Inflation can be industry-specific (such as what generous college loans did to the cost of higher education), which is why spending so much on defense doesn't affect the economy as a whole. It would be nice to have time to look at the package to make sure the money is being spent wisely and not just dumped onto the demand side of things so that we don't end up contributing to certain rising costs (like healthcare, for example).
I'd like to hone in on your bit about the risk of inflation from passing the $3.5 trillion reconciliation bill. Over the same period we will spend $7.6 trillion on defense. Where were the howls about inflation when that spending bill was sailing its way through congress?
The $3.5 trillion bill is mostly paid for unless the conservative democrats get their way and most of the revenue portion gets stripped out. So it's not $3.5 trillion of new money getting dumped into the economy. It's $3.5 trillion getting added over 10 years and let's guess about $2 trillion getting removed through taxation for a net effect of about $1.5 trillion new money over 10 years.
The entire US economy will generate over $214 trillion over the same period. That means new cash injected into the system will be about 0.7% of the economy. I'm sorry, but I doubt even Milton Friedman would argue that adding 0.7% of government spending into the economy over 10 years would generate an appreciable amount of inflation, never mind enough inflation to actually worry about.
I truly hope you are right about this. I'm no economist, and it's certainly possible that I've been listening too much to the inflation hawks on this lately. And true, since it's a reconciliation package it's supposed to be budget neutral, in theory.
Still, it feels like they're rushing something that most of us haven't really had time to digest. Inflation can be industry-specific (such as what generous college loans did to the cost of higher education), which is why spending so much on defense doesn't affect the economy as a whole. It would be nice to have time to look at the package to make sure the money is being spent wisely and not just dumped onto the demand side of things so that we don't end up contributing to certain rising costs (like healthcare, for example).