Article from For Liberty by Norm Leahy.

The federal government will run its first multi-trillion dollar deficit this year, due largely to massive spending on coronavirus relief, and also in part due to a decades-old spending addiction.

But should we be worried that these newer, bigger deficits will lead to galloping inflation? After all, inflation was relatively tame (according to government yardsticks) in the years following the Great Recession. 

Anthony Davies and James Harrigan write that inflation could be in our future – because not even the Federal Reserve, they say, can violate the laws of economics forever:

…if recent history is any guide, multi-trillion-dollar deficits will also become the new normal. And the funding required to support that level of borrowing will require the Federal Reserve to monetize the deficit, at least partially, by increasing the money supply.

The new normal will have the Federal Reserve printing money to pay for Washington’s runaway spending. And, sooner or later, that will give us sustained and significant inflation. The time to fix this problem passed a decade ago. We’re about to enter the final stages of our government’s fiscal life.

Since the invention of money, this has happened to all of the world’s super economies, and many of the minor ones: Rome, Spain, Germany, the United Kingdom, and next, the US. In every case, the outcome was the same—the country’s currency became less attractive as a reserve currency, and the country’s economic prominence faded. In every case, the fault traces to a single source—the inability of politicians to constrain government.

That’s a grim prediction – and also one that should prod politicians of all stripes and parties to put aside their squabbling long enough to tame spending. Just don’t hold your breath waiting for either to happen.

Image Credit: By Jericho [CC BY 3.0 (], via Wikimedia Commons