First Gen American asks:
As an economist. How likely is it that The current rate of spending by both President Biden and former President Trump will lead to significant inflation and devaluing the dollar. Why or why not.
Well, we’ve got inflation right now, though that’s mostly because of supply-side problems (factories in China, shipping all around the world) driving up prices globally. We don’t think it’s been caused by increases in US government spending.
In terms of hyperinflation, it is unlikely that the current rate of spending is going to cause anything of the sort.
I’m sure if Trump got reelected he could cause hyperinflation somehow. A lot of what causes hyperinflation is loss of trust in systems. People still trust the federal reserve. They can still raise interest rates to slow down inflation. There’s plenty of room for that. People around the world still trust the US government and our currency. We will pay back our debts.
I’m not a macroeconomist, but this is just not something anybody (other than some reporters who don’t have economics training) is worried about. We’re not just printing money. We still have economic growth. Here’s investopedia on the topic.
May 20, 2022 at 9:27 am
I agree that much of the inflation we are seeing is due to classic supply/demand imbalances. I am living it at my job and there are very legit explanations for most of it.
I don’t understand how money works on a macro scale at all, except that if everyone else is spending and we are still the best bet, it’s all good.
May 20, 2022 at 3:41 pm
Given that once upon a time, just over two years ago, I trusted the CDC/Supreme Court……. but now I am dubious/cynical/’not confident’ about their statements … I wonder how long any faith in the Federal Reserve will hold.
Thank you for continuing to work towards getting out the vote.