Inflation and Government Spending

The Federal Reserve Board of Governors held their annual symposium in Jackson Hole, Wyoming last week. The symposium is a meeting of the Federal Reserve along with leading economists and others who can weigh in on the state of the US economy.

A reported clear consensus by the attendees was that huge spending by governments exacerbates the problem. One study presented at Jackson Hole argues that half of U.S. inflation is fiscally driven, meaning that government spending is driving at least half of the increase in prices, and the Fed will fail to control prices without government cooperation.

President Biden’s answer? Spend more, first pumping hundreds of billions of dollars more into the economy with the climate stimulus bill and hundreds of billions, in addition to that, by giving money for outstanding student loans, both just in the past month.

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