Nobel Prize-winning economist Milton Friedman explained, “Inflation is always and everywhere a monetary phenomenon, in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output.”
On the campaign trail, President Biden said, “Milton Friedman isn’t running the show anymore.” Talk about tempting fate. Friedman is having the last laugh now. Even presidents can’t fight basic economics.
Today’s historic inflation is the chit that’s been looming due for years of fiscal profligacy and easy money that politicians have said is “cost-free.” It’s a black eye for Democrats, because it directly results from their Keynesian fiscal religion and Modern Monetary Theory (MMT) madness.
Today’s painful inflation should put a nail in the coffin of MMT, the belief held (at least in practice) by many Democrats that deficits don’t matter, because money grows on trees—or at least on Federal Reserve printers. Indeed, the inflation cost of MMT is proving high and painful. This philosophy is also responsible for the federal debt hitting $32 trillion, the net interest on which threatens to be a massive drag on the economy moving forward.
The decreasing value of the dollar further discredits the big-government approach to managing the economy. Next time the government calls for some massive social spending program, small businesses will be wary. “We tried that approach already,” Americans can say, “and it resulted in runaway inflation, falling real incomes, and decreased living standards.”
