J.D. Tuccille at Reason took on journalist Matthew Yglesias’s vox.com video that I wrote about yesterday, focusing on Yglesias’s pooh-poohing of the sheer size of the national debt. Tuccille noted that Yglesias under-reported its humungosity, and that the Congressional Budget Office finds, counter to Pollyanna-liberals, no small reason to worry about the ballooning debt.
But I’m still shaking my head that Yglesias really did argue the federal debt is no problem, because — get this! — the Fed can always just print more money.
We know! What he sees as a solution we see as a problem.
The modish government-as-savior view of society seems pure simplicity: major inputs and outputs — money supply, fiscal spending, debt, inflation — all of which liberal-progressives will “expertly” adjust.
Fed this, no wonder people ask questions like “why haven’t we seen inflation, following the huge influxes of quantitative easing?” Well, it is not just about consumer prices, but investment prices, too, which we have long known to be more volatile than consumer goods; investments can easily suck up new money to create an unstable boom, which bursts.
The biggest problem for today’s market recovery — aside from subsidies and wage controls and all the folderol that directly discourage new jobs — is federal government irresponsibility itself (symbolized neatly by the federal debt) which signals to investors and other market participants that they cannot make viable long-term plans.
Economist Robert Higgs called this effect “regime uncertainty.” It’s the uncertainty bred by bad policy.
Just the kind Yglesias and his comrades adore.
Fiddle with the economy’s dials, oh wise ones, and uncertainty seems a certain result.
This is Common Sense. I’m Paul Jacob.