Sound Fiscal Policy Is Missing From The Battle Against Inflation, Report Argues | Eastern North Carolina Now | Fiscal discipline is missing from the battle against elevated inflation, according to a paper published by the Committee for a Responsible Federal Budget last week.

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    Publisher's Note: This post appears here courtesy of the The Daily Wire. The author of this post is Ben Zeisloft.

    Fiscal discipline is missing from the battle against elevated inflation, according to a paper published by the Committee for a Responsible Federal Budget last week.

    As the economy grapples with supply chain issues and labor shortages, price levels rose 8.2% between September 2021 and September 2022, according to a report from the Bureau of Labor Statistics. The paper from the nonpartisan organization noted that lawmakers are working against the contractionary monetary regime advanced by officials at the Federal Reserve.

    "Spending increases and tax cuts work to boost demand in the near term, while high levels of projected deficits and debt can boost inflation expectations. This is especially true if markets believe the government will attempt to inflate away a portion of its debt," the paper said. "Enacting deficit reduction during a period of high inflation can also help to reassure markets that elected officials are committed to responsible policy and won't attempt to undermine Federal Reserve tightening in the future should inflation persist."

    Deficits soared in the wake of multiple stimulus packages enacted in response to the lockdown-induced recession. Both Republicans and Democrats have presided over surges in the national debt, which reached $31 trillion earlier this month.

    David Bahnsen, the founder of Manhattan-based wealth management firm The Bahnsen Group, explained to The Daily Wire that although deficits "have corresponded with periods of low prices and high prices," the greater concern is that runaway spending "puts downward pressure on future growth, as certain future growth will be absorbed by repayment of debt."

    The Committee for a Responsible Federal Budget argued that monetary policy is more useful for addressing economic phenomena than fiscal policy, which is generally constrained by the political process, yet affirmed that lawmakers can still "reduce recessionary pressures" through deficit reduction. Among other measures, officials could pursue work incentives that relieve labor shortages and reduce the deficit to "temper demand."

    The paper added that such policies would "require large increases in unemployment." Contesting the conclusion, Bahnsen argued that encouraging higher joblessness to slow the economy is a disproven thesis. "Growth absorbs money supply when the policy prescription is right," he explained. "Remove impediments to the new supply of goods and services, and prices come down in a market economy."

    The Federal Reserve raised the target federal funds rate by 0.75% last month, a move which followed two identical hikes in June and July, in an attempt to relieve elevated inflationary pressures. Bahnsen asserted that rate hikes are not "even remotely effective" in controlling many prices faced by consumers, with the exception of the "absurdly hot" housing market, in which mortgage rates have neared 7%.

    "The general price level increased because of the COVID shutdowns that brought new supply and new production to a dead standstill, followed by a reopening that brought demand back to pre-COVID levels without the corresponding readiness in supply," he explained. "Other than the few parts of the economy that low rates were artificially inflating, rate hikes are not the right tool for dealing with skyrocketing energy prices, food prices, or health insurance premiums."


poll#162
In what may be the most divisive period in modern American History, even more divisive than the turbulent sixties due to today's lack of patriotism, consider what are the major catalysts causing so much of this calamity of conflict, and vote: What most instigates the division of America, on this day September 20, 2022?
  Racism within our society
  Sex realignment to the detriment of our society.
  Biden /Harris Wide Open Southern Border Policy for the Demographic Upheaval of OUR Constitutional Republic
  Rampant Crime in Democratic controlled cities, and the possible contagion elsewhere
  Covid Pandemic, and its mishandling at the political, and bureaucratic levels.
  The unresolved questions /allegation regarding the flawed 2020 General Election
  January 6th Riot or "Armed Insurrection", depending upon patriotic perspective
  Joe Biden as Divisive Leader; Ineffective and Corrupt Executive
  Failed Education Industry, from an overall perspective, regarding all levels of education.
  Propagandistic Media in complete conflict with the First Amendment's guarantee of Freedom of Speech, and the awesome responsibility of a Free Press..
  "Orangeman Bad!"
  Bureaucracy rushing to a behemoth size, its unjustified expense, and far too often overreach.
  The Weaponized Deep State for political purposes
  A secular ambivalence to all that is real.
  Record number of overdose deaths from opioids and now Fentanyl
  Biden Administration's disastrous Foreign Policy
  Bidenflation /supply chain failure inevitably evolving into stagflation and recession.
  "Ultra MAGA Extremists" freely speaking louder AND LOUDER!
691 total vote(s)     What's your Opinion?


poll#154
Inarguably, the policies of the Democrats in congress and Joe Biden as the Executive is plunging the United States into a recession, if we are not already there; a recession that was completely avoidable. Will abrupt changes in policies occur in time?
  Yes, the Democrats have a bold plan, yet to be revealed, to save us.
  No, there will have to be a complete undoing of the damage done by these Democrats.
  I can't do simple math, so how am I to understand the concept of basic economics.
1,180 total vote(s)     What's your Opinion?

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