Inflation and the National Debt: Delayed Reckoning
Image created by Canva's Dream Lab, an AI tool The U.S. economy faces potential vicious cycles as mounting national debt and servicing costs could trigger economic downturns, with the Federal Reserve caught between controlling inflation and maintaining employment. While the recent inflation surge is subsiding, the path forward requires difficult choices between short-term stability and long-term solutions like growth-promoting reforms, tax increases, and spending cuts—yet politicians show little vision or appetite for these necessary measures. Four and a half years ago, I wrote on this blog that high servicing costs from rising national debt, inflation, and even crisis and collapse were all greater long-term concerns than the immediate economic effects of COVID-19. I predicted inflation was the most likely concern in the medium term. The predicted surge in inflation came, but the wave is now subsiding. But we are not out of the woods—the risk of vicious cycles remains in several w...
