In just the past two decades, Congress and several administrations, with full support from the Federal Reserve, have grown our budget deficit to over 130 percent of GDP with no end in sight. This increase has put the U.S. among the top 10 worst deficits in the world, alongside Greece and Italy. According to the U.S. Treasury Department’s recent Financial Report of the U.S. Government, “The current fiscal policy of the U.S. is not sustainable.”
This cannot continue, and the Federal Reserve must immediately cease aiding and abetting it. The scourge of inflation is upon us again. For a playbook on how we might deal with it, we can look to the period from the late 1970s through the 1980s, when we dealt with it successfully, albeit with extreme pain and disruption.