Washington’s Inflation Machine

It wasn’t so long ago that the word “trillion” was thought of as something like a “zillion.”

It was of course, a real number… but it was so far out there, it was almost imaginary — used more for describing the distance between stars in the galaxy rather than zeros on a government check.

But like the saying goes, “A billion here, a billion there, and pretty soon you’re talking real money.” And as constituent frogs of the US government, we’re all being slowly boiled in fiscal irresponsibility. Today, politicians and the media talk about trillions of dollars, and barely anyone bats an eye. 

It’s not hard to understand how this has happened. 

Our elected officials believe they need to provide prosperity for their constituents — if they want to stay elected that is. 

It’s not the government’s job to provide prosperity. Markets create prosperity. But like flies drawn to an open dumpster, it’s irresistible to butt in whenever possible and do anything they can to take credit.

Government Spending and Inflation

Governments don’t “invest” in economies.  Because, unlike a business, they rarely care if they get results. And when the outcomes are less than desirable they walk away (or throw more money at the problem). Rarely is anyone ever in government ever held accountable. Case in point…

Right now the administration is blaming the current round of inflation on the pandemic and Vladimir Putin. Both factors definitely play a role. But they conveniently forget to mention the economic shutdowns they supported along with the $5.2 trillion of free money they pumped into the economy between 2020 and 2021.

The higher education system is another.

The price of higher education has been on the rise for far longer than the recent spike in consumer prices. That’s because of how the government has gone about investing in that. 

Fifty or sixty years ago and going to college was an accomplishment — Families were producing their first ever college graduates.

Thirty or forty years ago, a college education became an expectation for most families.

Today, that once proud accomplishment is so taken for granted that it’s required just to keep up with modern society. Like not having a BA or BS after your name somehow makes you less of a citizen.

When you think about it, funding education (the government way) has been done much the opposite way that funding anything else is done.

What’s the first thing your bank wants to know before handing you a check to buy that new house? 

How much you make…  Because no one (at least not in the wake of the 2007 lending debacle) is going to extend a  $500,000 loan to someone making $40,000 a year. The logic behind this is really pretty simple.

But when it comes to student loans, and I admit, I am oversimplifying a bit, the less you make, the more you qualify for. 

Going through the application worksheet, there are all kinds of inputs for the student’s income as well as the parents (for dependent students). The goal of all these calculations isn’t so much to ensure repayment of the loan as it is to determine a student’s financial need. 

In perhaps the most fiscally responsible statement on their page, Student Aid.gov says under “how aid is calculated”… 

“You can’t receive more need-based aid than the amount of your financial need.”

A (real) business investment is made judiciously based on the potential risk as well as the expected return. 

Government investments are mainly giveaways. Because the risk to the government is basically zero.  And the “prosperity” their investments have produced has buried our country in debt, and now ignited a wave of inflation we haven’t seen in nearly half a century.

And this is where we get to the government’s big financial lie. 

In your next issue I’ll explain why they couldn’t care less about the current state of inflation. And the 4th grade math they’ll use to make you pay their bills…

Make the trend your friend,

Bob Byrne
Editor, Streetlight Daily