Despite their informal nature, those norms have historically constrained U.S. fiscal policy. But they’re eroding.
by Veronique de Rugy
Reason.com
Washington Post columnist Megan McArdle recently wrote that the best argument made in favor of limiting the size of the stimulus during the Great Recession—part of a larger conversation about austerity—was one of ethos. “We weren’t spending the money in theory,” she wrote, “or in 1945, when an ethos of fiscal responsibility prevailed. We were spending it in the 21st century, when that ethos had collapsed, so there was a considerable chance that when the good times finally rolled around, no politician would willingly undertake the sacrifices necessary to get the budget back in shape.”
She got me thinking about America’s fiscal norms.
It’s fair to say that the ethos of sound fiscal and monetary policy started with none other than Alexander Hamilton. In his January 1790 Report on Public Credit, Hamilton advocated for fully funded permanent public debt. This report laid the groundwork for a financial system supported by securely backed debt together with commodity money. Later that year, Hamilton proposed the establishment of the Bank of the United States. Though not a central bank by today’s standards, he thought it crucial for securing federal credit and a stable currency. Hamilton recognized the interconnectedness of fiscal and monetary policies.
A hotter-than-expected consumer price index report rattled Wall Street Wednesday, but markets are buzzing about an even more specific prices gauge contained within the data — the so-called supercore inflation reading.
WASHINGTON — Consumer sentiment about the U.S. economy has ticked down but remains near a recent high, with Americans’ outlook largely unchanged this year.
When the price of oil rises, the price of everything else rises. It’s a near-universal rule owing to the fact that virtually all goods and services involve the use of oil at some stage of the supply chain that brings them from producer to consumer.
Democratic Party analysts and left-leaning economists have had quite enough of their fellow Americans’ complaints. As a striking number of poll respondents express alarm, despair even, about the rising cost of living during Joe Biden’s presidency, experts shake their heads. Don’t people realize that jobs are plentiful, wages are rising, and inflation is in retreat?
Consumer prices rose 3.5% in March compared to a year ago, accelerating markedly from the previous month and reversing some of the progress achieved in a two-year fight to cool inflation, U.S. Bureau of Labor Statistics data showed. The finding matched economists’ expectations.
Claim: President Joe Biden claimed on Wednesday that inflation was “skyrocketing” when he took office.
Welcome to this week’s Finance University episode.
Including by 7.9% annualized for the not-seasonally adjusted PPI, worst since June 2022. So we’ll take a look.