When the President and Congress blow out the budget, the difference is borrowed from future (imagined) surpluses. That depreciates the dollar.
by Alexander W. Salter
The Daily Economy
How much longer will high inflation plague the US economy? Both the Consumer Price Index (CPI) and the Personal Consumption Expenditures Price Index (PCEPI) have grown faster than 2 percent (annualized) every month since March 2021. Inflation peaked during the summer of 2022 and has since fallen. Yet, it remains stubbornly elevated.
Much depends on the economic priorities of the Trump administration. I think many economist’s fears about the inflationary effects of trade and immigration restrictions are exaggerated. This is disputable, of course, and we should have a good-faith public debate. But let’s not lose sight of the big picture: monetary and fiscal policy still matter most.