Economic literacy has long evaded the bozos stumbling around in the halls of the US Congress. Politicians think on short-term horizons and favor political measures to buy votes.
Hence, the near universal embrace of big government and easy money (the biggest enabler of government growth).
Kentucky Congressman Thomas Massie is one of the few elected officials who gets this. And he made sure to call out his House colleague Speaker Nancy Pelosi for her recent display of economic ignorance.
On March 11, Pelosi stated during a press conference promoting The American Rescue Plan “When we’re having this discussion, it’s important to dispel some of those who say, well it’s the government spending. No, it isn’t. The government spending is doing the exact reverse, reducing the national debt. It is not inflationary.”
.@SpeakerPelosi: "When we're having this discussion, it's important to dispel some of those who say, well it's the government spending. No, it isn't. The government spending is doing the exact reverse, reducing the national debt. It is not inflationary." pic.twitter.com/6HKE5gX2SP
— The Hill (@thehill) March 12, 2022
Massie responded, “Fact-check: Completely FALSE.”
Fact-check: Completely FALSE https://t.co/WQGzB6lGZS
— Thomas Massie (@RepThomasMassie) March 19, 2022
Unlike his colleagues, Congressman Massie understands basic economics. Inflation is ultimately a monetary phenomenon. It’s the expansion of the money supply. However, when governments embark on massive government spending and rack up immense debts, the temptation to inflate the currency is huge. Inflation tends to reduce debt burdens through inflation-induced debt destruction. However, there are nasty consequences to inflating a currency.
Massive debasement of the currency transpires and people’s savings get destroyed. With no savings, people live in the present and are not incentivized to plan for the future. Future orientation is a bedrock of civilization and once that goes out the window, a rational society ceases to exist.
