As we approach the end of the tax reform bill saga, I just want to remind everyone how the fear of federal debt leading to massive currency induced inflation never happened even with trillions of debt on the books.
I am going to let the charts speak mostly for itself
CPI (Consumer Price Inex) Inflation has been calm and the rate of growth has been falling
PCE (Personal Consumption Expenditures) Inflation has not only been steady but even in 2017 the rate of growth fell. This is one of the reasons why earlier in the year I wrote that the Fed needs more inflation.
The dollar never collapsed and in fact it rose like it usually does before the first-rate hike
Interest rates not only didn’t rise with higher federal debt, they have been in a down trend on the long end since federal debt has exploded in this last cycle with 4 trillion of QE on top.
The reality for us as Americans is that tax rates are low and the debt is going to expand a lot going into the future because we love low tax rates, we love military spending and we are about to embark on an epic rise of older Americans collecting transfer payments.
One more thing, China does own us.
From a resourceful website: Political Calculations:
I am not a big fan of MMT ( Modern Monetary Theory) and have gotten into many battles with proponents of that theory over the years, specifically regarding how they interpret economic data. However, they have opened eyes to the fear of a massive federal debt leading to currency induced inflation should be questioned.
Logan Mohtashami is a financial writer and blogger covering the U.S. economy with a specialization in the housing market. Logan Mohtashami is a senior loan officer at AMC Lending Group, which has been providing mortgage services for California residents since 1987. Logan also tracks all economic data daily on his own facebook page https://www.facebook.com/Logan.Mohtashami