Of Stagflation and Economic Recovery

 

Photo by FortyTwo on Unsplash

Governments create inflation.  Since governments maintain a monopoly on money creation and exercise it constantly, the results of their policies are their own, whether they wish to own them or not.  Having said that, though government got us into this inflationary mess, more government is not going to get us out.  Yet, less government might.

The current administration—including the Federal Reserve—is in a tight spot.  Many repeatedly predicted that the unwholesome monetary and fiscal policies to respond to the equally unwholesome policies of dramatic economic shutdown of the 2020 Great Cessation would eventually lead to inflation.  So they have, even worse than what we saw in the 1970s.  The incoming Biden Administration persisted in blowing air into the inflationary balloon distended the year before.

This is not a partisan statement.  We have seen two Republican administrations doom themselves at the polls by engaging in ruinous economic policies because it was an election year.  Within memory of 2020 policymakers, the outgoing Bush Administration in 2008 mishandled the sure-to-be recession coming from the bursting of the housing bubble by panicking Congress into passing the TARP legislation, which fright drove investors to the sidelines.

True, the price rise from the 2020 massive fiscal and monetary stimulus did not appear as quickly as worriers, like me, expected.  Recipients of government largesse were not spurred to spend it as spontaneously as predicted.  Neither did negative real interest rates prod much borrowing, but it did punish savers.  While economic activity remained suppressed, people for a time sat on their money with little to do.  Eventually, puzzles all finished, people started coming out as 2021 wore on.  Congressional leadership called for more stimulus whilst the flood of funds from earlier stimulus at last began to flow.

The tight spot for the current administration is how to bring down inflation without bringing down the economy.  Of course, the economy will come down if they do not, because inflation eats away at the insides of economic activity.  Current White House leaders are sensitive about comparisons with the Carter Administration, yet there is talk of following the failed Carter example of trying to drive the economic car with one foot on the brake and the other on the accelerator.  That is the program for Carteresque stagflation, a stalled economy wrapped in continued high prices.

What we should have learned—and many have—is that the way to end inflation without getting into stagflation is not more government stimulus.  It is to end disincentives to business activity.  Reduce regulatory burdens and people will find ways to solve problems and get things done.  Inflation is caused by too much money chasing too few goods and services, stagflation impeding production of goods and services.  Reducing regulatory burdens and barriers to business activity addresses both problems by promoting productivity, innovation, and expansion, which increase supply at lower costs, reward creativity, and encourage new ideas in a virtuous economic circle.  It worked in the 1980s.  It can work 40 years later.

Of Christmas and Easter

 

Photo by Tim Gouw on Unsplash

Christmas, in all its depth, is marvelous.  It gathers together a world, nay, a universe of goodness.  It also attracts that which may not be so good, but in this world that can be said of nearly all good things.  Love, which is the greatest virtue of all, attracts a plethora of counterfeits, some of which are cheapened varieties of love, too many of which undermine love.  Many broken marriages so teach us.

I love Christmas, because I love Easter.  It is from Easter that Christmas derives its profound meaning and joy.  The depth of meaning and joy involved in Easter is unfathomable, yet there is joy in seeking to fathom it.

All goodness and happiness in life and this world are founded upon what Jesus Christ suffered and accomplished in those last few days of His mortal life, His brief experience in the world of the dead, and His resurrecting entrance into eternal life.  The ancient prophet Lehi taught that everything has its opposite.  To his son, Jacob, he said, “there is an opposition in all things,” nothing excepted, “neither holiness nor misery, neither good nor bad.” (2 Nephi 2:11)  Christ plumbed the absolute depths of evil, suffering all of the pain, sorrow, and the effects of evil for all, and then overcame it all.

Consider what it means when Jesus Christ’s perfect love for all the Father’s children meets with His omniscience, His knowledge of everything, before, then, and since.  Consider all your sorrows, and comprehensively combine them with the sorrows of all who ever lived and all who will ever live.  To Christ that whole weight was fully and completely revealed.  Christ considered and knew and experienced.  In so doing, He earned in the balance of justice an infinite supply of mercy that he offers to you  and me.

Thereby consider the opposite to the sorrow, a fullness of joy that overwhelms that weight.  No wonder when, shortly after His resurrection that guaranteed the resurrection of all, Christ met with a multitude of disciples who loved Him as much as those who wanted Him crucified hated Him.  Beholding these disciples, Jesus blessed their sick, one by one.  Surround by their children, He said, “And now behold, my joy is full.”  How much would it mean for the Creator of the world, to experience fullness of joy? 

Filled with that joy, Christ “wept, and the multitude bare record of it”.  Then Jesus “took their little children, one by one, and blessed them . . . And when he had done this he wept again . . . and said unto them:  Behold your little ones.” (3 Nephi 17)

Christmas is a delight, because Easter is a joy, and Christmas points us to it.

I have heard that before the days of Lenin, it was customary for Russians to greet each other on Easter with the words, “Khristos voskres!” To which the reply would be “Voistinu voskres!”  Christ is risen!  Indeed, He is risen!  I understand that many in Russia have resumed that Easter greeting.  There is rejoicing that can lead to a fullness of joy for each of us, everywhere.