From Inflation to Immigration: Essential Policy Debates for the Upcoming Election

Very soon, we will be voting again and, once again, there are a lot of economic and science issues that each voter will have to weigh in on their choice of who to vote for. Here are some of them:

Inflation

The question is what policies or problems have caused the inflation we are facing now and what are the best policies going forward? There are several causes. First, the federal government has been spending a lot of money, including trillions on the American Rescue plan and the Inflation Reduction Act. That’s the demand side of the equation (when there is more demand for goods than supply, prices rise). Larry Summers, an economist, had warned that trillions of dollars of spending would fuel inflation. Also, we had a pretty large increase in spending on the COVID-19 crisis. There was also a backlog of supply of both goods and workers which caused prices to go up. Russia’s invasion of Ukraine led to rising oil prices and sanctions which has limited supply. And finally, the Federal Reserve  supplied too much money in too short of a time.

What Policymakers Shouldn’t Do:

Don’t raise prices on imported goods (i.e., tariffs) and don’t try to suppress prices by price controls. The first results in much more inflation and the second results in shortages, the same kind we saw during COVID. 

What Policymakers Should Do

I’ll leave that to macroeconomic experts, and I am not one. Clearly, we want to stabilize the money supply, make sure the oil supply catches up to demand, and cut back on government spending, which will also help us reduce the enormous interest rates we pay on an unsustainable debt.

Read the full piece on my Substack here.