Federal Spending Ignites Inflation

OnThePoint commentary by Greg C. Truax airs weekly on WHBO AM 1040.

Welcome back to OnThePoint.  This is Greg C. Truax.

If you’re puzzled by persistent high inflation, consider the impact of federal government spending. Significant expenditures  from the American Rescue Plan, alongside the Inflation Reduction Act of 2022 and the Infrastructure Investment and Jobs Act of 2021. Together, these initiatives account for about $3.8 trillion.

Such massive spending has escalated budget deficits, with interest-bearing debt now hovering around $35 trillion, according to Main Street Economics.

This fiscal expansion has not only artificially increased demand for labor, boosting employment rates, but has also tightened the labor market, driving up wages and, consequently, service prices.

Excessive government spending complicates the Federal Reserve’s task of controlling inflation, as it increases demand at a time when the Fed is trying to temper it.

This is Greg C. Truax.  

Greg C. Truax is president of GCTMediaGroup, a film production studio, online magazine publisher, radio commentator, and creator of written and broadcast opinion commentary.

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