Fiscal Stimulus Impact on CPI graphicViolating the principles of John Maynard Keynes and Milton Friedman has consequences.

The pandemic recession produced a steep economic decline. Enter John Maynard Keynes, who advocated fiscal stimulus during periods of economic contraction to lessen its severity and duration. The 2020 fiscal stimulus worked. A sharp V-shaped recovery resulted, with the U.S. economy experiencing unprecedented, Asian Pacific Rim GDP growth.

The U.S. economy then growing at two to three times its natural rate was unprepared to support such rapid expansion. The W. Edwards Deming logistics philosophy of just-in-time inventory management was not ready to serve this post-pandemic demand. Moreover, stimulating an economy during this period of expansion produced inflationary pressure. Thus, the early 2021 $2.8 trillion stimuli ushered in this new era of inflation with too many dollars chasing too few goods. Irresponsible congressional action now requires remedy.

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