As Utahns celebrated Independence Day and Pioneer Day, the nation faces a $28 trillion debt and individuals face rising prices for everyday products, challenging our capacity to be truly independent or pioneers. Printing and spending money seems to be no longer pegged to reality, and we have reached a point when money is losing its meaning both symbolically (to our national leaders) and literally (for the rest of us).
In an era where bipartisanship is in short supply, one thing many Democrats and Republicans in Washington, D.C., agree on is more spending. Since President Reagan downsized government in the 80s and President Clinton declared the end of big government in the 90s, we have seen federal spending rise and the national debt grow, regardless of which party was in control.
Still, the past 20 years could not prepare the rational mind for current spending levels. In addition to the $6.5 trillion spent in 2020, President Biden has proposed another $5 trillion budget on top of his American Jobs Plan and American Families Plan estimated to cost $6 trillion.
There is no doubt the country faced a unique challenge with the pandemic and Congress acted quickly and appropriately to stem a deeper and longer recession with the first round of rescue spending, but subsequent trillions of dollars spent moved from rescue to relief, and from stimulus to pet projects.
This current monetary policy, combined with fiscal policy pumping unprecedented amounts of new dollars into the system, is leading us down the path of knowing the price of everything but the value of nothing, drifting into bankruptcy first slowly then all at once. In this environment, money is losing both its value and its meaning.
We all remember stories of wheelbarrows of money to purchase bread in Weimar Germany or the more recent example of Venezuela experiencing 8000% inflation. More than any single event, the dollar losing value over time through inflation and then suddenly in cases of hyper-inflation, matters more now than ever.
Every builder knows lumber prices have gone through the roof. Every shopper knows the price of food is up. Gas prices are unusually high after the pandemic suppressed demand. Inflation is impacting everyone and, like a regressive tax, it hurts those who can least afford it the most.
Putting trillions of dollars into circulation, coupled with low interest rates, naturally fuels growth and causes hiring to pick up and unemployment to drop. Good things for sure. But more dollars in the system also diminishes the value of each dollar, and the extra cash causes prices to rise in order to match dollar debasement and increased demand. Balancing these factors is not an easy task, maybe even impossible, and now reality is emerging along with unintended (but not surprising) consequences.
What might we do then? The answer is acting wisely personally and advocating the same for our government. Personally, each of us can follow wise counsel to reduce debt, increase savings and have supplies on hand that can last through any period of inflation. We must also become more fiscally responsible as a nation.
Utah exhibits a good model for our federal partners to follow. Utah has a rainy-day fund, balances its budget, and spends on today’s services with today’s money. Supporting our future rather than bankrupting it is something both Republicans and Democrats should get behind.
Derek Miller is president and CEO of the Salt Lake Chamber.