Fixing Our Economic Woes Is as Easy as Looking to the Past

Skyrocketing inflation, a historic Fed interest rate hike, rock-bottom unemployment, employers begging for workers—and just about everyone else scared to see what the stock market has in store tomorrow. It’s unclear whether the economy is just suffering from a case of monetary and fiscal policy indigestion or if something deeper is going on.

Can the Fed thread the needle and gear down the economy to cool inflation while avoiding a recession calamity? Will its 75-basis-point interest-rate increase provide any relief? Or has America’s free market economy become so bruised by constant political tinkering that it cannot respond predictably to yet another change in monetary policy?

When looking for feasible answers to these questions, our political leaders place the blame elsewhere and point to things outside of their immediate control. These excuses include uncertain recoveries from past recessions, COVID-19 shutdowns, supply chain breakups that require time to heal, and a war-loving Russian president’s invasion that has disrupted one of the world’s major energy filling stations.

While each of these scenarios does contribute to economic chaos, decisions by past and present administrations—including Barack Obama’s, Donald Trump’s, and Joe Biden’s—to subsidize economic sectors and to deposit freshly printed money into taxpayers’ bank accounts are perhaps most responsible. 

After unleashing trillions of stimulus dollars that chase a limited supply of goods, services, and travel opportunities and drive prices up, our political leaders doubled down. They produced, defended, and left intact regulations, tariffs, and subsidies that raise protective walls around America and offer special benefits to important interest groups.

Let’s consider the Federal Reserve data comparing the year-over-year growth in the S&P 500 stock market index and the all-items Consumer Price Index (CPI) produced monthly