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Inflation Is the Mother of Big Political Change – WSJ

By Thomas A. Smith

Today s inflation would be hitting an economy with rigidities of its own, mostly of a different kind. Zoning rules depress the supply of housing; licensing restrictions depress the supply of personal services. Wind and solar mandates tax the reliability of the grid. Means-tested entitlements make it less attractive at the margin for Americans to work.

We may discover other vulnerabilities but two gaping ones weren t part of the story in the 1970s. In 1977 federal debt was 34% of GDP; today it s 125%. And the share of Americans who ve experienced direct government aid has quadrupled. It now comprises more than 50% of the population, and that s before our vast pandemic spending and Joe Biden s welfare ambitions.

Which means a lot could go kerblooey and fast. Rising interest rates could double or triple today s $400 billion interest bill on the national debt. Overnight, this item could rival Social Security and Medicare as the biggest single budget outlay.

via www.wsj.com

A lot could go kerblooey and fast.

Holman Jenkins.