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Biden sleepwalks into a stagflation nightmare

NEW YORK – The Biden administration’s US$1.9 stimulus package, adding to last year’s $2 trillion in Covid-19 related handouts, has the effect of feeding sugar to a diabetic. The patient is on a sugar high, but at risk of collapse.

The US doesn’t have the productive capacity to meet the demand created by the federal government and the Federal Reserve. The result is stagflation—a combination of inflation and economic weakness that we last saw during the Jimmy Carter administration in the 1970s.

There are two big differences between now and the 1970s, though. The first is the explosion of US government debt. The second is China.

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