This is the Katori Daily Podcast for Thursday, August 25,

2022. I'm Caleb Brown.

Debt continues to pile up in the US and under current projections

it's probably trillion dollar deficits as far as the eye can see.

Romina Botches, the Cato Institute's a freshly minted director of budget and

entitlement policy. She's looked at the numbers and wants to remind us that

historically there are just a few examples

of countries bouncing back from this level of debt.

The Biden administration championed and Congress passed a piece of legislation aimed at or at least according to the

title of the legislation was aimed at bringing down inflation but of course it's a

massive spending bill and it's not really clear that this

piece of legislation will do much to reduce inflation but it is a massive spending bill and so maybe it would be helpful

to understand better this relationship between government spending, which is a large fraction of total GDP and the inflation that we

are experiencing right now. Yeah, so what happens when government spends money?

It competes with resources with the private sector and it depends on how many of those resources are available and if

government ends up consuming or redirecting a lot of those resources away from

private sector activities that can increase the price level.

In general, if you look at the inflation reduction act, what you have is a bill that

has about 370 billion dollars over the

next ten years of subsidies of various kinds for the energy industry. Some have

called it a mini version of the Green New Deal. And then you also have about another

70 billion of Obamacare related health care subsidies. So all in all you're looking at

...