Eighteen years ago this week, Paul Krugman was awarded the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel. Ostensibly, he won it “for his analysis of trade patterns and location of economic activity,” but most likely he received it because he had spent the previous eight years attacking the George W. Bush administration from his perch as a New York Times columnist, as Bush was rather unpopular with a majority of Europeans.

Wall Street and the federal government are both addicted to artificially low interest rates, and to easy money. The federal government wants lower borrowing costs to help finance the $40-trillion federal debt. And, Wall Street and wealthy asset owners want monetary inflation to help ensure that prices for assets—i.e., real estate and stocks—continue ever upward. Yet, against the wishes of these interest groups, the Federal Reserve’s Federal Open Market Committee (FOMC) raised the policy interest rate last month. The Fed’s hand was essentially forced by political realities.

The Social Security Administration announced today that Social Security benefits will increase by 3.6% in 2027, reflecting higher inflation and boosting the average retiree’s annual benefits by about $900. On average, Social Security retirement benefits will increase by $75 per month, rising from $2,095 to $2,170.

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” — Ludwig von Mises, Human Action

A new definition of madness: legislating potent new fiscal incentives for capital spending when the longest running and most severe asset inflation in modern times has gained new and threatening momentum. That is what happened in the US last year. The chickens are already coming home to roost as the spectre of calamitous malinvestment looms large.

For years, anyone arguing that China’s spectacular economic rise was less impressive than it appeared was liable to be dismissed. There were always doubters, however, and I found myself among their ranks.