Mises Daily Friday by Antony Mueller: 

Brazil’s government has long been devoted to the idea that more government spending will create more economic prosperity. For a time, it seemed to work, but now reality and disillusionment have set in.

Europeans and the Japanese have long been fearful of price deflation. This fear is probably based on the fact that mainstream economists and central bankers have this fear and express it often. That fear is called apoplithorismosphobia. They believe that deflation is a force that sucks an economy down and destroys it much like a black hole that sucks objects in and destroys them. The only evidence they have is that price deflation occurred during the Great Depression. They don’t have a theory, reason or evidence.

Time reports that Rand Paul has come out in favor of a sizable boost to defense spending,

[U]nder Paul’s new plan, the Pentagon will see its budget authority swell by $76.5 billion to $696,776,000,000 in fiscal year 2016.[1]

Paul, positioning himself for a run in the presidential primaries, is echoing his fellow republicans who seem to be under the impression that defense spending is an endangered species in Washington, DC.

Its been over 6 years of ultra low interest rates referred to as ZIRP, or zero interest rate policy. We have been told to expect a normalization of interest rates soon, but now we are told that the Fed, specifically the New York Federal Reserve Bank is trying to figure out how to do that. 

For the millions of people who have suffered through an economics course the answer should be obvious, but for the Fed, things are not as clear as in the past.

[Editor’s note: In this article from 2015, economist John Cochran examines why higher interest rates are a key factor in repairing the damage of easy-money-induced business cycles. This topic remains timely and important because the Trump administration, like the Obama, Biden, and Bush administrations before it, remains committed to low-interest inflationary monetary policy. At the time of Cochran’s writing, the Yellen fed was doubling down on endless low-interest rate policy.

In September 1993, President Bill Clinton reassured his radio audience that “if you work hard and play by the rules, you’ll be rewarded with a good life for yourself and a better chance for your children.” Picking up that theme over eighteen years later, President Barack Obama affirmed that “Americans who work hard and play by the rules every day deserve a government and a financial system that does the same.” The trouble is neit

How big is government in the United States? The answer depends on the concept used to define its size. Although many such concepts are available, and several are used from time to time, by far the most common measure, especially in studies by economists, is total government spending (G) as a percentage of the gross domestic product (GDP).

Central banks have embarked on a transition from relative secrecy to relative transparency over the last two decades. This has led researchers to investigate the ramifications of transparency on important economic outcomes. By and large, the results reported have been favorable, favorable with qualifications, or ambiguous. This paper examines the communications of officials from the Federal Reserve during 2007, the year between the end of the housing bubble and the beginning of the financial crisis.

All Keynesian roads lead to stagflation. That was the case in Europe and in the United States in the 1970s when both stagnation and inflation hit the economies at the same time. Currently, this is the case in Brazil.