Once again, the economic system is trying to adjust to political and monetary interventions. The year 2023 marks the end of a historical period characterized by zero-cost credit.

The monetary expansion that began in the early 2000s led to the great financial crisis of 2008 and the emerging markets boom. Exaggerated demand expectations and easy access to capital caused an overexpansion of production capacity and the subsequent industrial restructuring between 2015 and 2018.

Banks have been tightening their lending standards, and they plan to keep doing it throughout the rest of the year. Last week, the Board of Governors of the Federal Reserve released a new report on how much banks plan to expand or tighten lending in coming months. The report, known as the Senior Loan Officer Opinion Survey on Lending Practices, found that bankers expect a deteriorating economic picture in 2023, both for themselves and for their customers. 

Special counsel John Durham on Monday released his report on the FBI’s role in investigating the 2016 Donald Trump campaign’s alleged collusion with Russia. This investigation, codenamed “Crossfire Hurricane,” had been—according to Durham’s report—”swiftly” opened as a full-blown investigation in response to “unevaluated intelligence information” by FBI personnel “without ever having spoken to the persons who provided the information.”

It is hard to ignore the headlines about US corporate profit margins stabilizing at their highest level in decades. This information has provided plenty of ammunition for populist commentators and politicians who blame corporate greed for the sharp increase in postcovid consumer prices and ignore the elephant in the room, which is a more than 40 percent increase in broad money supply after March of 2020 mostly due to central bank balance sheet expansion and the monetization of massive budget deficits.