On December 15, the Federal Reserve announced numerous quantitative tightening measures that have the intended goal of combating the rising inflation that has been bogging down the American economy. As of November 2021, the rate of inflation has reached 6.8 percent, the highest since 1982, and is unlikely to have peaked yet.
Relating a quip by Soviet economist Nikolai Fedorenko, Yuri Maltsev illustrated the problem with socialism in his foreword to Ludwig von Mises’s Economic Calculation in the Socialist Commonwealth. Fedorenko said, at the time, in Maltsev’s words, “[A] fully balanced, checked, and detailed economic plan for the next year would be ready, with the help of computers, in 30,000 years.”
Whereas inflation rates in the US and Europe have risen steeply in the course of 2021, consumer price inflation in Japan stood at 0.1 percent for October 2021 (figure 1). Also, Japan’s producer price inflation of 8 percent lagged far behind the US and Europe. Even more, Japan’s extremely low inflation has persisted for more than thirty years—despite an extremely loose monetary policy and soaring government debt. There are three reasons for Japan’s “inflation miracle.”
Not surprisingly, both houses of Congress approved another increase in the debt ceiling and have sent the bill to President Biden, who will most assuredly sign it. The bill raises the debt ceiling to $31.5 trillion. This debt ceiling is expected to last through the upcoming midterm elections so that incumbent elected officials don’t have to deal with it in their campaigns for reelection.
