The Moment When Monetary Policy Runs Aground on the Third Great Mistake

The U.S. national debt exceeded $30 trillion for the first time, reflecting increased federal borrowing during the coronavirus pandemic. Total public debt outstanding was $30.01 trillion as of Jan. 31, according to Treasury Department data released Tuesday. That was a nearly $7 trillion increase from late January 2020, just before the pandemic hit the U.S. economy.

The debt milestone comes at a time of transition for U.S. fiscal and monetary policy, which will likely have implications for the broader economy. Many of the federal pandemic aid programs authorized by Congress have expired, leaving Americans with less financial assistance than earlier in the pandemic. Meanwhile, the Federal Reserve has signaled it could soon begin to raise short-term interest rates from near zero in an effort to curb inflation, which is at its highest level in nearly four decades.

-The Wall Street Journal, February 1, 2022

The Fed can change how things look; it cannot change what things are.

-Jim Grant