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by SkyMarshal 2194 days ago
>It constantly looks like the country is merely printing more money to stay afloat.

That's basically what's been happening since 2008. The main lesson the Economics profession learned from the Great Depression is that it's better to prevent a full-on depression by any means available than to let it occur and rebuild afterwards. Rebuilding after that level of economic destruction is long and arduous, better to preserve what you have. That's what the 2008 GFC would have caused (or worse) if not for extensive US govt and Fed preventative measures.

The modern means of doing that is for the government to deficit spend and for the central bank to pump the financial system full of cheap or free credit. Problem now is, nobody sees a way of unwinding the deficits and cheap credit without causing the depression they were trying to prevent.

Neither political party has the political will to balance the budget and be the cause of the resulting economic pain. Republicans convince themselves we can outgrow the deficits by cutting taxes, and Dems convince themselves that Modern Monetary Theory will spur growth and limit inflation enough to outgrow the deficits. The Fed tried early in the Trump admin to raise rates back to normality, and the market started crashing again, so they stopped. We're stuck.

It's the most consequential economic experiment since the US left gold standard, and nobody knows how it will turn out. Imho our best hope is for a gradual devaluation of the Dollar and a soft landing, avoiding a major shock. But under precarious circumstances like these, unpredictable shocks are a distinct, if not likely, possibility.