The U.S. is now experiencing the long-run negative effects of fiscal and monetary policies that were intended to extend short-run bursts of economic activity. These negative effects include a significant increase in its national debt, increased volatility within financial markets, high inflation and a decline in real GDP growth. To combat these problems, the U.S. government must discipline itself and adjust its spending and tax programs. Likewise, the monetary authorities must cease enabling the government’s excess spending. If preemptive corrective action is not taken in monetary and fiscal policy, then the U.S. risks precipitating its own next financial and economic crisis.
