Monetary Policy From An Alternate Universe

America’s great problem today is that the several branches of government believe things which are manifestly untrue. These include:

• The Deep State’s belief in US global hegemony and interventionist enforcement of rubbery constructs like the “rule of law” rather than reliance upon the nation’s nuclear deterrent and the great ocean moats to provide homeland security;
• The Fed’s obsession with its 2.00% inflation target and the notion that actual inflation rates should be ignored if “inflation expectations” are well-anchored ;
• The fiscal branch’s delusion that deficits don’t matter because interest rates are low and the carry cost of the public debt is manageable.

In combination, these misbegotten notions are leading to ruin. That is, soaring military spending, an economic sanctions war against the dollar-based global trade and payments system, rampant debt-financed fiscal profligacy and sweeping falsification of financial asset markets and injections of massive excess liquidity.