Paul, a long-standing deficit hawk, said on Fox Business’ Cavuto: Coast to Coast that Congress and the Federal Reserve have created the conditions for inflation to rise above its current 12-year high.
“I don’t think it’s as benign as people say it’s going to be,” he said. “I think [increasing deficit spending] is going to have profound repercussions — and that we’re just getting started.”
High-ranking officials in Congress, the Treasury, and the Federal Reserve argue that peculiar circumstances relating to the government-induced economic recession have caused a short-term rise in inflation.
They all ignore that the government has introduced more than $6 trillion in new dollars into the economy in about a year.
Congress has financed most of the new spending with debt.
“We added four or five trillion dollars’ worth of debt last year,” Paul said. “We’re probably going to do the same again this year.”
Notwithstanding Modern Monetary Theory, which falsely asserts that the government can create new money without causing inflation, an increase in the amount of dollars always devalues existing dollars.
“When the [Federal Reserve] says this [inflation] is transitory, I think that’s an excuse for government spending and borrowing,” Paul said. “It’s sort of from the same kind of lexicon of ‘deficits don’t matter.'”
Paul argued that the newly created money has not contributed to real increases in production but simply a glut in demand, which will lead to inflation and an inevitable economic crash.
The House Republican Study Committee released a 2022 budget proposal, titled “Reclaiming Our Fiscal Future,” which it said would balance the budget in five years to control debt and inflation, Georgia Star News reported.