The latest example of the Federal Reserve engaging in Bill Kristol-like levels of denial is the Fed's continued insistence that the return of 70s-style inflation is a "transitory" phenomenon resulting from the end of the lockdowns. The Fed has acknowledged the "transitory" inflation will last until at least 2022, yet it is still determined to keep interest rates at or near zero until the "jobs situation" improves.

To be fair, the Fed has finally announced plans to cut back on its money-pumping activities by reducing by 15 billion dollars a month its monthly purchase of 80 billion dollars of Treasury bonds and 40 billion dollars of mortgage-backed assets.

It is unlikely that the Fed will stick to its plans to "taper" its purchase of Treasury bonds. The Fed's Treasury bond purchases enable the federal government to run up the debt without increasing taxes or paying punishingly high interest on the debt.

The Congressional Budget Office projects that by 2030 the federal debt interest cost will more than double to 829 billion dollars. That is more than the government spent on the military in 2020!

Despite the looming fiscal crisis, Congress is unlikely to cut spending anytime soon. Instead, Congress members are debating a 1.75 trillion dollars "social spending" plan, having just passed a 1.2 trillion dollars infrastructure bill. Contrary to the claims of President Biden and his allies, this new spending will not reduce inflation. What it will do is hasten and deepen the inevitable economic crisis caused by government overspending.

Of course, most Republicans will continue opposing big increases in spending and debt … as long as a Democrat sits in the Oval Office. A Republican who becomes president will likely believe, as Dick Cheney has said, that President Reagan taught us that deficits don't matter. The difference between the parties is Republicans are less likely to raise taxes. So, no matter who controls Congress and the presidency, spending and debt can keep increasing.