It amplifies the temptation to overspend in turbulent times.
The Federal Reserve has become the “only game in town” for America’s economic problems. That phrase once signaled admiration. Today it’s an indictment. A growing concern has taken hold in Washington that innovations in monetary policy may be undermining fiscal discipline by creating the expectation that the Fed will always monetize deficits. Treasury Secretary Scott Bessent has called these innovations “gain of function monetary policy.” If true, this threatens the central-bank independence that has anchored American economic stability for decades.
The worry is understandable. The main innovation that Bessent is talking about, quantitative easing (QE), was born from crisis. In 2008,
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