Whether rising deficits cause inflation depends on the interaction between fiscal deficits and monetary policy, with inflation coming down as the Federal Reserve raised interest rates and tightened conditions, while supply-side improvements (resolved supply chain issues, labor force expansion from immigration) have also helped reduce inflation.
causalpending
Speaker
Philip SwagelEvidence Quote
“what they mean for inflation depends on the interaction with monetary policy um inflation has come down um you know as the FED has has raised interest rates and kept them high until you know it's recent cut um and then also on the supply side of the economy we've had the supply uh challenges arising from the pandemic have um you know have have backed away”
Created: 8/12/2026, 6:26:40 PM
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