Category: Macro Economics

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Government Macro Economics

Recession? Not So Fast. The Data Say Otherwise

Ever since President Donald Trump’s landslide re-election in November 2024, the media-industrial complex and its political allies have been screaming one word louder than ever: recession. Cable news pundits, legacy newspapers, and a veritable army of social media doom-posters are ringing the alarm bells. “The Trump economy is on the brink,” they tell us. “Brace for impact.”

But here at Optimum Broadband, we believe in logic, not hysteria. Facts, not feelings. And the facts? They tell a very different story.

The Kudlow Rule: Growth Is Growth

Let’s start with the basics. As of Q1 2025, U.S. GDP is growing at an annualized rate of 2 to 2.5%, according to preliminary numbers from the Bureau of Economic Analysis. That’s not booming—but it’s steady, sustainable growth.

Unemployment sits at 4.1%—a hair above last year, but still near multi-decade lows. Consumer spending remains strong, particularly in services, retail, and travel. And core inflation? Tamed, hovering around 3%.

The Federal Reserve, wisely holding rates steady at 4.5–4.75%, seems to agree: the economy is on solid footing.

That’s not a recession. That’s a durable, dynamic economy adjusting to global turbulence—and emerging stronger.

Manufactured Panic: TDS in the Markets

So why the panic? Why are networks like CNN and The New York Times flooding the zone with stories about “economic peril”? Why are progressive influencers lighting up X (formerly Twitter) with end-is-nigh memes?

Because they’re suffering from an old affliction: Trump Derangement Syndrome (TDS)—the irrational need to paint any success under Trump as failure.

It’s the same playbook they used during his first term. When Trump cut taxes, they predicted deficits would destroy us. When he deregulated energy, they screamed climate Armageddon. When he renegotiated trade deals, they cried “trade war.” And when wages rose, unemployment fell, and the stock market hit record highs—they called it a fluke.

Now, in 2025, they’re back at it—ignoring the fundamentals in favor of a narrative.

There Are Risks—But They’re Manageable

To be fair, this isn’t a perfect economy. There are risks. Business investment has pulled back slightly, especially in manufacturing and logistics, as companies digest Trump’s updated tariff policies on China.

Housing starts have cooled, thanks to high mortgage rates. And some stress remains in the regional banking sector—echoes of 2023’s Silicon Valley Bank mess—but federal regulators are watching it closely and responding with targeted reforms, not sweeping overreach.

And yes, the S&P 500 is down about 5% from its January peak. But even that’s a correction, not a collapse. Stocks rise and fall—it’s the long-term trend that matters. And long-term, America under pro-growth leadership remains the best investment on the planet.

A Tale of Two Narratives

One of the more underreported stories of the last decade is the degree to which partisan perception drives economic sentiment. A landmark 2024 study by the American Political Science Association confirmed what many of us suspected: Democrats routinely rate the economy worse under Republican presidents—even when the actual data is strong.

So when the media blares “Recession!” 24/7, it’s less about the economy and more about the narrative. It’s emotional politics masquerading as economics.

At Optimum Broadband, we’re not interested in spin. We look at industrial production, consumer confidence, the yield curve, energy output, and labor participation. Those are the vital signs of a real economy. And they aren’t flashing red—they’re mostly green.

Trump’s Tariffs: Strategic, Targeted, and Pro-Growth

Let’s take a moment to clear the air about Trump’s latest round of tariffs. The usual suspects in the media and academia are once again crying “trade war” and predicting economic ruin. But here’s the truth: Trump’s tariffs aren’t about isolationism—they’re about leverage.

The president’s new “America First 2.0” trade strategy is a continuation of what he started in his first term: holding foreign competitors accountable, particularly China, for decades of cheating, IP theft, currency manipulation, and mercantilist abuse.

These tariffs are not blanket taxes on all imports—they’re surgical tools aimed at strategic sectors: semiconductors, EV batteries, solar panels, and critical rare-earth minerals where the U.S. must secure its supply chains. This is economic security, not protectionism.

Critics say tariffs raise prices. That’s textbook theory, not real-world economics. What they miss is that tariffs can shift global supply chains in our favor, bring manufacturing jobs back home, and reduce dependence on hostile nations. We’re already seeing companies diversify production away from China and invest in the U.S., Mexico, and trusted allies. That’s a win.

Even the Congressional Budget Office, hardly a cheerleader for the Trump agenda, admits the tariffs could result in a net GDP boost if implemented alongside tax and regulatory reforms. That’s exactly what’s happening now.

In classic economics : incentives matter. Tariffs, when paired with the right domestic policy mix, incentivize American production, innovation, and job creation. They send a signal to the world: if you want access to the U.S. market, play by our rules.

That’s not anti-trade. That’s pro-fair trade—and it’s long overdue.

America’s Economic Engine Is Still Running

Trump’s economic blueprint—lower taxes, fewer regulations, energy independence, and fair trade—is once again creating the conditions for growth.

Yes, there’s uncertainty in global markets. Yes, China remains a threat. But under strong leadership, America is doing what it always does: adapting, innovating, producing.

In the words of Larry Kudlow, “Free market capitalism is the best path to prosperity.” And in 2025, that path is still open—despite the noise from the peanut gallery.

Final Thought: Turn Down the Volume, Tune into the Data

If you’re feeling anxious about the economy, we get it. The headlines are loud. The social feeds are louder. But here’s our advice:

Don’t follow the fear. Follow the fundamentals.

There’s no recession today. And with the right policies in place—ones that unleash growth rather than stifle it—there won’t be one tomorrow either.

Keep your eye on the numbers. Ignore the clickbait. And remember: the American economy doesn’t run on panic—it runs on productivity.

Categories
Macro Economics

Time for a US Sovereign Wealth Fund

It’s a new day for American economic policy – and the opportunity before us is historic. With the global economy evolving rapidly and national debt continuing to mount, the U.S. is finally exploring an idea that successful nations like Norway, Singapore, and the United Arab Emirates have embraced for years: the sovereign wealth fund. These countries have used their sovereign funds to turn natural resource wealth and fiscal surpluses into powerful engines for long-term prosperity. Norway’s Government Pension Fund Global, for example, has ballooned to over $1.4 trillion, distributing the benefits of its oil wealth to every citizen and safeguarding its economy for generations.

Now, under the leadership of President Trump, Treasury Secretary Scott Bessent, and Commerce Secretary  Howard Lutnick, America is poised to step into this space with a uniquely ambitious vision. And let me tell you – this isn’t just smart economics, it’s America First economics.

For decades, we’ve talked about unleashing the full potential of American assets. Well, here’s the moment. Instead of watching our government bloat the balance sheet with more and more debt, why not flip the script and invest in America? That’s what this fund does – it takes underutilized government assets, like our stakes in Fannie Mae and Freddie Mac, and turns them into wealth-building opportunities for all Americans.

Howard Lutnick’s proposal to obtain equity or warrants when the government makes major purchases is simply genius. Think about it – when Uncle Sam spends big, the American people should get a return on that investment. This is how we bring market discipline into government spending. It’s shareholder capitalism — with the taxpayers as the shareholders.

This is a pro-growth strategy. It’s a jobs strategy. It’s a prosperity-for-everyone strategy. And most importantly, it’s a vision that says government should be a partner in wealth creation, not just a redistributor.

Let’s take a page from Norway’s playbook – but do it the American way. Bigger, better, and driven by innovation, entrepreneurship, and the dynamism of our free-market system. From tech to energy to biotech, the opportunities are endless when you have a country like ours at the helm of a professionally managed, transparent, and accountable investment vehicle.

This could be the beginning of a new era – one where American families feel the upside of American power. Lower taxes, smarter infrastructure, stronger retirement security, and a booming economy. That’s the Kudlow way. That’s the American way.

Policy Recommendation:

To ensure the U.S. sovereign wealth fund launches with strength and credibility, the administration should begin by capitalizing it with a portfolio of existing federal equity stakes – including positions in Fannie Mae, Freddie Mac, and any publicly traded assets currently held by government entities. Additionally, Congress should authorize a new “American Prosperity Fund Act,” empowering the Treasury and Commerce Departments to negotiate equity or warrant agreements in exchange for future large-scale federal expenditures—such as infrastructure contracts, clean energy development, and pharmaceutical procurements. The fund should be managed independently with a professional board, subject to strict transparency requirements, and structured so that a portion of returns are reinvested while another portion is distributed annually as dividends to American citizens—similar to Alaska’s Permanent Fund model. This ensures broad-based benefit and builds long-term public trust.

This should not be a partisan issue. It’s time for Democrats to show they truly care about working-class Americans—not just with words, but with actions that deliver real, generational wealth. A sovereign wealth fund is a chance for both parties to unite around economic opportunity and shared prosperity. If we’re serious about lifting up all Americans, then we must come together now to make this vision a reality.

The United States has long been a beacon of free enterprise, innovation, and boundless opportunity. A sovereign wealth fund gives us the chance to double down on those strengths – to turn our government into a strategic investor, and our citizens into stakeholders in the national success story. The time to act is now. Let’s seize this moment and build the next great chapter of American prosperity – not just for Wall Street, but for every Main Street in this great country.

Categories
Macro Economics

  Yellen’s Disaster of Short-Term Debt: A Fiscal Crisis  Scott Bessent Must Undo

   Introduction

Janet Yellen’s tenure as U.S. Treasury Secretary, from January 26, 2021, to early 2025, will be remembered as a catastrophic failure of fiscal stewardship, marked by her reckless and shortsighted obsession with issuing short-term debt. Her strategy—born of either incompetence or willful neglect—has plunged the U.S. economy into a maelstrom of refinancing risks, crippling interest rate exposure, and a tarnished fiscal reputation, leaving a $34 trillion debt burden teetering on the edge of disaster. As of March 19, 2025, Scott Bessent, whether as the newly appointed Treasury Secretary or a prospective leader, inherits this smoldering wreckage, tasked with salvaging an economy battered by Yellen’s egregious missteps. This paper dissects the damage she inflicted and outlines the monumental challenges Bessent must overcome to restore stability.

   Background: Yellen’s Short-Term Debt Legacy

Under Yellen’s disastrous oversight, the U.S. Treasury leaned heavily on short-term instruments, such as Treasury bills with maturities of less than one year, to fund the government’s insatiable borrowing needs during the COVID-19 recovery and beyond. Initially justified by low interest rates in the early 2020s, her refusal to pivot to longer maturities as rates soared in 2022 betrayed a staggering lack of foresight. By 2025, with the national debt exceeding $34 trillion, a significant portion now demands constant refinancing at punishingly high rates—a direct consequence of Yellen’s myopic strategy. For Bessent, this skewed debt profile is not just a challenge but a fiscal time bomb requiring immediate defusal.

   The Inherited Economic Challenges

1.   Mounting Refinancing Risk   

   Yellen’s folly has saddled Bessent with the Sisyphean task of rolling over billions in short-term debt monthly, often at rates that have skyrocketed since her tenure began. With the Federal Reserve holding rates above 5% in 2025 to tame persistent inflation, refinancing costs have exploded—debt once issued at 0.1% in 2021 now renews at over 5%. The Congressional Budget Office (CBO) warns that annual interest payments could hit $1 trillion by 2030, a fiscal albatross Yellen strapped to the nation’s back, choking off resources for critical priorities.

2.   Interest Rate Vulnerability   

   Yellen’s shortsightedness has left the Treasury nakedly exposed to interest rate swings, a vulnerability Bessent must now wrestle into submission. Short-term debt, unlike the long-term securities she shunned, ties borrowing costs to volatile market conditions. As rates climbed relentlessly from 2022, her failure to secure low rates for the long haul has proven ruinous. Bessent faces an uphill battle to stabilize this chaos, with every rate fluctuation threatening to deepen the wound Yellen carved.

3.   Restoring Fiscal Credibility   

   The global perception of U.S. fiscal reliability lies in tatters, a casualty of Yellen’s reckless reliance on short-term debt. The 2023 Fitch Ratings downgrade from AAA to AA+—a humiliating rebuke—laid bare the risks of her approach, amplifying market unease. Bessent must now rebuild trust among investors wary of a government that Yellen left scrambling to refinance its obligations, a task made harder by the specter of higher yields demanded to offset her legacy of instability.

   Bessent’s Strategic Options

To claw back from Yellen’s abyss, Bessent can pursue several urgent measures:

1.   Lengthening Debt Maturities   

   Bessent must immediately shift issuance toward long-term securities—10- and 30-year bonds—to break the cycle of perpetual refinancing Yellen entrenched. Though rates are higher than the golden opportunity she squandered in 2021, this move could shield the economy from further rate shocks, offering a stability she never valued.

2.   Debt Restructuring Initiatives   

   Innovative tools like callable bonds or debt swaps could help Bessent convert Yellen’s short-term mess into manageable long-term obligations. These steps, though intricate, might temper market disruption and begin repairing the damage her negligence unleashed.

3.   Coordination with the Federal Reserve   

   Bessent could seek tacit alignment with the Federal Reserve to manage rate expectations, a lifeline Yellen never grasped. While the Fed’s independence limits overt collaboration, strategic signaling could ease the refinancing burden she magnified, giving Bessent breathing room to enact reforms.

   Obstacles and Trade-Offs

Bessent’s mission is a Herculean one, hampered by Yellen’s legacy of elevated rates that make long-term debt costlier than it should have been. Market appetite for Treasuries may falter if rate hikes loom, forcing higher yields to lure investors—a bitter pill traceable to her inaction. Political gridlock, too, could thwart his efforts, with Congress likely to balk at the interest costs Yellen’s blunders have normalized.

   Analysis: A Pivotal Moment

Yellen’s tenure stands as a cautionary tale of fiscal malpractice, her short-term debt fixation a gamble that backfired spectacularly. Bessent inherits a Treasury bleeding from her wounds, with interest payments devouring the budget and economic flexibility in tatters. The 1970s, when similar shortsightedness fueled a debt crisis, echo as a grim warning. Bessent’s response—whether bold restructuring or cautious stabilization—will define whether he can reverse her course or merely delay the reckoning she ensured.

   Conclusion  Scott Bessent confronts a fiscal nightmare forged by Janet Yellen’s disastrous reliance on short-term debt. Her legacy is one of squandered opportunity and inflicted harm, leaving behind a nation vulnerable to refinancing chaos and spiraling costs. Bessent’s charge—to lengthen maturities, innovate financing, and restore trust—is a tall order, but essential to avert the collapse Yellen’s policies courted. His success will determine whether the U.S. economy emerges from her shadow or sinks deeper

Categories
Macro Economics

Social Security Unshackled: Unleashing the S&P 500

Introduction

I owe David Friedberg a shout out. The guy’s a tech wizard—ex-Google hotshot, sold The Climate Corporation for a cool $930 million—and his riff on the All-In Podcast lit a fire under me. He tossed out a wild idea: shove half the Social Security Trust Fund into the S&P 500. I’m running with it, not because it’s his baby, but because it’s a sledgehammer to the rusting shackles of a system bleeding out by 2032. This isn’t just about saving a fund—it’s about smashing the myth of government handouts, handing workers their rightful slice of America’s corporate jackpot, and fitting Trump’s MAGA war cry like a glove. Buckle up.

The Current Mess of Social Security

The Social Security Trust Fund—$2.7 trillion on paper—is a wheezing dinosaur, chained to U.S. Treasury securities that limp along at 4.8% a year since the ’30s. It’s a slow-motion car wreck—outflows dwarf inflows, and by 2032, it’s toast. Meanwhile, the S&P 500, a roaring testament to American hustle, clocks 11% annually. The gap’s a gut punch: a fund meant to cradle workers is choking on its own cowardice, and I’m not buying the excuses.

The Plan: Equity Over Entitlements

Here’s the play: siphon at least 50% of that $2.7 trillion into the S&P 500—Wall Street’s glitzy prize. Rewind to ’71, post-gold standard, and picture half the fund riding the market’s waves. Today, it’d be $15 trillion—five times its current heft, a third of the S&P 500’s muscle, owned by every grease-stained, clock-punching American. The wins are brutal:

  1. Cash That Lasts: Slam $500 billion into equities now, let it rip at 10.5% a year, and the fund’s a juggernaut—no bankruptcy, no groveling for tax scraps.
  2. Workers Get Their Due: Every payroll nick becomes a golden ticket—shares in Tesla, Walmart, Pfizer—not crumbs from some bureaucrat’s table.

Equity Over Elitism and the Raw Joy of Ownership

Since ’08, the fix was in—cheap cash and Fed voodoo juiced stocks for the suit-and-tie crowd with 401(k)s, while the lunchbox brigade got stiffed with Treasury scraps. Flip that script: every worker scores a piece of the pie. Imagine a steelworker in Pittsburgh or a cashier in Boise ripping open their Social Security statement—“You own 0.0001 shares of Apple, 0.0002 of Amazon.” It’s not a drab number—it’s a middle finger to the elite, a raw, fist-in-the-air thrill of staking a claim in America’s engine room.

A Cynical Take on “Entitlements”

Here’s where it gets ugly. Social Security and Medicare—funded by workers and their bosses through payroll sweat—aren’t “entitlements” like Medicaid, doled out from Uncle Sam’s piggy bank. They’re ours, damn it, administered for us, not gifted by some benevolent overlord. But Washington’s spun it—lumping them with welfare to paint us as moochers, not earners. It’s a con, a semantic sleight-of-hand to keep us bowing to the feds instead of standing tall as the funders. Equity ownership blows that lie wide open—your labor, your stake, no handouts.

A Sovereign Wealth Fund, Not a Politician’s Prop

This $15 trillion beast would be the planet’s fattest sovereign wealth fund—not some king’s stash, but a worker-built titan. Norway’s got its $1.4 trillion oil kitty; we’d have a people’s empire, born from calluses and clock-ins. It’s already there, mislabeled as a trust fund, rotting in Treasuries. Why? Not just old debt habits—politicians hoarded it to hog the glory. Investing in the S&P 500 would’ve spotlighted America’s free-market dynamo, not D.C.’s puppet masters. They’d rather us grovel, cradle-to-grave, than cheer the capitalism that actually pays the bills.

Work’s Worth, Not Washington’s Whims

This is about guts, not government. Every Social Security cut from your check turns into a war chest—shares in Ford, Netflix, Boeing. Friedberg’s teary-eyed toilet-scrubbing tale hits home: work should mean something. “Log in and see what you own,” he mused. For the welder, the nurse, the driver—it’s not just a wage; it’s a legacy, a loud-and-proud “I built this.” No more begging D.C. for scraps—your labor’s the fuel, and the market’s the furnace.

The Real Reason It Never Happened

History’s a clue, but cynicism’s the key. Sure, the ’30s needed Treasury buyers, but today, the fund’s 8% of the pile—peanuts next to the Fed and foreigners. The real scam? Politicians didn’t want the S&P 500 stealing their thunder. A booming fund tied to free markets would’ve screamed American ingenuity—Ford’s assembly lines, Jobs’ garage—not congressional grandstanding. They kept it in Treasuries to keep us dependent, addicted to their “generosity,” not liberated by our own system’s horsepower.

Feasibility Despite the Fearmongers

It’s not rocket science. Canada’s pension fund bets 20% on stocks; U.S. feds cash in via S&P 500 options in their Thrift plan. Half-in works—period. The ’08 crash—down 37%—makes suits sweat, but the fund’s a marathon runner, not a sprinter. That 11% average shrugs off dips; toss in bonds for a 50/50 split, and it’s steady as steel. Politicos will wail “gambling!”—let ’em. Show workers their shares, and it’s not a dice roll—it’s theirs.

Trump’s MAGA Match

This is MAGA catnip—Trump’s “Make America Great Again” distilled into dollars and defiance. He’d crow: “We’re making Social Security yuge—the biggest fund ever, folks, bigger than China’s, owned by you, the forgotten worker. Tremendous.” It’s populist dynamite—socking the coastal snobs, arming flyover country with Wall Street clout. It’s jobs roaring back, pride surging, America flexing—a red-hat rally in financial form, all while dunking on global wannabes.

The Bigger, Grittier Picture

This is America unchained. Equity statements—gritty proof of ownership—would weld workers to the nation’s winning streak, spitting in the eye of despair. A $15 trillion fund’s a global haymaker, built by the people, not parasites. Work becomes a warrior’s badge—every shift a brick in the empire, not a plea for D.C.’s pity.

Conclusion Friedberg’s spark lit this fuse, but I’m fanning the flames. Shoving half the Social Security Trust Fund into the S&P 500 isn’t a tweak—it’s a reckoning. A $15 trillion worker-owned titan, equity stubs that scream “mine,” and a gut-shot to the entitlement lie—it’s raw, real, and MAGA to the core. Washington’s kept us on a leash, hogging credit for our cash. Time to cut the cord, unleash the market, and let workers rule. This is ours—let’s take it.

Categories
Macro Economics

 The Ballooning Government Debt: A Consequence of Neo-Keynesian Overreach and the Neglect of Milton Friedman’s Monetary Theory

The United States and many advanced economies are grappling with unprecedented levels of government debt, a crisis exacerbated by decades of policy rooted in Neo-Keynesian thought. This paradigm, a synthesis of John Maynard Keynes’ demand-side economics with neoclassical principles, has fostered a belief that government spending is inherently beneficial, even when it fails to generate productive economic activity. Meanwhile, Milton Friedman’s monetary theory, which emphasizes the primacy of money supply control and fiscal restraint, has been sidelined. Friedman’s warnings about the limits of discretionary intervention and the inflationary risks of excessive money creation stand in stark contrast to the Neo-Keynesian orthodoxy that dominates today. This paper argues that the colossal government debt we face is a direct result of overreliance on Neo-Keynesian assumptions—epitomized by the notion that all government spending is good—coupled with a dismissal of Friedman’s disciplined monetary framework.

Neo-Keynesian thought gained prominence by advocating government intervention to boost aggregate demand, particularly during economic downturns. Its modern iteration, bolstered by economists like Paul Krugman and Olivier Blanchard, has extended this logic to justify expansive fiscal policies even in times of relative stability. The 2008 financial crisis and the COVID-19 pandemic accelerated this trend, with governments unleashing trillions in stimulus packages—often with bipartisan support—under the Neo-Keynesian banner that spending stimulates growth. The U.S. national debt, surpassing $34 trillion by early 2025, reflects this approach, as policymakers embraced deficits as a tool to “prime the pump” without rigorous scrutiny of their productivity.

Central to Neo-Keynesian ideology is the assumption that government spending, regardless of its form, generates a multiplier effect that outweighs its costs. Infrastructure projects, social programs, and even poorly targeted subsidies are defended as economic catalysts, despite evidence that much of this expenditure fails to yield sustainable growth. For instance, the 2021 American Rescue Plan injected $1.9 trillion into the economy, yet studies suggest significant portions were funneled into consumption rather than investment, inflating demand without enhancing productive capacity. This carte blanche approach to spending has normalized deficits, entrenching the view that debt is a manageable byproduct of progress.

Friedman’s Monetary Theory: A Road Not Taken

Milton Friedman offered a starkly different perspective, rooted in the Quantity Theory of Money and a skepticism of government overreach. He argued that economic stability hinges on controlling the money supply, not on endless fiscal expansion. In *A Monetary History of the United States, 1867–1960*, Friedman and Anna Schwartz demonstrated how monetary mismanagement, rather than insufficient demand, drove the Great Depression—a critique that implicitly challenged Keynesian reliance on spending. His policy prescription was clear: maintain steady, predictable money supply growth and avoid discretionary interventions that distort markets or fuel inflation.

Friedman’s monetarism also carried a fiscal corollary: government spending should be restrained, as excessive borrowing and money creation sow the seeds of economic instability. He viewed inflation as “always and everywhere a monetary phenomenon,” warning that printing money to finance deficits—whether directly or through central bank purchases—would erode purchasing power and burden future generations. Had Friedman’s principles guided policy, the unchecked debt accumulation of recent decades might have been curbed by a focus on monetary discipline and productive allocation of resources.

 How Neo-Keynesian Overreliance Fuels Debt

The neglect of Friedman’s insights is evident in the trajectory of government debt. Neo-Keynesian policies have encouraged a spending spree detached from economic fundamentals. Post-2008 quantitative easing, where central banks bought government bonds to finance deficits, exemplifies this trend—effectively monetizing debt in a manner Friedman cautioned against. By 2025, U.S. debt-to-GDP ratios exceed 130%, levels unseen since World War II, yet Neo-Keynesian advocates argue that low interest rates render such burdens sustainable. This optimism ignores the crowding-out effect, where government borrowing siphons capital from private investment, and the risk of future inflation as money supply growth outpaces output.

Moreover, the Neo-Keynesian fetishization of spending overlooks productivity. Projects like high-speed rail boondoggles or bloated bureaucracies consume resources without delivering commensurate economic value, yet they are justified as “stimulus.” Friedman’s framework, by contrast, would demand accountability: government outlays should align with a stable monetary environment, not serve as a catch-all solution to every downturn. The 1970s stagflation, which validated monetarism by exposing the limits of Keynesian demand management, has been forgotten, replaced by a dogma that equates deficits with virtue.

Consequences of Ignoring Friedman

The consequences of this imbalance are dire. Ballooning debt threatens fiscal sustainability, with interest payments alone projected to surpass $1 trillion annually by the late 2020s, diverting funds from productive uses. The Neo-Keynesian dismissal of monetary restraint has also fueled asset bubbles and eroded savings, as loose policy distorts price signals—outcomes Friedman predicted. Meanwhile, the absence of his rules-based approach leaves policymakers ill-equipped to address emerging challenges, such as cryptocurrency’s impact on money supply or the inflationary pressures of supply-chain disruptions.

 Conclusion

The towering government debt of 2025 is a testament to Neo-Keynesian overreach, a paradigm that venerates spending as an economic panacea while ignoring Milton Friedman’s monetary wisdom. By treating all government expenditure as inherently good, even when it fails to produce tangible results, Neo-Keynesian thought has paved the way for fiscal recklessness. Friedman’s call for monetary discipline and fiscal prudence offers a corrective lens, one that could have tempered the debt spiral had it not been overshadowed. To avert a looming crisis, economists must reconsider their reliance on Neo-Keynesian orthodoxy and revive the insights of monetarism, ensuring that policy prioritizes productivity over profligacy.