Yes, Joe Biden will become the U.S. President in a few hours. For some, this is the end of a nightmare, for others, it’s only the beginning. And yet for others, it’s a different kind of nightmare. But as I started our intro headline, I couldn’t help but remember that jingle that we used to sing 30 years ago every Sunday in church:

This is the day, this is the day, that the Lord has made, that the Lord has made. I will rejoice, I will rejoice and be glad in it, and be glad in it.

Some of you older Bereans remember it. For younger Bereans, you can listen to it and wonder why we thought that tune was much more fun than the older hymns we used to sing! But yes I digress in a blog on Christian Political Economy, but this is a day we should choose to rejoice in, even while lamenting the plans of the incoming administration. Our task is a both/and, and I suspect it will be for a while–rejoice and lament.

There is much we could address, but I’ll just hit yesterday’s news. No surprise, but shock!, Janet Yellen testified during her Treasury Secretary confirmation hearing that she now supports “Go big or go home!”

“Neither the President-elect, nor I, propose this relief package without an appreciation for the country’s debt burden,” Yellen said. “But right now, with interest rates at historic lows, the smartest thing we can do is act big. In the long run, I believe the benefits will far outweigh the costs, especially if we care about helping people who have been struggling for a very long time.”

Mr. Biden previously announced his plan for $1.9T in new Covid-19 spending, to include sending more checks to people who have jobs. Our national debt is now $28T and rising, so $30T is dead ahead with the Biden plan. Mr. Trump was unconcerned with government spending, and Mr. Biden will continue that trend, but with more gusto. We have lamented before, there is no party that is in favor of fiscal prudence. The irony for me as an economist is to see Mr. Biden’s rationale for sending government checks to people with jobs, because (in part), costs of essential goods have risen. And he is absolutely right. But what causes that rise? It’s exactly the inflationary result of increased spending, coupled with (in some cases) reductions in supply due to mandated shutdowns. There are undoubtedly more nuances than that, but there is no economist that would say you deal with rising prices by increasing demand–which is the purpose of these stimulus dollars. But I don’t really fault Mr. Biden–what does he know about economics? But his policy advisors?

Which brings me to Ms. Yellen. Note her rationale for big spending: historically low interest rates! We’ve watched this movie repeatedly since the financial crisis. The Federal Reserve engineers low interest rates to implement financial repression and then progressive economists argue that markets are “begging us” to spend more money. There is a “savings glut” causing the low interest rates, and private demand is insufficient–we must have more government spending. I have a challenge to this idea. Let’s just have the Federal Reserve sell off the $3.5T of assets they added to their balance sheet this year and then we’ll see what happens to interest rates. And then let’s stop paying interest on reserves to have banks just sit on their reserves and not loan them out into the private economy. And then let’s stop regulating the financial system to hold more “safe” government debt. Then just have the Fed do nothing–no more buying, no more selling, and then we can see what the market really thinks about the need for more government spending. Of course, we need to consider the Bank of Japan, the European Central Bank and others that are all doing the same thing. But seriously–the idea that low interest rates are a market outcome is no different that saying the rental price of an apartment is a market outcome in a city with tight rent controls. Ms. Yellen should know better. But she now is fully ensconced in the political world–her words are those of a political figure, not those of an impartial economic advisor. Which in the words of the former president should be taken with a huuuggee grain of salt.

But her words are irrelevant–more spending and more debt is coming. And coming. Debt is always easy…until it isn’t.