The U.S. is racing toward a national debt of $36 trillion and will likely surpass this benchmark before the end of the year, according to public finance economist EJ Antoni.
In homes across the country, Americans are indirectly feeling the weight of the national debt through inflation, and Antoni, who serves as a research fellow at The Heritage Foundation, uses the analogy of wine to explain how.
The Federal Reserve finances a great deal of the national debt, Antoni explains, but “unlike the Treasury, which has to finance everything either through taxes or borrowing money, the Federal Reserve actually can just create money.”
When the Federal Reserve creates money, “it’s like you’re pouring water into wine and you’re literally watering it down,” Antoni says. “So yes, you now have more wine per se, but you don’t have the same concentration of…
