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trade-cargo

Stacked shipping containers and cargo in U.S. trade port. (Photo: Reuters)

This century has not been good news for economic freedom in the United States. According to Economic Freedom of the World, America has dropped from being the 3rd-freest economy of the world in 2001 to the 12th-freest economy in the most recent rankings.

Perhaps more important, our aggregate score has fallen from 8.20 to 7.81 over the same period. So, why has the U.S. score dropped? Was it Bush’s spending binge? Obama’sstimulus boondoggle? All the spending and taxes in Obamacare? The fiscal cliff tax hike?

I certainly think all those policies were mistaken, but if you dig into the annual data, America’s score on “size of government” only fell from 7.1 to 7.0 between 2001 and 2012.

Which means economic freedom in the United States mostly declined for reasons other than fiscal policy. In other words, our score dropped because of what happened to our scores for trade policy, monetary policy, regulatory policy, and property rights and rule of law.

That triggered my curiosity. If America is #12 in the overall rankings, how would we rank if fiscal policy was removed from the equation?

Here are the results, showing the top 25 jurisdictions based on the four non-fiscal policy factors. As you can see, the United States drops from #12 to #24, which means we trail 14 European nations in these important measures of economic freedom.

If you look in the second column, you’ll notice how many of those European nations have double-digit increases when you look at their non-fiscal rankings compared to their overall rankings.

This is for two reasons.

First, their fiscal scores are terrible because of high tax rates and a stifling burden of government spending.

Second, these same nations are hyper-free market on issues such as trade, regulation, money, rule of law and property rights.

In other words, the data back up points I’ve made about policy in nations such as Denmark and Sweden.

In an ideal world, countries should have free markets and small government. In Northern Europe, they manage to get the first part right. Which is important since non-fiscal factors account for 80 percent of a nation’s overall grade.

Now let’s return to the issue of America’s decline.

Here are the non-fiscal rankings from 2001. As you can see, the United States was #5 at the time, scoring higher than even Singapore and Hong Kong. And the U.S. was behind only three European nations back in 2001.

For what it’s worth, America’s score has fallen primarily because of a significant drop in the trade category (from 8.7 to 7.7) and a huge drop for rule of law and property rights (from 8.7 to 7.0).

In other words, it’s not good for prosperity when a nation begins to have problems such as protectionism and politicized courts.

P.S. The erosion of America’s score for non-fiscal factors is particularly disappointing since improvements in those factors have played a big role in protecting the world from the negative economic consequences of more spending and taxes.

P.P.S. I think this is an example of correlation rather than causation, but the above rankings for non-fiscal economic liberty seem somewhat similar to the rankings I shared last week looking at overall societal freedom.

[mybooktable book=”global-tax-revolution-the-rise-of-tax-competition-and-the-battle-to-defend-it” display=”summary” buybutton_shadowbox=”true”]

According to the most recent Economic Freedom

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Louisiana State Trooper Steven Vincent, 43, a 13-year veteran of the force. (Photo: AP)

Louisiana State Trooper Steven Vincent, a 13-year veteran of the force, died Monday from injuries he suffered when he was shot in the head Sunday afternoon. Police video show Vincent, 43, was shot while trying to talk to a man whose pickup truck had run into a ditch. The trooper had arrived on scene at 2:43 p.m., when the suspect exited the vehicle shortly after with a sawed-off shotgun.

“I am very saddened to report that Senior Trooper Steven Vincent has passed away this morning from the gunshot wounds he suffered yesterday in conjunction with a traffic investigation,” Colonel Michael D. Edmonson said in a statement. “As an organization, we are heartbroken over this senseless and tragic death. Our thoughts and prayers are with his surviving wife Katherine and his son Ethan as well as his entire extended family.”

The video shows the man, identified as Kevin Daigle, 54, of Lake Charles, hit Vincent with at least two or three buckshot rounds, inflicting major damage. Immediately after the shooting, Daigle wandered into the road and over to Trooper Vincent, asking if he was alive. “You could hear him breathing, telling him, `You’re lucky. You’re lucky — you’re going to die soon.’ That’s the words that came out of his mouth,” Edmonson said.

He said two or three drivers stopped immediately, one of them making a quick turnaround on the two-lane highway to rush to the trooper’s aide. That driver wrestled the shotgun away from Daigle, who had multiple DUIs, while the others got him to the ground and slapped Vincent’s handcuffs on his wrists. The good Samaritans were unhurt, according to Edmonson. Meanwhile, there has been an outpouring of support from within the community. The Seven Slot Society of Southwest Louisiana held a candlelight vigil for Trooper Vincent at Lake Charles Memorial Hospital on Sunday.

“Steven was proud to serve as a Louisiana State Trooper and we were proud to count him among our ranks,” Edmonson said. “This loss exacts an enormous emotional toll on the State Police family, but we will do what is necessary and proper to honor Steven and support those who knew and loved him. He will be missed but never forgotten.”

Edmonson said Vincent had a wife and a 9-year-old son, and that one of Vincent’s brothers is also a state trooper, while yet another is a police chief in the nearby town of Iowa. The department is requesting prayers in support of the family on Facebook, which has been shared and liked over 10,000 times as of the writing of this article.

“His family lives and breathes law enforcement.”

Louisiana State Trooper Steven Vincent, a 13-year

China’s Shanghai Composite Index Sheds 8.5%

China-Financial-Markets

Aug. 24, 2015: A Chinese investor monitors stock prices at a brokerage house in Beijing. Stocks tumbled across Asia on Monday as investors shaken by the sell-off last week on Wall Street unloaded shares in practically every sector. (AP Photo/Mark Schiefelbein)

China’s stock markets suffered their sharpest daily loss since the global financial crisis on Monday, wiping out Shanghai’s gains for the entire 2015 year. The selloff comes as investors world-wide have been concerned by a slowdown in China’s economy, and volatile selling in its markets.

The Shanghai Composite Index (SHA:000001) lost nearly 8.5 percent at Monday’s close, which was its largest daily percentage decline since February 2007. Today’s performance reminded investors of an 8.5 percent drop on July 27, when worries mounted that authorities were pulling back on measures to prop up the market.

Monday’s selloff reverberated across Asia and beyond ahead of China hosting world leaders for a memorial parade next week, which is meant to show off its military power and increasing clout on the global stage. In addition, Chinese President Xi Jinping is scheduled to visit the U.S. next month. But a global selloff was already gathering pace by late afternoon in Asia, with European stocks and U.S. stock futures falling sharply.

Concern the Chinese economy may be slowing down dramatically triggered the heavy losses in global stock markets, commodities and emerging markets. China again moved to devalue its yuan two weeks ago—which could make its exports more competitive—came amid a string of weak data signal the economy may be far more fragile than initially expected. Despite a policy that includes interest rate cuts and measures to boost lending, officials have not been able to stem the bleeding.

The Shanghai Composite closed Monday at 3209.91, making total losses since its mid-June peak climb to nearly 38 percent. In the prior 12 months leading up to the drop, the index had doubled in value. The smaller Shenzhen market fell 7.7 percent to 1882.46, closing down 40 percent from its June peak. Both indexes breached a previous bottom in early July, after the government had stepped in with massive intervention measures to stem the bleeding.

China’s stock markets suffered their sharpest daily

Elizabeth_Warren-Joe-Biden-Getty

Elizabeth Warren, D-Mass., at the Capitol in Washington, Jan. 8, 1015. | Vice President Joe Biden in Chattanooga, Tenn., Aug. 15, 2015. (Photo: Getty/AP)

Vice President Joe Biden made an unannounced trip from his Delaware home to his Washington residence, reportedly to see meet Sen. Elizabeth Warren, D-Mass. The trip came shortly before Josh Alcorn, a family friend and leader of “Draft Biden,” an effort to get the vice president to run for president against Hillary Clinton, touted the groundswell growing for a Biden bid.

The meeting is noteworthy because Democratic activists and donors have for months been trying to get the first-term Massachusetts senator to seek the party nomination. Warren’s far left progressive views stand in contrast to the front-runner Democrat Hillary Clinton, whom the party doesn’t trust ideologically.

But Warren made clear she would decline the opportunity to run against the Clinton machine, and hasn’t indicated she will change her mind in the wake of Clinton’s slipping polls numbers. Plagued by the email controversy, advisors to the 72-year-old vice president now believe he has a chance to fulfill the wishes of his late son Beau Biden began, who wanted to see his father become president.

Biden ran in 1988 and 2004 but failed to get past the primaries, leading the vice president to consider a third run only if they can put together “a competitive campaign.” CNN reported that the Biden-Warren meeting took place at the Naval Observatory at the vice president’s residence. Biden’s official schedule shows him spending the weekend in Delaware. The administration confirmed Saturday only that Biden went to his Washington residence for a last-minute meeting.

Meanwhile, Alcorn signed up longtime Democratic strategist Steve Schale, who helped President Obama win Florida in 2008 and 2012. A recent Quinnipiac Poll showed Biden running strong in head-to-head match-ups with Republican candidates in key states, and Alcorn says the vice president has a growing grassroots support network.

“We have a grassroots list of 200,000 people that’s growing every day,” Alcorn, senior adviser for Draft Biden 2016, told “Fox News Sunday.” “He may not have the financial resources, but there is a groundswell of support.”

But Alcorn did express concern that an announcement–which is now expected in October–must be made soon as to ensure the vice president has a place on the first debate stage.

“I think having the vice president on that debate stage is an important part of the campaign,” Alcorn said.

Vice President Joe Biden made an unannounced

Donald-Trump-Mobile-Alabama

Mobile, Alabama: Donald Trump meets with some 30,000 fans wearing shirts printed with his smiling face and holding ‘Mobile for Trump’ signs printed in red, white, and blue. (PHOTO: MARK WALLHEISER/GETTY IMAGES)

Since Donald Trump released his 3-point plan to deal with the serious issue of illegal immigration, we have heard and, up until now, tolerated some real whoppers. Media pundits, lawyers and all around nay-sayers are on national television doing what they do best–lying to you.

Jorge Ramos, the pro-open border advocate from Univision, said it was “impossible” for the most technologically advanced civilization in human history to build a wall on the U.S. Mexico border to stem the flow of illegal immigrants. A simple historical comparison reduces his claim to the level of intellectually feeble. The ancient Chinese constructed the 5,500-mile Great Wall of China to protect themselves from Mongol invasion, nearly 3,000 years ago. Worth noting, a new archaeological survey done by China’s State Administration of Cultural Heritage said the Great Wall is more than double the length initially estimated.

Yet, even if we concede initial estimates are correct, Jorge Ramos says it is “impossible” for the U.S. to secure the roughly 1,954 mile-long border from the Gulf of Mexico to the Pacific Ocean, a distance less than half that of the Great Wall.

In an effort to be fair, let’s address coverage by the allegedly conservative Fox News Channel, from both their online reporting and cable television programs. We have five examples of either ignorance or dishonesty coming out of Fox News reporters, anchors, commentators and, we are going to demolish each of them in one fell swoop.

Example 1

Native-born children of immigrants –even of those living illegally in the U.S.–have been automatically considered U.S. citizens since the adoption of the Constitution’s 14th Amendment in 1868.

— ‘Trump addresses largest crowd of presidential campaign while in Alabama,’ by Junior Reporter Kyle Rothenberg, published Saturday August 22, 2015 on FoxNews.com

Example 2

And the amendment has already withstood a Supreme Court test. In 1898, the high court ruled that San-Francisco-born Wong Kim Ark was a citizen despite being born to parents of Chinese descent living in the U.S.

— ‘Trump’s call to end abuse of US birthright citizenship divides GOP field, legal experts,’ by Joseph Weber, published Saturday August 22, 2015 on FoxNews.com.

Example 3

The purpose of the 14th Amendment was to make certain that the former slaves and the native Americans would be recognized as American citizens no matter what kind of prejudice there might be against them.

— Judge Andrew Napolitano, interview with LAWYER and Fox News anchor Shannon Bream, who covers the Supreme Court!

Example 4

It’s been around for a hundred and fifty years. It’s a very short conversation.

— Charles Krauthammer, during exchange with Laura Ingraham on ‘Special Report’ Friday August 21, 2015.

Example 5

The 14th Amendment says if you’re born here, you’re an American! You want me to quote you the amendment? IF YOU’RE BORN HERE YOU’RE AN AMERICAN. PERIOD! PERIOD!

— Bill O’Reilly, interview with Donald Trump on ‘The O’Reilly Factor’ on Tuesday August 18, 2015.

Each of these statements, claims, assertions–or, whatever you want to call them–are entirely, incorrect. In fact, they are so grossly incorrect on both historical and legal grounds, it is almost unbelievable that some of them came from supposed legal experts (Judge Andrew Napolitano and Shannon Bream), and a former history teacher turned-historian-turned-cable TV anchor (Bill O’Reilly).

In fact, native-born children have NOT “automatically” been granted citizenship “since the adoption” of the amendment in 1868, as Mr. Rothenberg, a member of the “Junior Reporter program” reported. Perhaps it is unfair to be too hard on Rothenberg, considering associate reporters and senior editorial staff are no better. After all, Weber claimed the “amendment has already withstood a Supreme Court test,” citing “San-Francisco-born Wong Kim Ark” in United States v. Wong Kim Ark, 169 U.S. 649 (1898).

Why is this such a terrible journalistic failure? Because in this divided 5–4 opinion, which was heavily criticized in the Yale Law Journal, the Supreme Court reluctantly granted citizenship to a child born to legal immigrants, not illegal immigrants. Further, the ruling recognized various exceptions, including the one pertaining to diplomats. Disgracefully, not only did Mr. Weber fail to mention these important distinctions, but he was really trying to pass off a case that isn’t analogous to the conversation as relevant jurisprudence.

The 14th Amendment also had nothing to do with native Americans, as Judge Napolitano and numerous others have asserted. In 1886, roughly 16 years after the 14th Amendment was ratified, John Elk, a native American who argued birthright citizenship, lost at the Supreme Court. That’s because the 14th Amendment was specifically designed to deal with slaves who were born in the post-slavery United States, and certainly did not pertain to children born to illegal foreigners.

While attempting to calm skeptics’ fears regarding the amendment, Senator Jacob Howard, the author of the 14th Amendment, reassured lawmakers the language sufficiently excludes not only Indians but “persons born in the United States who are foreigners, aliens, [or] who belong to the families of ambassadors or foreign ministers.” That is obviously why the high court DID NOT rule in favor of John Elk.

Nevertheless, even if the high court did rule in favor of birthright citizenship in a relevant case–as Weber, Napolitano and Mr. O’Reilly have feloniously claimed–they unequivocally would not have the authority to do so.

“The Congress shall have Power To establish an uniform Rule of Naturalization,” per Article I, Section 8 of our great and beloved U.S. Constitution. Again, not the Supreme Court, not the president and certainly not some bureaucrat, but The Congress shall have Power To establish” or legitimize birthright citizenship. The last time we checked, the 14th Amendment–specifically Section 2–modified Article I, Section 2, of the U.S. Constitution, not Article I, Section 8.

Furthermore, Congress exercised their legitimate authority to do so when they included Native Americans in 1924, who were previously excluded along with “persons born in the United States who are foreigners, aliens.” Consequently, just to remind Judge Napolitano and Charles Krauthammer, it is called The Indian Citizenship Act of 1924. This false version of history they are selling as Gospel was not born 150 years ago, but roughly 30 years ago. It’s a byproduct of a movement started by the late Sen. Ted Kennedy, D-Mass., aimed at creating a permanent immigrant underclass and loyal voting constituency.

What it isn’t is the truth, and Americans shouldn’t buy into it for one second. Through our lawmakers, American citizens have every right to decide who they believe should be granted the precise gift of American citizenship, absent the disconnected sentiments of activist courts or media talking heads.

Since Donald Trump released his 3-point plan

Patent and Trademark Office Employees Paid, Given Bonuses for ZERO Work

Tech-Patent-Trademark-Office-Shinkle

The U.S. Patent and Trademark office. Photo: John Shinkle)

I created the Bureaucrat Hall of Fame as a way of giving special attention to government employees who go above and beyond the call of duty in their efforts to get paid way too much in exchange for doing far too little. While my standard practice is to bestow this honor on individual bureaucrats, sometimes I bend the rules and give the award to an entire group, such as the paralegals at the Patent and Trademark Office who were paid – and even given bonuses – even though they were never assigned any work.

Well, not doing work must be part of the culture at that bureaucracy. The Washington Post reports on an employee who apparently was supposed to do some actual work but instead gamed the system.

A federal patent examiner racked up more than 18 weeks of pay last year for work he didn’t do, but his manager didn’t notice until he received an anonymous letter claiming the employee only showed up for his job sporadically and turned in work that was “garbage.” …The examiner, a poor performer for years who was never disciplined, came and went as he pleased… He frequently told colleagues he was leaving work to go to the local golf driving range, play pool or grab a beer — then claimed a full day on the job on his time sheet. On most of the days when the examiner was gaming the system, “there was no evidence” he even went to the office or did any work on his government-issued laptop, investigators found.

My initial reaction to this story is that American bureaucrats need to learn some lessons from their foreign counterparts.

Doing zero work for 18 weeks and still getting paid may sound impressive, but it’s trivial compared to the Indian bureaucrat who managed to get paid up until last year even though he stopped showing up for work back in 1990. Or the lavishly compensated Italian government employee who only worked 15 days over a nine-year period.

But I’m not an Indian or Italian taxpayer. I get irked by when my tax dollars are being squandered. So, why didn’t his supervisor notice that something was amiss?

Well, perhaps that person didn’t notice because he or she was never around.

The examiner’s supervisor works from home more than 30 hours a week.

And even if the supervisor was paying attention, it might not have mattered.

…union rules allowed supervisors limited oversight over their employees.

Though there were plenty of warning signs that should have been noticed.

“Despite numerous red flags and the [patent office’s] internal controls, the agency did not review [the examiner’s] time and attendance records to determine if he was claiming time for work he did not perform,” the 27-page investigation by Acting Inspector General said. The patent office had received numerous complaints from inventors and their attorneys that the examiner was not responsive to their e-mails and phone calls.

If you’re a taxpayer, you’ll be delighted to know that the bureaucrat was making a very comfortable salary.

And even though the scam has been ended, you’ll also be happy to learn that he or she will leave with a clean personnel record.

The employee, a GS-11 making more than $70,000, quit two hours before he was scheduled to meet with the inspector general’s office, the report said. The union representing patent examiners told him that if he resigned, his personnel record would stay clean, not showing that he was under investigation for falsifying hours.

Gee, isn’t that wonderful. Anybody want to guess whether this person winds up working for another government agency?

The final part of the story nicely captures much of what’s wrong with Washington.

An independent review last month by the National Academy of Public Administration…praised the agency’s telework program as a model in the federal government that’s good for morale

Yeah, I bet it’s good for morale. If I got (over)paid and didn’t have to do much work, I might feel happy as well.

Actually, that’s not true. For better or worse, I passionately care about the future of the country and the cause of human liberty. So I’d be doing exactly what I’m doing even if I had to do it as a hobby. I’m just lucky that I get to ply my trade atAmerica’s most effective think tank.

Paralegals at the Patent and Trademark Office

[brid video=”13821″ player=”1929″ title=”ICYMI Laura Ingraham Schools Charles Krauthammer on 14th Amendment Anchor Babies”]

Well, it doesn’t happen often, but when it does it sure is entertaining. On Friday, Laura Ingraham schooled Charles Krauthammer on the history and jurisprudence regarding the 14th amendment and anchor babies on Special Report.

Charles Krauthammer: The issue of anchor babies or birthright citizenship, it is a sideshow because it’s a symptom…

Laura Ingraham: There’s quite a debate about whether the 14th Amendment has to be repealed. I know a lot of people glibly say… That’s not actually been settled and you could do a whole hour on the jurisprudence surrounding that.

Krauhammer: It’s been around for 150 years.

Ingraham: Well, we actually didn’t have a problem with illegal immigration in the 1800s as we know. That wasn’t an issue. It was directed at the slaves who did deserve to stay here. So, it really was an important clause and the author of the clause Howard Jacob said it didn’t apply to foreigners in the United States. But, you know, this is a long conversation… And I know Trump’s rise annoys a lot of people now. And I get it. But the people in this town who have been propping up two parties that have failed the Middle Class, failed them on these global trade deals… that have absolutely not delivered what they promised to deliver to the Middle Class, failed them on enforcing the border, failed them on all these ideas that America was going to export its values around the world… They’re ready to throw in with the guy who has all these conflicting positions maybe because the guys who said they were going to be consistent weren’t. And they’re not fighting for the people.

Krauthammer: It’s easy to go and attack Washington and it’s a clever dodge. The issue here is birthright citizenship…

Ingraham: And Bush and Obama didn’t stop it. Neither stopped it. Neither did McConnell or Boehner when they had the chance. They’re not stopping it. People are tired of it.

Worth noting, Mr. Krauthammer is wrong far more than most pundits and media outlets point out. For instance, Donald Trump was first never going to get in the race. Then, Donald Trump, according to Krauthammer, would never file his financial disclosure forms with the Federal Elections Commission. Once more, Mr. Trump had a very low polling ceiling, which he has since surpassed.

Finally, viewers watching his performance at the debate witnessed “the beginning of the end” of Trump’s campaign. Of course, none of this has turned out to be accurate.

Laura Ingraham schooled Charles Krauthammer on the

Janet-Yellen-Congress

Janet Yellen waits to respond to questions from the House Committee on Financial Services during her first congressional hearing as chair of the Federal Reserve. She delivered the Fed’s semiannual report on monetary policy Tuesday. (Photo: Griffin Moores)

What’s the biggest economic fallacy on the left? What’s the defining mistake for our statist friends? One obvious answer is that many of them hold the anti-empirical belief that the economy is  a fixed pie and that one person can’t climb the economic ladder unless another person falls a few rungs.

There’s no doubt that the fixed-pie myth is an obstacle to sound thinking, but I’m wondering whether an even bigger problem is the pervasive belief on the left that there are easy shortcuts to prosperity. Keynesian fiscal policy, for instance, is based on the notion that more growth is just a simple question of having the government spend more money.

And Keynesian monetary policy is based on a similarly simplistic assumption that more growth is generated by having central banks create more money.

To be sure, both policies may seem to work in the short run since people suddenly perceive that they have more money. But perceptions and reality may be different, particularly if the short-run boost in the economy is an illusory bubble.

And that’s why I’m not a big fan of QE-type policies designed to “stimulate” growth with artificially low interest rates.

As I explain in my brief FBN interview with Neil Cavuto this week, any short-run gain is offset by long-run pain.

And I’m not the only one who has a jaundiced view.

The Wall Street Journal also is not happy with the Federal Reserve, opining that the real economy has stagnated as financial assets have been propped up by easy money.

…the Fed has only itself to blame for its economic and political predicament. …One lesson here is that the Fed’s great monetary experiment since the recession ended in 2009 looks increasingly like a failure. Recall the Fed’s theory that quantitative easing (bond buying) and near-zero interest rates would lift financial assets, which in turn would lift the real economy. …But while stocks have soared, as have speculative assets like junk bonds and commercial real estate, the real economy hasn’t. This remains the worst economic recovery by far since World War II…the economic expectations of Fed Chairs Ben Bernanke and Janet Yellen have been consistently wrong. …the Fed now finds itself caught between a slowing global economy and its promise to begin normalizing rates this year. …One result has been to increase economic uncertainty and market volatility.

Another result is that easy-money policies give politicians an excuse to avoid the real reforms that would boost long-run growth.

I definitely think that’s been a problem in Europe. Politicians keep waiting for magical results from the European Central Bank when the real obstacle to prosperity is a stifling burden of taxation, spending, and regulation.

The bottom line is that politicians all over the world are exacerbating bad fiscal and regulatory policy with bad monetary policy.

To augment this analysis, here’s a video from the Fraser Institute about the insight of Friedrich Hayek, who warned that government intervention, particularly via monetary policy, caused booms and busts by distorting market signals.

Needless to say, last decade’s financial crisis is a case study showing the accuracy of Hayek’s Austrian-school analysis. But politicians never seem to learn. Or maybe they just don’t care. They focus on the short run (i.e., the next election) and it always feels good when the bubble is expanding. And when the government-created bubble bursts, they can simply blame greed, or rich people, or find some other scapegoat (and then repeat the same mistakes as soon as the dust settles).

P.S. For a more detailed look at Austrian economics, check out this lecture. And Austrian-school scholars also have the best analysis of the Great Depression. P.P.S. And for a more conventional critique of easy-money policies, here are some highlights from a speech by a member of the Bank of England’s Monetary Policy Committee.

Keynesian monetary policy is based on a

[brid video=”13748″ player=”1929″ title=”Dan Mitchell Talks Perils of Easy Money Artificially Low Interest Rates w Cavuto”]

CATO economist and PPD contributor Dan Mitchell joined Neil Cavuto to discuss Fed Chair Janet Yellen and the FOMC raising interest rates this year. Mitchell said there are two things that need to concern Americans with respect to inflation and raising short term interest rates.

First, the cost of borrowing money, considering the government’s massive national debt, will increase and even more of the federal budget will have to be allocated for servicing existing debt.

“That’s just going to add to the fiscal burden on taxpayers,” Mitchell said. “But secondly, if we do have a bubble and that bubble bursts, that of course causes instability in financial markets. Either way, I think the lesson we should be learning is–maybe we shouldn’t have had artificially low interest rates in the first place that encouraged all this debt.”

CATO economist and PPD contributor Dan Mitchell

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