The political problem is partly self-correcting. The Covid-19 spending measures were popular because spending is popular categorically. The people who were receiving supplemented and extended unemployment benefits were in themselves a highly motivated constituency working to secure their own benefits. But now that all that spending is supercharging inflation, the wage gains of the past few years are being reversed or entirely erased for many workers, especially those in lower-wage jobs. By some recent measures, real wages — meaning wages adjusted for inflation — are down year-over-year for lower-wage workers. Current policies are, in a measurable way, hurting the people they are meant to help…

There is no easy fix. The usual way to put a brake on inflation is to raise interest rates. That is a hard thing to do for the U.S. government, which is the most indebted organization in world history and already spends a substantial share of each year’s tax revenue on interest payments for prior years’ spending. Both the government and the broader economy have become very accustomed to ultra-low interest rates — free money, in effect — and both will have a tough time adapting to a different credit environment.

Prosperity will emerge — if we let it. But first, we have to do the hard part: reforming our public finances with an eye toward long-term stability and following a more sensible long-term monetary policy, thereby creating the conditions of stability and predictability in which sensible and profitable long-term investment is possible.