David L. Bahnsen is Senior Fellow of Economics and Finance for the Center for Cultural Leadership and Founder, Managing Partner, and Chief Investment Officer of The Bahnsen Group, a bi-coastal private wealth management firm managing over $2.8 billion in client assets. Here he addresses a few front-burner socioeconomic issues.
CCL: After the recent third stimulus bill, a handful of Democrats is pushing for yet another bill, which includes “recurring direct payments.” How are the latest stimulus packages likely to affect the economy?
DLB: Each of the three COVID spending bills carries its own unique issues. By far the latest is the most problematic, if for no other reason that it is the least-COVID related. Any bill that provides any sustained incentive to stay out of the work force is highly problematic. Transitory, emergency relief is one thing; structural incentives to not work do irreparable damage to the economy, and the soul.
CCL: There seems to be a growing conflict over states eager to reopen their economy, and the President and global health officials warning against a swift reopening. Who’s right, and why?
DLB: Free people wanting to make free decisions are right. All else is just noise. We know the identifiably COVID-vulnerable segment of the population. There is a highly asymmetrical relationship now between the health risks of normalcy (slim to none), versus the economic risks of a normalcy (devastating).
CCL: The Fed is warning that it won’t keep interest rates low just so the government can finance its most recent increased debt. If and when the Fed does increase rates, what’s are likely economic results?
DLB: The Fed is saying that — you are correct. 13 years of post-financial crisis policy and 30 years of Japanese monetary policy leads me to, shall we say, question their commitment to such. I believe the central bank will formulate monetary policy around the reality of federal debt, and I believe all of their policy rationalizations point to such. At some point a higher Fed funds rate would help normalize activity in capital markets, help minimize distortions, and re-price assets to rational levels. But I don’t believe the Fed can or will do any such thing, anytime soon.
Christian Culture 
What intrigues me about the current situation is that the Federal Reserve and Treasury have somehow managed to force Money Market interest rates to remain near zero, even as actual (not “official”) inflation is already going up fairly rapidly. The last time inflation was high, in the 1970s, the stock and bond markets did poorly, but money market funds kept up with inflation. This time that somehow appears to have been prevented, and I’m wondering how it was done, and whether there is still any point in holding some money market funds as a hedge against renewed stagflation.