The enthusiasm unleashed by the unveiling of the electric Ford F-150 has jolted our national psychology: America is back! We’re still great innovators! It’s a new dawn! Quite possibly true.

Along with the decline of COVID infections, the new pickup fosters a positive mood. Sales should be brisk and accelerate the shift to electric vehicles. This could turn our economy from a volatile, speculative obsession with tokens of no intrinsic value to tangible durables you can really use that employ workers.

Bitcoins, for example, gain and lose several thousand dollars a day. Based on nothing, they neared $65,000 (for one!) but last week far less, along with other cryptocurrencies. There were some better — but still chancey — investments: stocks, venture capital, homes, baseball cards and smartphone apps. During manias, investors bet on just about


The chief reason is excess liquidity: so much cash floating around that investors don’t know where to put it. For a while, this works. The GDP could grow 7% this year. Desperate workers get the relief and now jobs they need. Everybody’s house is worth more. Corporations boost their value by buying back their own stock. Foreigners flock to the safe, soaring U.S. economy. The rich get richer than ever.

But can it last? Liberal economists argue that inflation will be temporary. It’s been so low for so long that a rise to the desirable 2% may help more than hurt. But asset inflation is already way past that. Now just about all consumer prices, fueled by pent-up spending, are rising. Official inflation statistics lag, and they don’t include food and gasoline. Too volatile. As if people don’t eat and drive.

But inflation may not be the big threat. The danger is that this rather contrived growth will end when someone pulls the liquidity plug, which has to eventually happen. The Biden administration proposes that their $6 trillion relief and infrastructure packages are temporary necessities and that once growth takes hold federal deficits will shrink. We could soon see how this works.

I’m all for aiding people desperate to put food on the table and pay the rent or mortgage. But where does the money go after that? To landlords and mortgage-holders, many of whom are also hard pressed to pay their own debts. And where does this money go? Eventually up to banks and hedge funds.

Federal spending aimed at ordinary citizens, however praiseworthy, soon rises into the hands of the investor class, which has to invest it in something. They make no money sitting on cash amid years of absurdly low interest rates. The Great Recession of 2008–09 persuaded the Federal Reserve to keep interest at essentially zero. For retired savers, this amounts to a stealth tax on their savings: zero interest income minus several percent inflation.

The Fed now rightly fears that even modest interest bumps could end the investment mania and crash the economy. When you’re on the tiger’s back, how do you get off?

There is no hard-and-fast threshold for the U.S. national debt, now around 100% of GDP. This sounds huge until you learn that Japan and China have long had national debts above 200% of their respective GDPs. But neither the yen nor the yuan (RMB) play a major role in international trade; some two-thirds of international deals are written in U.S. dollars. (Beijing tries to alter that in promoting RMB for world trade, with some success.)

The cash-infused mania can continue for quite some time. But eventually either a Republican administration (and a few Democrats) on top of a change of heart at the Fed will stop the cascade of money. Will that end the growth spurt?

Here’s where I hope my pessimism proves wrong. If there are enough sound, sustainable investments among the silly ones, the economy, boosted by the current jump in venture capital, may thrive. A cryptocurrency crash does little harm to the overall economy. Electric vehicles will build a better, solid economic base, one that gives Americans decent jobs.

I’m delighted when Elon Musk expands production of his all-electric Tesla car, so far the industry leader but now tasting competition. I’m concerned when Musk touts and then disparages cryptocurrencies, sending them first soaring, then crashing. Shoemaker, stick to your last.

Much depends on how soon we can build a nationwide network of recharging stations. Electric vehicles can go over 200 miles on a charge, enough for most purposes but always leaving drivers a bit worried that they’ll run out. Home recharging overnight — you’ll need a 220 outlet — offers some assurance.

One interesting shift accompanies electric vehicles: anti-environmentalist conservatives stop sneering. They too will want rapid acceleration, low fuel costs, jobsite electricity and vehicle batteries that can run your home during power outages. This change is as big as the spread of gasoline-fired piston engines over a century ago.