Phill Gramm and Thomas Saving write A Booming Economy Will Challenge the Fed in the WSJ

I recommend reading it entirely, but you may encounter a paywall.

The authors articulate a concern I have expressed that an expanding economy with put upward pressure on interest rates with increased monetary velocity while the Fed seeks to reduced the liquidity it has flooded the market with for the past 8 years. Higher interest rates increase our debt and slows the economy.  Can this tax bill stimulate enough growth to withdraw liquidity without spiking interest rates and inflation?

I don’t think it has ever been done before, but it seems it would take far better than normal growth to accomplish this, and a very cautious and measured Fed management.

Most do not realize that we have not yet paid the bill for the recession and the Obama spending. Obama depended on the Keynesian multiplier to stimulate the economy. It failed because too many other friction costs counteracted it; including higher taxes, increased regulations, and a generally unfriendly business climate in DC. Even without these friction costs, the benefit of the multiplier is limited.

The Republicans are trying a dramatically different approach. While it should stimulate the growth we need, this growth brings a new set of problems.  It will be a challenge for the Fed.