Former USPTO patent examiner here. I'll answer why an overworked USPTO will lead to more patents at present, but I make no claims that it should be this way.

The effective default is to grant patents. Why? Because the examiner has a finite amount of time for each application and has to have some sort of justification for a rejection. Unless there are some formal problems with the patent application, "I couldn't find prior art" means that a patent will be granted. Examiners could try "official notice" to basically say that they don't think it's novel or non-obvious without providing a reference, but that's easily defeated by attorneys. Examiners must provide a clear justification for a rejection.

If the amount of time an examiner has is too low (and it's far too low), that increases the chance that no prior art will be found, and consequently increases the chance that invalid patents will be granted.

Contrast that with the Supreme Court: The Supreme Court can decline to see a case. You can't do that as an examiner. You can try to have an application transferred, but that will just give it to another overworked examiner!