Trump Risks Making the Same Economic Mistakes as Biden

 

Jason Furman, who chaired the White House Council of Economic Advisers under Barack Obama and now teaches at Harvard, recently published a thoughtful critique of former President Joe Biden’s economic policy. 

https://www.foreignaffairs.com/united-states/post-neoliberal-delusion

The American Recovery and Reinvestment Act, signed in 2009, cost more than $800 billion, 

but some economists argued at the time (and still believe) that it should have been bigger, saying it helped make the recovery from the 2008 recession needlessly slow.

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 Stephanie Kelton  berättar om att Obamas rådgivare ville ha ett stimulanspaket på minst 1,3 trillion för att undvika en utdragen recession. 

Andra rådgivare ansåg, förmodligen med rätta, att ingenting som slutade på “trillion” skulle gå igenom i kongressen. ” In the end, Obama lost his nerv”, skrev hon.

Det blev 787 miljoner i stimulanser – och en långvarig recession. 

https://englundmacro.blogspot.com/2020/10/guldet-euron-och-budgetunderskottet.html

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Meanwhile, the Federal Reserve went into full-on stimulus mode for years after the crisis, continuing to expand its balance sheet. 

With both the added debt and the expansionary monetary policy, higher inflation and rates were expected — but they never came about.

What policymakers took away from this experience was that no amount of spending or expansionary monetary policy would increase interest rates or inflation. 

Ergo, they could stimulate as much as they wanted, in just about any way they wanted, without cost. 

As long as interest rates are near zero, this is kind of true; after all, it is nearly costless to run up debt, and it appears to pay off so long as it produces some positive growth.

Low rates enabled this delusion.

Allison Schrager Bloomberg 19 februari 2025  

https://www.bloomberg.com/opinion/articles/2025-02-19/trump-economy-risks-the-same-mistakes-as-biden

Forecasting  inflation is a staple of macroeconomic modeling, yet virtually all economists’ predictions for the United States in 2021 were way off the mark. 

Jason Furman Project Syndicate 17 January  2022

https://englundmacro.blogspot.com/2022/01/why-did-almost-nobody-see-inflation.html

Jag tycker det är skriande uppenbart att räntan världen över är för låg och att en större del av stimulanserna borde ske via finanspolitiken.

Rolf Englund blog 5 december 2009

https://englundmacro.blogspot.com/2014/08/skriande-uppenbart.html

Tillbaka till Rolfs länktips 20 Februari 2025

https://englundmacro.blogspot.com/2025/02/rolfs-lanktips-20-februari-2025.html