Monday , January 18 2021
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Thank God that there’s a great deal of ruin in a nation

Summary:
In a post I wrote right before the election, I made this prediction about what would happen if Biden won: Are we facing a bad interregnum, as during 1932-33? Perhaps, especially if Trump becomes bitter and blames the American people, much as Hitler blamed the Germans for letting him down. And now we see this: Trump strips US Fed of emergency credit powers in latest scorched-earth move . . .“The most obvious interpretation is that the Trump administration is seeking to debilitate the economic recovery as much as possible on the way out of the door,” said David Wilcox, the Fed’s former chief economist, now at the Peterson Institute. Fortunately, the Fed has other tools, and thus it’s not at all clear that Trump will succeed in destroying the US economy out of spite.

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In a post I wrote right before the election, I made this prediction about what would happen if Biden won:

Are we facing a bad interregnum, as during 1932-33? Perhaps, especially if Trump becomes bitter and blames the American people, much as Hitler blamed the Germans for letting him down.

And now we see this:

Trump strips US Fed of emergency credit powers in latest scorched-earth move. .

“The most obvious interpretation is that the Trump administration is seeking to debilitate the economic recovery as much as possible on the way out of the door,” said David Wilcox, the Fed’s former chief economist, now at the Peterson Institute.

Fortunately, the Fed has other tools, and thus it’s not at all clear that Trump will succeed in destroying the US economy out of spite. But you can’t accuse him of not trying!

HT: XVO

Update: It just occurred to me that this is sort of good news, as it clearly indicates that Trump understands that he has lost.


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Scott Sumner
Scott B. Sumner is Research Fellow at the Independent Institute, the Director of the Program on Monetary Policy at the Mercatus Center at George Mason University and an economist who teaches at Bentley University in Waltham, Massachusetts. His economics blog, The Money Illusion, popularized the idea of nominal GDP targeting, which says that the Fed should target nominal GDP—i.e., real GDP growth plus the rate of inflation—to better "induce the correct level of business investment".

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