PAUL KRUGMAN Trump Is Flirting With Quack Economics

PAUL KRUGMAN

Trump Is Flirting With Quack Economics
April 29, 2024

https://www.nytimes.com/2024/04/29/opinion/trump-economics.html

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What’s really worrisome, however, are indications that a future Trump regime would manipulate monetary policy in pursuit of short-run political advantage, justifying its actions with crank economic doctrines.

The Federal Reserve is a quasi-independent institution, not because of any sacrosanct constitutional principle, but because nations have found that in practice it’s important to limit partisan influence over interest rates and money creation. But in recent weeks there have been reports that Trump advisers want to take away much of the Fed’s independence, presumably so that Trump could juice the economy and the stock market the way he wanted to in 2019.

There are also reports that Trump advisers, obsessed with the trade deficit, want to devalue the dollar, which would indeed help exports but would also be clearly inflationary — raising import prices and overheating a U.S. economy that is already running hot. (In fact, our economic strength is probably the main reason the dollar has been rising.)

And even as they talk about weakening the dollar, Trump advisers are reportedly discussing punishing other countries that reduce their use of the greenback — which seems both contradictory and to involve a delusional view of how much economic power even America possesses.

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