Trump and inflation8 Jun 2024 10:33
Good Noah Smith article
https://www.noahpinion.blog/p/trump-and-inflation
Lazy AI summary
Trump's proposed tariffs could raise consumer prices and lead to inflation from negative supply shocks. His lack of concern about deficits, exemplified by pandemic spending that contributed to 2021-22 inflation, signals higher future deficits that are theoretically inflationary. Trump challenged the Fed's independence by pressuring for lower rates, and allies propose further eroding Fed autonomy, potentially compromising inflation management. Forcing low rates could boost employment but lead to higher inflation expectations, canceling out efforts. Collectively, tariffs, rising deficits, and monetary interference risk 1970s-level stagflation with high inflation and mortgage rates. While unlikely given the U.S. economy's size, Trump's commitment to permanent deficits and money creation raises the specter of hyperinflation, which has occurred elsewhere after years of irresponsible policies. After a stable first term, Trump's potential second-term influence over macroeconomic policy threatens damaging instability akin to other populist leaders.