Here’s one key thing you should know about Trump’s shock to the world economy: it could work | James Meadway
www.theguardian.com
It’s hard to say if the president truly knows what he’s doing. But there is a precedent for the US causing short-term chaos and reaping long-term gain, says economist James Meadway

Here Meadway draws parallels between Trumps tarrifs and Volcker’s interest rate shock in the 1970ies. Is this justified considering the world economy has a totally different structure today?

There is another argument that what Trump actually wants is a reactionary economic policy more similar to the 19th century where interests of small, wealthy, powerful groups were dominant over the well-being of normal people. For how much of a difference that can make, Germanys rapid economic development which was then to a large part attributed to Ludwig Erhard, Germanys minister for economic affairs from 1949 to 1963.

  • talkingpumpkin@lemmy.worldEnglish
    4·
    7 days ago

    There are precedents. In October 1979, Paul Volcker, newly appointed as chair of the Federal Reserve, drove up interest rates to a remarkable 13% in a bid to tackle inflation, later raising them to 17%.

    Back then the problem was rampaging inflation and the (by-the-book) cure was raising interest rates to drive it down.

    Nowadays US inflation is not an issue (IIRC it’s like 2% or 3%) and tariffs are gonna bring it up in a confused effort to… rebuild a manufacturing industry? (I’m not sure that’s the goal - it’s hard to say what “great again” means precisely).

    In what way would 1979 be a precedent?

    Anyway… yes, assuming Trump’s goal is to have more manufacturing in the US, tariffs will “work” - the point is how much that’s gonna cost (in quality of life, not dollars) and who’s gonna pay that price.