Having a bet with Trump

In an article about inflation and deflation this week The Economist cites “. . . Some economists reckon that running the economy “hot” [that is, with inflation] to the extent that demand outstrips productive potential [as desired by Trump’s transition team] could nurture growth in America’s economic capacity . . .” [And make America “Great again”!]

Wonderful how wrong you can get, isn’t it? They still can’t get away from the Keynesian line that consumer demand creates economic growth, not supply. Middle-class yeoman’s wives were desperate for colourful light-weight dresses to wear in the summer for at least a century and a half in order to imitate the wives of the aristocracy and their silk dresses.

But no, it wasn’t until automated cotton spinning swept in, closely followed by colour printing, that exactly the right product became available in the early 1820s. It was then, and only then, that the industrial revolution could finally take off.

There are no uniquely new consumer products. Trump is going to wait an awful long time for the major economic bounce he’s expecting.

One thought on “Having a bet with Trump

  1. If increased debt is what drives his projects, they will hit a brick wall. Only way I see is for the Treasury to coin money, which risks a run on the $US.

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