Donald Trump’s Twitter bragging about the soaring stock market can be tiresome. Come on — it’s not all about you, Mr President. It is worth bearing in mind, however, that, as Dominic suggests, under President Hillary Clinton, the world would probably not have enjoyed such a boom.
And as the Nasdaq breaks 8000 for the first time, it’s also worth rewinding the clock to when Trump won the presidential election. Let’s look at what Paul Krugman predicted, in November 2016. I quote at length:
‘If the question is when markets will recover, a first-pass answer is never. Under any circumstances, putting an irresponsible, ignorant man who takes his advice from all the wrong people in charge of the nation with the world’s most important economy would be very bad news. What makes it especially bad right now, however, is the fundamentally fragile state much of the world is still in, eight years after the great financial crisis.
‘It’s true that we’ve been adding jobs at a pretty good pace and are quite close to full employment. But we’ve been doing OK only thanks to extremely low interest rates. There’s nothing wrong with that per se. But what if something bad happens and the economy needs a boost? The Fed and its counterparts abroad basically have very little room for further rate cuts, and therefore very little ability to respond to adverse events.
‘Now comes the mother of all adverse effects — and what it brings with it is a regime that will be ignorant of economic policy and hostile to any effort to make it work. Effective fiscal support for the Fed? Not a chance. In fact, you can bet that the Fed will lose its independence, and be bullied by cranks.’
Wow. And we wonder why people are sceptical of experts.