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Krugman Should Love Trump’s Infrastructure Plan

Summary:
Seriously. An excerpt: Krugman should be a huge fan of this approach. After all, Krugman tells us that sure, the economy seems to be doing OK in the first year under Trump, but that “when the next big shock comes…we’ll need an effective, coherent response from officials beyond the world of central banking.” This is because—Krugman claims—we are dangerously close to the “zero lower bound” world of the liquidity trap, so that the Fed can’t just cut interest rates when the next shock hits us. In that context, then, Krugman should be ecstatic to learn that the Trump Administration has already gotten the wheels in motion for private investors to put up .3 trillion on the front end to build infrastructure, in exchange for revenues to be collected over the following

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Seriously. An excerpt:

Krugman should be a huge fan of this approach. After all, Krugman tells us that sure, the economy seems to be doing OK in the first year under Trump, but that “when the next big shock comes…we’ll need an effective, coherent response from officials beyond the world of central banking.” This is because—Krugman claims—we are dangerously close to the “zero lower bound” world of the liquidity trap, so that the Fed can’t just cut interest rates when the next shock hits us.

In that context, then, Krugman should be ecstatic to learn that the Trump Administration has already gotten the wheels in motion for private investors to put up $1.3 trillion on the front end to build infrastructure, in exchange for revenues to be collected over the following decades. That is exactly the kind of plan to promote investment spending via deficit finance that Krugman thinks is necessary when the Fed is rendered impotent because interest rates hit 0%.

Robert Murphy
Robert Patrick Murphy (born 23 May 1976) is an American economist, consultant and author. He is an economist with the Institute for Energy Research (IER) specializing in climate change and a research fellow with the Independent Institute, He was a senior fellow in business and economic studies at the Pacific Research Institute, and he is an associated scholar at the Ludwig von Mises Institute. In addition to economic subjects, Murphy writes about, and has presented an online video class in, anarcho-capitalism on the Mises Institute website. Murphy also has written in support of Intelligent Design theory and expressed skepticism of biological evolution.

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