No, I may not swagger but I’m confident.
Still, I’m forever ready to give myself a pat on the back (if my impaired left shoulder permits) when a real expert like Paul Krugman says I’m doing OK.
In today’s column, Krugman offers a mea culpa (re the immediate effect of Trump’s election on the economy) and a calm warning: no matter how well things seem to be going now, there are distinct possibilities they will not be going well in the future.
Why? I do a bit of bolding:
The key point is that while the major advanced economies are currently doing more or less OK, they’re doing so thanks to very low interest rates by historical standards. That’s not a critique of central bankers. All indications are that for whatever reason — probably low population growth and weak productivity performance — our economies need those low, low rates to achieve anything like full employment. And this in turn means that it would be a terrible, recession-creating mistake to “normalize” rates by raising them to historical levels.
But given that rates are already so low when things are pretty good, it will be hard for central bankers to mount an effective response if and when something not so good happens. What if something goes wrong in China, or a second Iranian revolution disrupts oil supplies, or it turns out that tech stocks really are in a 1999ish bubble? Or what if Bitcoin actually starts to have some systemic importance before everyone realizes it’s nonsense?