Bloomberg Own Economist Says Biden's Inflation Plan Will Fail, Makes Prediction
Economist Nouriel Roubini told Bloomberg TV that there can only be two outcomes from Biden's inflation plan and they're both horrible.
“The fed funds rate should be going well above 4% -- 4.5%-5% in my view -- to really push inflation towards 2%,” the chairman and chief executive officer of Roubini Macro Associates said in an interview on Bloomberg Television’s “Balance of Power With David Westin” Monday.
“If that doesn’t happen, inflation expectations are going to get unhinged,” said Roubini, whose prescience on the housing bubble that led to the US financial crisis of more than a decade ago earned him the nickname Dr. Doom. “Or if that happens, then we are going to have a hard landing. Either way, either you get a hard landing or you get inflation getting out of control.”
Roubini joins several experts, like Goldman Sachs & Co. Chief Economist Jan Hatzius, who say the economy is on a collation course and don't believe the Fed will be able to pull off a soft landing.
“In the US, whenever you had inflation above 5% and unemployment below 5%, the Fed tightening has led to a hard landing,” Roubini said. “So my baseline is a hard landing.”
US inflation decelerated in July by more than expected, which investors speculated took some pressure off the Fed to continue hiking interest rates aggressively. The consumer price index increased 8.5% from a year earlier, cooling from the 9.1% June advance that was the largest in four decades.
Meanwhile, while Biden's team celebrates a producer index decrease by 0.5% from a month earlier, using it to claim that inflation has peeked— Bloomberg's own experts say there is way more to be concerned about right now.
“It might have peaked but the question is how fast is it going to fall? With the Fed still having real rates on the policy side highly negative, I don’t think the monetary policy is tight enough to push inflation toward 2% fast enough,” Roubini said. “We are still in a severely inflationary environment, not just in the United States but around the world.”
Biden's plan, as usual, is to throw tons of money at the problem without any regard for the long-term damage that will cause to taxpayers. Even liberal economists can see how dangerous and ridiculous this inflation plan is. The problem is the media coverage behind it supports the Act because it pleases their political overlords.