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It is hard to find any good economic arguments for protectionism. Economists have known this at least since Adam Smith wrote the Wealth of Nations in 1776. That, however, has not stopped president-elect Donald Trump putting forward his protectionist agenda.
In yesterday's blog post I wrote about why I believe it is the combination of Donald Trump's fiscal stimulus plans (infrastructure investments and tax cuts) combined with the Federal Reserve's willingness not to (fully) offset this, which has pushed inflation expectations in the bond markets up very significantly since Tuesday.
Today I was asked to do an interview with a Danish radio station about Donald Trump and about whether one could say anything positive about him or rather about his economic agenda. I declined to do the interview. I frankly speaking has nothing positive to say about Trump.
There is no doubt that I believe that the Federal Reserve under the leadership of Fed Chair Janet Yellen has kept monetary conditions too tight and I have particularly blamed Yellen's 1970s style obsession with the Phillips curve for this.
This morning we got some very good news out of Egypt as this statement was released by the Egyptian central bank:
Believe it or not - there is a country in the world where I now believe that monetary policy is becoming (moderately) too easy. Yes, that is correct - I will not always say that monetary policy is too tight. The country I talk about is Sweden. More on that below.
A couple of days ago I read an interview with ECB's former chief economist Otmar Issing about the euro crisis. I frankly speaking didn't find the interview particularly interesting and Issing brings little new to the discussion.
Sunday we got some bad news, which many wrongly will see as good news - this is from Reuters:
Today Donald Trump unveiled his team of economic advisers. Interestingly enough there are very few economists among the economic advisors and only one who can be said to have any free market credentials - the Heritage Foundation's chief economist Stephen Moore.