A group of 16 Nobel Prize-winning economists authored an open letter warning that if Donald Trump won a second presidential term, his economic agenda would not just be “vastly” inferior to that of President Joe Biden’s but that Trump would also “reignite” the inflation “which has come down remarkably fast.” Of course, a criticism of Trump’s heterodox economic proposals would mean a little more from a team of economists that did not previously lie that Biden’s empirically abysmal policies would bring down inflation instead of supercharging price instability to its worst crisis in 40 years.
You see, 14 of the 16 economists from the 2024 letter wrote another letter in September 2021 cheering on Biden’s “Build Back Better” agenda, which would later become the Bipartisan Infrastructure Law. Spearheaded by Joseph Stiglitz of Columbia, George Akerlof of Georgetown, Sir Angus Deaton of Princeton, Sir Oliver Hart of Harvard, Eric Maskin of Harvard, Daniel McFadden of Berkley, Paul Milgrom of Stanford, Roger Myerson of the University of Chicago, Edmund Phelps of Columbia, Paul Romer of NYU, William Sharpe of Stanford, Robert Shiller of Yale, Christopher Sims of Princeton, and Robert Solow of the Massachusetts Institute of Technology claimed that the BIL, which infused about half a trillion dollars of new spending into the economy, would “ease longer-term inflationary pressures” despite inflation already running at 5%. Again, this September 2021 letter would be less embarrassing if Stiglitz hadn’t already endorsed the preliminary portion of the BBB agenda, the American Rescue Plan.
Rewind back to February 2021, when inflation was just 1.7%, Stiglitz called a refusal to pass the “urgently needed” $1.9 trillion ARP “irresponsible and reckless.”
“Opponents of the Biden plan also disingenuously warn against inflation — that lurking bogeyman that is more fantasy than real threat nowadays,” Stiglitz wrote in support of the ARP. “Indeed, some data suggest that wages may be falling in parts of the economy. But if inflation does emerge, the US has ample monetary and fiscal tools at the ready.”
Of course, after Stiglitz got his wish when Biden signed the ARP into law, the “fantasy” of inflation jumped from below the Federal Reserve’s maximum target of 2% to 5% when Stiglitz and 15 other Nobel laureates pushed Biden to pass the next phase of BBB. Within the year after the BIL was signed into law, inflation almost doubled to the near double digits. Only after the Fed enacted its fastest monetary tightening in four decades did inflation begin to slow.
Even so, the Fed’s unilateral war on inflation, which is not just being unassisted by the Biden administration but actively undermined, has slowed to a crawl. In the past year, the annual inflation rate has barely slipped from 4% to 3.3%, or a progress rate of 1.5% per month. And recall that as a result of Bidenomics and big spending, real average wages are down 5% since Biden took office, a laughable and predictable result of the bills Stiglitz said would spur wage growth.
Economists at the Federal Reserve Bank of San Francisco explicitly blamed “fiscal support measures” such as the ARP and BIL for increasing inflation about three percentage points higher than it would be by the end of 2021, while economists at the Federal Reserve Bank of Chicago upgraded the estimate even higher, to about four points.
The same economists who backed BBB from the start and doubled down even when the inflation it wrought became evident are now tripling down. After lying that Biden is responsible for “lowering long-term inflationary pressures,” the Nobel signatories of the 2024 letter claim that Trump is worse than the alternative because he would worsen inflation.
“Donald Trump and the vagaries of his actions and policies threaten this stability and the U.S.’s standing in the world,” the signatories write. “We believe that a second Trump term would have a negative impact on the U.S.’s economic standing in the world and a destabilizing effect on the U.S.’s domestic economy.”
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The letter does not even cite specific Trump policies, just his “fiscally irresponsible budgets” that historically had a deficit of a full trillion fewer than Biden’s today.
Voters can find honest reasons to justify not voting for one guy or another, but a letter claiming Trump will stoke inflation while Biden is responsible for taming it just is not one of them.