Page 193 - TrumpsEconEra_Flat

Trump’s Economic Era

These structural changes will have an enormous impact
on future growth and employment.

WHAT TO DO?
President Trump agrees with economists that
increasing productivity is the long-term solution to
growing the economy. However, economists disagree
on how to use monetary and fiscal policies in the short
run. Because Keynesians view the economy as a
machine, they favor an activist approach to problems.
Austrians, on the other hand, support stable
policy settings because they adhere to a predetermined
set of rules; they tend to ignore short-run fluctuations.
For example, the Federal Reserve should increase the
money supply each year only to compensate for growth.
For example, if the economy grows by two percent, the
Fed should increase the money supply by two percent.
Austrians believe the government should strive for a
balanced budget over the long run, deficits in bad times
and surpluses in good times. Donald Trump agrees with
the Austrians and favors establishing stable policy
settings.
Whether economists prefer active policies or
rules, they agree on three things: we should pay more
attention to lag effects, we should avoid sharp policy
changes, and we should emphasize the long run.
Politicians, on the other hand, are moved by politics.
Despite President Trump's efforts, in March of
2018 he was stymied by the Congress who waited until
the last few hours and presented the 1.3 trillion dollar
spending bill that was 2, 232 pages long with a 65 to 32

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