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Ep. 253: Barry Eichengreen on Trump Trade Policy, Dollar Status and Debt Crises
Jan 31, 2025
Barry Eichengreen, a UC Berkeley economics and political science professor and former IMF advisor, dives into pressing macroeconomic issues. He discusses the current inflation regime and the crucial independence of central banks under political pressure. The conversation shifts to Trump's trade policy, including tariffs and their historical context, alongside the U.S.-China tech rivalry and its security implications. Eichengreen also explores the dollar's status as a reserve currency and the impacts of U.S. debt on economic stability.
43:38
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Quick takeaways
- Central banks face increasing challenges in managing inflation expectations amid political pressures, necessitating agile responses to economic shocks.
- Despite attempts to explore alternatives, the U.S. dollar remains the dominant global reserve currency amid shifting geopolitical dynamics.
Deep dives
The Evolving Inflation Landscape
Central banks are facing a more volatile inflation environment, necessitating a strategic shift in their policy responses. The recent economic shocks, including geopolitical tensions and shifts in administration, will lead to inflation temporarily overshooting or undershooting targets. Despite these fluctuations, central banks like the Fed are expected to maintain a commitment to their 2% inflation target, though they must be agile in their responses to inflationary pressures. The difficulty of reaching the target, particularly due to the flattening Phillips curve, signals that while central bank independence remains stable, challenges lie ahead in managing inflation expectations.
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