Trump’s ‘run it hot’ economic strategy could work — but it’ll cost Americans dearly
There’s a pitch taking root within the Trump administration and some corners of Wall Street that envisions two somewhat incompatible realities playing out at once: rapid economic growth and low inflation.
It’s a tantalizing idea — typically, rapid growth creates greater demand, which tends to push prices higher. But this particular version hinges on many things going right, all at once. And even then, the result could be disastrous for the American workforce.
Here’s the gist: The “run it hot” theory posits that artificial intelligence tools are about to do to 2020s what the internet did to the 1990s — which is to say, unleash productivity across industries, allowing businesses to grow briskly and stocks to surge, all while consumer prices stay relatively stable. The magic of that moment was made possible, in part, by the rapid adoption of networked computers. (Yes, there were a lot of other macroeconomic factors going on — the end of the Cold War, a massive deregulation effort, increasingly globalized trade — but bear with me.)
Chart from Axios:
