CEA Chairman Steve Miran Hudson Institute Event Remarks

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1. Steve Miran, whom I believe is the chief economic adviser to the President, outlines the demands of the US on the global economy. He argues that nations must focus on building America’s economy should they wish to benefit from America’s protection, including simply writing cheques to the Treasury department.

2. This is the first time I’ve seen someone blame China on the 2008 crash.

   “There are other unfortunate side effects of providing reserve assets. Others may buy our assets to manipulate their own currency to keep their exports cheap. In doing so, they end up pumping so much money into the U.S. economy that it fuels economic vulnerabilities and crises. For example, in the years running up to the 2008 crash, China along with many foreign financial institutions, increased their holdings of U.S. mortgage debt, which helped fuel the housing bubble, forcing hundreds of billions of dollars of credit into the housing sector without regard as to whether the investments made sense. China played a meaningful role creating the Global Financial Crisis. It took almost a decade to recover, until President Trump got us back on track in his first term.”

3. He neglects to mention that the US has benefitted from its reserve status by enabling us to buy goods cheaply due to the strong dollar. Meanwhile our stock market is high and interest rates are low due to foreigners recycling their dollars into US stocks and Treasury bonds.  So US consumers, taxpayers, and asset-owners have benefitted hugely. That’s why they call reserve status the “exhorbitant privilege”.  The down side has been US deindustrialization. But does he really expect foreigners to sacrifice by voluntarily refraining from tariff retaliation, and even send checks to the US Treasury??? That last suggestion in particular is so ridiculous that it’s impossible to take him seriously. And he neglects to mention the effects of our spiraling Federal fiscal deficit, approaching 7% of GDP which also contributes to the trade deficit by raising interest rates and thus the dollar.  If we can’t get our own fiscal house in order, why should foreigners come to our rescue?

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