The Nobel Prize winner economist Joseph Stiglitz says
“The Federal Reserve “didn’t do their homework” and mischaracterized the spike in inflation that has plagued the U.S. economy over the last two years”
United States inflation started to gain pace in 2021 when the economy appeared after the COVID-19 pandemic. In 2020 it increased by 1.2% and in 2022 June it rose by 9.1%.
Stiglitz shares his thoughts on CNBC’s Steve Sedgwick from the sidelines of the Ambrosetti Forum and says.
“The Fed thought the source of the inflation that began in the post-pandemic era was excess demand, and you could understand why they may have thought that if they didn’t do their homework,”
He does not find any aggressive monetary policy tightening situation in the last 18 months. Stiglitz suggests that there are lessons to be learned from any Fed’s assessments. According to him..
“It’s really bad economics, because [the Fed] saw that the government had passed this enormous recovery program, and if all that money had been spent, it would have been inflationary, but you have to remember back just a few years ago, there was an enormous amount of uncertainty.”
Stiglitz also said.
“Why was there inflation? We all know the reason,” he added. “Car prices in the beginning went way up — why? Was it because we didn’t know how to make cars? No, we knew how to make cars. American auto companies forgot to put in orders for chips, and for want of a chip, you can’t make a car.”
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