Though President Joe Biden continues to give himself and his administration high marks when it comes to the economy, a top expert in the field with ties to a prior Democratic president has offered some words of caution.
Former Obama Global Development Council Chair Mohamed El-Erian said on Friday that the “sustainable energy” push championed so heavily by Biden and his supporters has placed the world in greater danger of high inflation, as Breitbart reports.
Sounding the alarm
El-Erian, who is also a columnist, chief economic adviser to Allianz, and president of Queens College, Cambridge, made his remarks during an appearance on Bloomberg’s Surveillance.
The well-known economic authority explained that a 2% inflationary target is, essentially, arbitrary, and that there is not a great deal of justification for moving heaven and earth to go from 3% to 2%.
He went on to explain that the current economic realities facing the world inevitably set the stage for an inflationary environment, noting first that “the domestic paradigm is changing.”
El-Erian went on, “We’re no longer in this Washington consensus of deregulation, liberalization, and fiscal prudence. We are in a world of industrial policy, government intervention, and fiscal irresponsibility.”
Turning to the international arena, El-Erian observed, “we’re no longer talking about…globalization. We’re talking about fragmentation. Then look at the transitions we have, we have major transitions going on, not just generative AI, life sciences, and sustainable energy, we have things happening in health are, you have things happening in defense, you have things happening in food security.”
“If you put all that together, it is a different inflationary environment,” he added. “It’s a world that’s subject to higher inflation, and we’ve come from a world that was subject to lower inflation.”
Not so fast, Joe
El-Erian did not stop there, as he also noted last week that he shares the opinion of JPMorgan Chase CEO Jamie Dimon, at least when it comes to what likely lies ahead in terms of inflation, as Bloomberg noted.
Dimon revealed that he sees “a lot of inflationary forces in front of us,” regardless of Biden administration suggestions to the contrary, and El-Erian agreed, stating that Federal Reserve decision makers have downplayed the dangers a bit too much.
“Jamie and I have been on the same wavelength for a while,” he said.
El-Erian went on to express frustration at what he feels has been an overly optimistic prevailing viewpoint, adding, “In January when we got a negative surprise, the inclination of consensus was to dismiss it as a bump, as nothing, and we needed to more data points to confirm that there was something going on,” and he cautioned those in power to heed the signals he and folks like Dimon are noticing.
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Author: Sarah May
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