Masciandaro: 'Politicians stay away from money. History teaches that they only make messes".
3' min read
3' min read
"Those who do not learn from their mistakes are destined to relive them". According to Donato Masciandaro, Bocconi University economist and monetary policy expert, the economic policy moves made by the US Trump administration2 in its first months in office are slowly recreating the premises for a new major crisis, as had already happened in 2008 with the 'end of the golden age' of central banks and the triggering of the subprime mortgage crisis, which then spread to Europe where it quickly turned into the sovereign debt crisis, putting the very survival of the euro at risk.
In one of the many dialogues that are animating the Trento Festival of Economics, dedicated to the 'new monetary policy routes of the Federal Reserve and the European Central Bank', Masciandaro (who writes the 'Hawks & Doves' column in Il Sole 24 Ore, in which he scrutinises the activities of the central banks every week) retraced 'the journey to Ithaca that the central banks are trying to complete', that journey that would like to bring monetary policy back to normality, that is to say, to normality that means stable growth and low and stable inflation.
But the storms churning and threatening the sea of uncertainties in which the Federal Reserve and the European Central Bank are forced to navigate have been occurring almost non-stop since that 2008, which threatens to appear very distant: a large proportion of the students in the room in 2008 were in kindergarten.
"Currency must be kept away from politicians," warned Masciandaro, recalling the excess of liquidity that was created before 2008. "History tells us that when those who govern also want to deal with money and monetary issues, they botch things up."
Why? "Because, for those who administer a country, when faced with difficulties, the easiest thing is to print money. But that's how you create bubbles and sooner or later the bubbles burst', they rarely deflate, with all the consequences already seen in the last two decades. This is why Trump's constant and heavy-handed pressure and attacks on Fed Chairman Jerome Powell to lower interest rates are worrying. "It's not nice to wake up in the morning and see on social media that the president of the United States is mad at you".
