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Nobel Laureate Thomas Sargent Criticizes US Economic Policy Instability
Warning on US Economic Policy Instability
Nobel laureate in economic sciences Thomas Sargent has criticized the instability and lack of credibility in current US economic policy. He warned that aggressive fiscal policy and loose monetary policy could lead to stagflation. Sargent emphasized the importance of policy credibility and a long-term perspective, urging policymakers to avoid short-term manipulation. He cited the concerns of American businessmen regarding the unpredictable policy changes under the Donald Trump administration, highlighting the need for clear and consistent rules.
Fiscal Health and Social Safety Net Issues
Sargent pointed out significant problems within the US government's fiscal situation. He specifically mentioned that the social security system is projected to go bankrupt in eight years, and the public medical system is very expensive. He stated that all current plans and figures are mathematically inconsistent. The United States will either have to default on some of its debts, increase taxes, or fail to deliver on promises to beneficiaries.
Advice for Policymakers
Sargent stressed that policymakers should understand the importance of forecasting based on mathematical theory. He advised current central bank governors and fiscal chiefs to maintain stable rules and establish transparent policies that the public can understand. He added that governments should collect enough taxes to cover expenditures and ensure consistent financial regulation.
*Source: YouTube: CGTN (2026-03-29)*
