- Former Fed Chair Alan Greenspan said the Republican-sponsored tax overhaul plan will do “very little” for economic growth.
- Instead, he said in an interview with CNBC that Congress should focus on the deficit or risk inflation getting out of control.
- Greenspan cautioned in 1996 about “irrational exuberance” in the stock market, and earlier this year warned that a bubble in the bond market was about to pop.
Alan Greenspan: We’re about to go from stagnation to ‘stagflation’ from CNBC.
The Republican-sponsored tax overhaul plan will do “very little” to spur real economic growth but could push inflation dangerously higher, former Fed Chair Alan Greenspan said Wednesday.
Greenspan said the GOP plan, endorsed by President Donald Trump, instead should focus on reducing the deficit and heading off inflation.
Under the proposal, the corporate tax rate will be slashed from 35 percent to 20 percent while individual rates also will be cut. Analyses of the plan show it could add $1 trillion to the budget deficit, though the White House maintains the tax cuts will pay for themselves through gains in gross domestic product.
“This is a terrible fiscal situation we’ve got ourselves into,” Greenspan told CNBC’s “Squawk on the Street” in a live interview. “The administration is doing tax cuts and a spending decrease, but he’s doing them in the wrong order. What we need right now is to focus totally on reducing the debt.”
Ron Paul: ‘Inflation is all over the place’ and it’s creating a dangerous distortion in stock market
- Former GOP congressman Ron Paul thinks the Fed is underestimating inflationary pressures, the libertarian firebrand told CNBC.
- Bitcoin’s meteoric rise could be a sign that people are more worried about rising prices than most think, Paul added, saying there will be “a race to the exit.”
- Still, a number of Wall Street economists took issue with his assessment.
Ron Paul: Inflation is creating a dangerous distortion in stock market from CNBC.
He’s not known for being subtle when it comes to his stock market correction calls or criticizing Washington politics.
And as stocks reached new heights last week, former Republican congressman and libertarian Ron Paul listed inflation high on his list of concerns. Despite the Federal Reserve‘s recent observations that prices were actually low, Paul believes inflation is a dangerous distortion that could spark a pullback as deep as 50 percent.
“Inflation is all over the place,” Paul said recently on CNBC’s “Futures Now.” “I think there’s a ton of inflation. Bonds are representing inflation. These high prices in stocks — that’s inflation.”
Paul’s latest thoughts came as the stock market was capturing some of its best gains so far this year, as the Dow flew above the 24,000 level for the first time ever on Thursday.
Bank of America economists & analysts say the bull market is showing signs of cracking, possibly leading to a big market correction in mid-2018.