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Short-term policies that force governments to make ‘really stupid decisions’

Jamie Dimon, CEO of JPMorgan Chase & Co., will speak at the Bloomberg Global Business Forum in New York on Wednesday, September 25, 2019.

Tiffany Hagler-Geard | Bloomberg | Getty Images

Short-term thinking causes governments around the world to make “really stupid decisions”

; about economic policy, according to JP Morgan CEO Jamie Dimon.

Dimon suggested that the US Federal Reserve had managed to avert a financial crisis in the wake of the coronavirus pandemic, but argued that governments had not focused on policies that did not support “healthy growth” for the economy.

“There are huge corrections to income inequality. You could have negative income tax, you could arrange education, so for me there are many things we need to do to help the poor,” Dimon told a CNBC-moderated panel at the Singapore summit Tuesday.

Dimon claimed that 1% higher growth in the United States over a 10-year period would amount to about $ 4 trillion extra in GDP (gross domestic product), equivalent to more than $ 12,000 per year. Person.

“It pays for a lot of social safety nets, taxes and so on, we no longer focus on growth, healthy growth,” he argued. “What we focus on is blaming each other and we are suffocating ourselves because we are not able to do very basic things,” Dimon said at the summit to be held online this year.

“Again, it’s long – term thinking, real politics with real facts and analysis, not guessing and not seeing year-over-year. Those year-over-year things have just been a waste of time and made us make really stupid decisions. “

Keeping the markets ‘benefit everyone’

The Fed has released an unprecedented monetary stimulus package in an attempt to support markets in the midst of the recession from the coronavirus crisis, an effort that has seen S&P 500 and Nasdaq record highs in recent weeks.

In the absence of an agreement on a new round of federal spending, with Republicans and Democrats in disagreement over a new slimmed-down bill, investors are looking at the Fed’s annual Jackson Hole symposium this week for guidance on how the central bank can move further toward calming markets.

President Donald Trump’s administration has issued stimulus controls aimed at individuals and small businesses to help Americans cope with the economic storm of the pandemic, but Dimon suggested it was time for the federal government to step up.

“We knew we were going to have this big recession. What (the Fed) did not want was a global financial crisis beyond a big recession,” Dimon told the panel. “This is where markets close down and people can’t get money, so they kept the markets open, which gave everyone an advantage.”

He added that the Fed was “so far open now” that it does not need to pump more liquidity into the system and instead should let nature take its course. He argued that another small round of federal spending was needed to support small businesses and people in long-term unemployment.

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