Joseph Stiglitz, Nobel Prize-winning economist and professor at Columbia University, discusses the domestic economic impact of U.S. President Donald Trump's policies.

A Nobel laureate has expressed significant concerns about the effects of Donald Trump's policies on the U.S. economy. The economist highlighted that tariffs, attacks on civil service and universities, and restrictive immigration policies pose risks to both inflation and unemployment. The expert also warned that pressure on the Federal Reserve and attacks on American institutions undermine confidence in the U.S. dollar and economy.

The economist argued that these actions could lead to increased inflation and higher interest rates, as well as a broader loss of confidence in the American economic system. The undermining of key institutions and the rule of law were cited as factors that threaten the long-term stability and reputation of the U.S. economy.

Nobel laureate: Trump's policies undermine confidence in U.S. economy

Well, normally it would not. That is to say, the Fed has traditionally focused on inflation, and the risks of inflation I think are significant, given the enormous threats of tariffs. Tariffs are taxes, taxes on the importation of goods and services from abroad, at significant levels, levels that we have not seen in decades and decades. So quite frankly, we don't know the full impact, either in the short-term, medium-term or long-term. But we do know that it will represent a significant interference to global supply chains. And the best piece of evidence on the consequence of that came in COVID-19. And we saw there that the interference with global supply chains showed that they were not resilient and had enormous inflationary consequences. So there is a risk of inflation, and a prudent central bank, following its normal dictates of its focus on inflation, would not be cutting interest rates at all. On the other hand, I was going to say that the data that I see, and my belief at the damage that Trump's policies are inflicting on the American economy, are very worrisome. So those who say that the U.S. economy is in good shape, I think, are underestimating the magnitude of the damage that his policies are inflicting, not only his tariff policies, but his attack on the civil service, his attack on the universities, his immigration policy. All of these are risks, both to inflation, but also to unemployment. What is President Trump risking by putting the pressure on the Fed the way that he is? Oh, I think it's enormously damaging. You know, the value of the dollar represents confidence. And part of the confidence in the dollar is that the Federal Reserve will not engage in, you might say, a spree of creating money. Real estate magnates love access to cheap money. It's a short-term perspective. They don't care about bankruptcy. He has a fantastic record of bankruptcy, but that's not good for the economy. So I understand where he comes from, but he comes from a reckless view that has had enormous cost because he has gone into bankruptcy and it has inflicted severe cost to the economy from a micro perspective. But now what we're talking is a macro loss of confidence. And if there is that loss of confidence, there are significant inflationary consequences of and significant impact in increases of interest rates. There are further reasons for the loss of confidence. His attack on American institutions and the rule of law and the rule of the judiciary and the rule of attorneys, all the attacks on American institutions, on those things that actually made America great, he is destroying that. And that is undermining confidence in the American economy today and in the future.

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