In a recent BBC interview former Fed Chair Al Greenspan suggested that “The populism of Donald Trump is a “shout of pain” but it won’t improve the living standards of ordinary Americans.” Greenspan led the US Central Bank from 1987 to 2006, said Mr Trump’s trade war with China would hurt US workers. The BBC comments that “since 2017, Mr Trump has left or sought to renegotiate international trade deals and imposed steep import tariffs on goods like steel. He says he wants to stop US jobs being lost to countries with lower labour costs, like Mexico or China, while addressing decades-old trade imbalances.” 

Interestingly Greenspan compared the president’s approach to that of populist leaders in Latin America in the late 19th and early 20th centuries. “We have one major so-called leader saying ‘I feel your pain and I am here to help you’,” he told BBC Radio 4. “People like the sound of it but the facts are he is lowering the standard of living of the average American.”

How do Greenspan’s comments relate to the policies that eventually require expenditure switching and expenditure reductions?