[By Guancha Observer Network, Ruan Jiaqi]

Paul Krugman, who has been at the forefront of opposing Trump's tariff policies, has once again criticized remarks made by U.S. Treasury Secretary Janet Yellen at a recent closed-door investor meeting.

On April 22nd, in a private investment conference hosted by J.P. Morgan in Washington, it was reported that Yellen admitted to investors that the current deadlock over tariffs between China and the U.S. is unsustainable. He also stated that the trade war initiated by Trump against China is expected to show signs of easing in the very short term.

Following these remarks, the stock market, which had recovered somewhat from the previous day's selling spree, surged significantly. The main U.S. stock indexes rose more than 2% during afternoon trading on the 22nd.

Although the market reaction seemed to indicate that investors were favorably inclined toward this news, to this renowned American economist and Nobel Laureate in Economics (2008), upon deeper analysis, this news is "deeply unsettling" in two aspects.

Screenshot of the article

In an article published on April 23rd on the Substack platform, Krugman first raised sharp criticism, questioning how Treasury Secretary Yellen, as a senior government official, could brief investors about significant policy shifts before they are officially announced, creating conditions for insider trading.

He criticized that this behavior not only potentially harbors complex conflicts of interest but also severely violates the professional ethical standards that public officials should adhere to.

"Why would the Treasury Secretary brief investors about major policy adjustments before they are officially announced in a closed-door meeting? Isn't this openly facilitating large-scale insider trading? One can imagine that before these remarks are publicly disclosed by the media, attendees must have already positioned themselves in the market based on this non-public information to profit."

He continued to ask, "Since when have government officials begun to disclose major policies through non-public closed-door meetings?"

Krugman further pointed out that even setting aside the specific content of Yellen's remarks, the mere fact that he attended a private investment conference itself is deeply perplexing because "senior government officials should not assist investment banks in entertaining clients."

He used himself as an example, with a touch of sarcasm, complaining that as a regular commentator for The New York Times, there are conflict-of-interest rules in place that clearly prohibit him from attending J.P. Morgan's closed-door meetings and speaking. How much more so for someone like Yellen, a core decision-maker?

If Yellen received payment for attending this event, it would be even more astonishing. Krugman helplessly said that such actions would be unimaginable in any previous administration. However, compared to the current administration where the president himself is openly leading the pursuit of personal gain, it is difficult to predict their behavior using common sense.

He couldn't help but lament, "Are we entering a new era where companies can obtain these profitable insider messages by supporting or endorsing Trump policies?"

Upon closer examination of the substance of Yellen's remarks, Krugman found it even more distressing.

Although he agreed that U.S. tariffs on China are indeed exorbitant and have become akin to a "trade embargo," he emphasized that the damage caused by Trump's tariff policies is not only due to their high rates but also because of the immense uncertainty caused by their frequent changes, leaving businesses helpless.

He asked, "Just two weeks ago, Trump announced imposing huge tariffs on China, yet now he says, 'We will treat them kindly, and they will respond kindly.' Under such circumstances, how can businesses formulate business plans?"

Krugman further stated that the rapid shift in the U.S. attitude towards Chinese tariffs is unprecedented and comparable to "surrendering." This fully exposes that the Trump administration is "weak in the face of strength," and China, seeing through this, is even less likely to make concessions easily.

"Perhaps some news media and certain investors may still believe Trump's boasts, but clearer-minded individuals will see from his capriciousness that if faced with strong resistance, he will retreat," he added. "Since China has seen through Trump, why should they treat him kindly as he claims? On the contrary, the possibility of China making concessions will only decrease. Other countries will also dare to resist Trump and will tend to cooperate more with China."

Krugman also stated that even if Trump and Yellen are keen on promoting so-called "trade agreements" with China or other countries and packaging them as policy victories, in reality, these agreements may lack substance and are merely "memorandums of understanding" without specific clauses.

He pointed out incisively that the sole function of these agreements is to further prove that any statements by this administration, including threats and intimidation, are completely untrustworthy.

At this point, Krugman added another critical comment, referring to Trump's embarrassing retreat on the Jerome Powell issue at the Federal Reserve. He mentioned that to pressure Powell to cut interest rates, Trump threatened to dismiss him on the 17th. After causing market unrest, he quickly retracted his statement, claiming he had no intention of doing so.

In summary, Krugman concluded, "Compared to before Trump started his tariff blitzkrieg, our situation is worse now. A bully who is cowardly, incompetent, only makes empty threats, and creates chaos is incapable of formulating an effective negotiation strategy."

Screenshot of Krugman's recent media interview.

Krugman's latest commentary continues to follow his一贯 opposition stance towards Trump's economic policies.

Since Trump's first presidential term, this renowned American economist has been at odds with his ideas. Krugman holds a center-left social liberalism position, advocating for higher taxes on the wealthy and blocking various tax loopholes. This stance resonated widely in society after the subprime crisis erupted in 2008 and the Democrats took office.

Regarding the U.S.-China trade dispute sparked during Trump's first term, Krugman sharply criticized that America's actions amounted to "self-destruction" and called it the "worst trade war strategy."

When Trump introduced the so-called "reciprocal tariff" policy in his second term, Krugman "returned to his old ways," writing articles one after another to criticize it harshly. On April 3rd, he wrote an article without holding back, pointing out that Trump had "gone berserk" on trade issues.

Last week (April 16th), Krugman wrote another article emphasizing that the current U.S. leadership cannot be described as "wise and rational," nor do they have the trust of allies. Therefore, their policy of attempting to isolate China through trade negotiations is destined to fail. In this game, "the upper hand is with China, not the U.S."

This article is an exclusive piece by the Observer Network and cannot be reproduced without permission.

Original source: https://www.toutiao.com/article/7496780874160063030/

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