Trump’s ‘run it hot’ economic strategy could work — but it’ll cost Americans dearly
Trump’s ‘run it hot’ economic strategy could work — but it’ll cost Americans dearly
https://www.aol.com/articles/trump-run-hot-economic-strategy-100046453.html
Publish Date: 2026-02-26 07:57:00
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Wall Street traders and the Trump administration alike are counting on AI being the new internet. – Michael Nagle/Bloomberg/Getty Images
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There’s a pitch taking root within the Trump administration and some corners of Wall Street that envisions two somewhat incompatible realities playing out at once: rapid economic growth and low inflation.
It’s a tantalizing idea — typically, rapid growth creates greater demand, which tends to push prices higher. But this particular version hinges on many things going right, all at once. And even then, the result could be disastrous for the American workforce.
Here’s the gist: The “run it hot” theory posits that artificial intelligence tools are about to do to 2020s what the internet did to the 1990s — which is to say, unleash productivity across industries, allowing businesses to grow briskly and stocks to surge, all while consumer prices stay relatively stable. The magic of that moment was made possible, in part, by the rapid adoption of networked computers. (Yes, there were a lot of other macroeconomic factors going on — the end of the Cold War, a massive deregulation effort, increasingly globalized trade — but bear with me.)
On Thursday, Trump economic adviser Kevin Hassett reiterated his belief that the next Federal Reserve chair should essentially run the Alan Greenspan playbook and keep interest rates low.
US economic growth is strong, Hassett told CNBC, but inflation is “not taking off.”
“So it’s obvious, because productivity is in the (work)force right now, because of AI and the data centers… so it looks very, very much like the ’90s to me right now.”
This is a very trendy comparison lately, for obvious reasons — AI looks like a bubble the way internet companies were a bubble, wide-leg jeans are in, and Gwyneth Paltrow seems to be everywhere.
But there are important…
